The Pace Of US Downward Revisions Is Picking Up

Tyler Durden's picture

With 86% of the S&P 500’s market cap reported, 2Q earnings growth has been negative, with profits down 1.6% excluding Financials. This marks the first quarter of year-on-year profit declines since 2009. Moreover, while EPS surprises have been positive, they have been the weakest of the current recovery cycle, and revenue surprises have been negative. Following 2Q announcements, companies have issued weak guidance, resulting in increasingly rapid downward revisions to analyst estimates. At present, consensus expectations are for earnings to decline by 1.5% in 3Q. This implies further deterioration in margins. While UBS believe margins will hold up better than expected, their revised economic outlook suggests top-line expectations may be too high - and along with the FX impact we noted last night, those miraculous multiples will have to extend to magnificent levels to maintain this haughty market valuation.



As earnings growth is negative for the first time since the recession...


and revenue growth is the slowest since then too...


with earnings and revenue surprises now at cycle highs - with more top-line negative surprises than we have seen since Q2 2009...


and yet we are at 4 year highs in stocks...


Charts: UBS and Morgan Stanley

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vinu02's picture

As long as ECB is conducting fine tuning operation on Tuesay, its difficult to get any sell off.

LawsofPhysics's picture

Even harder when shorting and selling becomes illegal (well for you anyway).

vast-dom's picture

only one word to explain all of this: PONZI

slaughterer's picture

"Downward revisions"?   Macht nichts.  

LawsofPhysics's picture

I remain an optimist.  Just more motivation for the earth to be an efficient producer like Germany.  I am sure the other planets will be lining up to buy all our goods and services in no time.

RSloane's picture

And Krugman wiill lead them!!

roccman's picture

can't have a proper kill off with UPWARD revisions...

buzzsaw99's picture

banker hubris will keep stock prices elevated

LMAOLORI's picture



The Fed will act just in time for obama's election after that KA BOOM


Is the Market Rally Just a Set-Up for a Bigger 'Collapse'?

spanish inquisition's picture

"You can almost watch the FED stimulus work its way through the system, get outsourced go to China and Mitts profits come back to ... no wait.. the profits are being offshored in Swissy land.. well at least we have some tax rev.... no? OK, no tax revenue either. Well at least we have a warm feeling in our stomachs from the glowing news reports on how things are consistently getting better....... Really?...Thats hunger?"

otto skorzeny's picture

who are you "quoting"? do you really blame anyone for moving $ overseas when half the country is on the govt dole(which is taxpayer labor/taxes)? I would if I could

JR's picture

Otto, you would if you could. But you can’t, unless you’re above the law and "too big to fail" or  to control. That’s the rub.

Quoting Prof. James Petra…

“James Henry, former chief economist at the prestigious consulting firm McKinsey & Company, has researched and documented tax evasion. He found that the super-wealthy and their families have as much as $32 trillion (USD) of hidden assets in offshore tax havens, representing up to $280 billion in lost income tax revenue! This study excluded such non-financial assets as real estate, precious metals, jewels, yachts, race horses, luxury vehicles and so on…. Multi-national corporations receive federal bailout funds and tax exemptions and then, in violation of publicized agreements with the government, relocate plants and jobs in Asia and Mexico …”

Money laundering, Libor, multi-billion dollar financial swindles involving the major banks, conned investors while the brokers pump and dump…and  not a single banker has gone to jail.”

As far as “moving,” the international bankers have reached too far for anyone to escape their grimy, blood stained fingers.  Europe is cracking, wars for resources and Israeli/American empire are flaring around the globe, a complicit China is offering her slave labor pool in exchange for the picked bones of America’s patent and manufacture base served up by the bankers for a price …

Seriously, Otto, where would you go? It looks to me as if we've no choice but to stay and advance the collapse of the Fed.

mirac's picture

And what if the said tax havens disappeared due to natural forces, like tsunamis and plate movements?  hmmmmm

spanish inquisition's picture

It was a joke! I do think it is funny that you are giving an out to evading taxes to the guy who wants to be president. All we gotta do is check some taxes. (Yes, I know Obama is withholding paperwork. I would also like to look at that.)

otto skorzeny's picture

why is this bad-then everyone can "beat" in upcoming quarters and it's all good. then J. Cramer can continue to jizz in his pants at the "beats"

Cognitive Dissonance's picture

Nothing to see here. Move along.

<cue the>

orangegeek's picture

More bullish news.

Mr_Wonderful's picture

Obviously the market will always be at a high when there is most need for distribution, e.g. 2000, 2008, 2012.

Hype Alert's picture

The problem is labor has been trimmed to the bone.  Keeping earnings up going forward will prove to be a more difficult task.

