Weather or no weather, even the sell-side's most exuberant hope-mongers appear to be losing faith in 'revisions', 'double-seasonals', or 'rebounds' saving the US economy...
Who could have predicted this? Wall Street's consensus crowd of perennial optimists have taken the machete out to Q2 GDP growth expectations (just as they had to when Q1 showed them all for the worse weather forecasters ever). The tumble in Q2 expectations brings Wall Street once again, closer to where The Atlanta Fed's GDPNow model forecast is... a mere 0.7% growth... and drags total 2015 growth well below trend.
Some folks have been dumpingglobal bonds again today (after disappointing retail sales in the US). But, can we just put the recent bump in interest rates into some perspective? Will the "bond bull" market eventually come to an end? Yes, eventually. However, the catalysts needed to create the type of economic growth required to drive interest rates substantially higher, as we saw previous to the 1960-70's, are simply not available today. This will likely be the case for many years to come as the Fed, and the administration, come to the inevitable conclusion that we are now caught within a "liquidity trap" along with the bulk of developed countries.
While Crude and Copper get all the glory, the fact is, as we have detailed previously, Lumber prices are the most correlated with economic activity (ISM and GDP) of all industrial commodities. That is quickly becoming a major problem for the "Q1 was weather and now we get the epic bounceback" narrative writers.
We suspect, given the plethora of newly-minted immodest gurus in the investment world, the following "memory" of the 2010 flash-crash - from a seasoned modest trader - will be repeated many times as 2015 progresses.
We have never, ever, seen a larger divergence between long-term earnings growth expectations and equity valuations...
Numerous data points are showing the economy is approaching if not already in recession. And yet stocks are pricing in economic perfection. By the time they catch on… we’ll see a serious market correction.
Japanese stocks and USDJPY are back below the lows of the US day-session following The Bank of Japan's decision not to stimulate further (despite all the collapsing economic evidence one might need to do such a thing). Investors were clearly hoping for moar (even if economists weren't). With GDP expectations collapsing, BoJ still voted 8-1 not to increase QQE keeping monetary base growth expectations flat. The result is a 500 point drop in The Nikkei from this morning's highs and around 1 handle drop in USDJPY... for now.
"Twitter has likely the greatest array of company-specific catalysts of any company in its sphere this year, including Periscope, core monthly active user (MAU) acceleration from the Google partnership, and new core features like embedded video.... building out the "tail" should allow Twitter