Meesohaawnee's picture

better trot out the warren and becky bathtub party.

otto skorzeny's picture

i think I'd rather bang Warren-she looks like an old hound dog

WestVillageIdiot's picture

Aren't you being kind of rough on old hound dogs?

disabledvet's picture

Phucking BRAWL baby!

Jlmadyson's picture

Hear that?

Sounds like a gigantic pop!

Quinvarius's picture

Come out economic dick!

Meesohaawnee's picture

yea.. and 94 pb crude is even more bullish! that says that more people are driving and spending and working right? CNBC told me so....

Jlmadyson's picture

Oh yes sir on to $150 we go.

Central planning has it all figured out.

roccman's picture
Oil shock - it's what's for lunch... "I estimate the time frame for the event to occur would be in the next 8-16 months).

Examining the data, one can discern a *statistical* Hubbert's Peak occurring at
about the line representing 2008-1/2, rising to + (6-7) mbd above the current
mean since 2002. The *statistical* curve would lag 3-6 mo behind the rise of
the actual curve. using *symmetry* arguments (physicist say this <g>) on the
way down, one would expect the *actual* curve to lag the *statistical* one by
3-6 months.

Thus, if one assumes the production level at 2004 to represent the "end of the
beginning", (2-1/2 years before the *statistical* peak), then an equivalent
(mirror image) point should occur 4-1/2 years after the same. This *beginning
of the end* (aka "cliff event") would, under this reasoning, HAVE to occur in
the year 2013, give or take a few months.

Note that, if one assumes that the "first leg down" was largely caused by
*political decisions* and not geology, an apparent *saving* (area between the
two curves) of crude oil occurred between the years 2005 and 2012 which
"enabled" the extending of the plateau a year or so beyond the one in which
production would otherwise have begun to *noticeably* plunge.

"Buckle your seat belts..." credit to poster on YH tech group.

azzhatter's picture

I turned on CNBC this morning to watch Meredith Whitney bitch slap that cub reporter Sorkin. Sorkin, as a child, said to Whitney "Don't you realize you scared people with your muni analysis?" Fucking hysterical TV.

FMR Bankster's picture

The whole thing with Meredith Whitney has been great. She comes out a couple of years ago and says watch out for muni credit issues, there are real long term budget issues and there will be defaults. When they don't begin to occur in the blink of an eye CNBC calls her to the table claiming she's wrong. Of course she never said it would happen next week. Now it's a couple of years later, we have Stockton, San Bernadino, Mammouth Lake, Compton, Jefferson county, Scanton, ect and the list is growing by the week. Plus there's really no way out as people will leave these cities and their underwater mortgages if there's massive tax increases.

chinaboy's picture

Topline expectation always too high. Stock price always too low. JPM (BAC) trading always win.

Meesohaawnee's picture

algos getting fired up. No red days are allowed 3 months before an election.. come on Ben. Rev em up

WestVillageIdiot's picture

Perhaps you don't remember the 3 months before that last election? 

WestVillageIdiot's picture

+1 if you coined the term "McCovery".

pleseus's picture

Markets are due to roll over.  Today could be the tippity top.

Yellowhoard's picture

Never underestimate the Feds ability to gun the market in an election year.

WestVillageIdiot's picture

What happened in 2008?  Was that because there was no incumbent on the ballot?

XtraBullish's picture

Replacement value of equities as denominated in USD's can only go higher when the Treasury/Fed is "PRINT" mode. Shorting USD's (or USD purchasing power) is a better bet than shorting the stuff that those USD's buy. Currency debasement is XtraBullish for common shares and I offer as case-in-point the example of Zimbabwe's stock market.

Meesohaawnee's picture

telling ya.. the worse the news the more the ramp up. gotta cover things up for obama. If we had good news.. Youd see a selloff.

Dareconomics's picture

The current retreat on analysts expectations looks a lot like 2001 line we observe from the chart in the ZH post

although it could get even uglier like 2008. Analysts will always be optimistic, because that is what sells stocks and pays their salaries. It is tough to get earnings right. First, you have to model the company and the sector, then make assumptions about the economic environment in which the company operates. Always take the reports with a grain of salt, but when they start revising estimates upward or downward en masse then pay attention.

Mr_Wonderful's picture

They would love to retest those twin May tops before taking a much needed 10-15% correction.

The market is seriously overbought.

cosmictrainwreck's picture

yeah... and seeing as how that double-top, in fact, predictably predicted a drop - they'll probably make damn sure that don't happen again, ergo paint a big fat single top, merging into a plateau... or whatever....?

You gotta hand it to those guys, they sure know how to paint; that June 1st forward chart you couldn;t have apinted more pretty that it shows..... higher highs & higher lows = "it's a BULL, ya'll!"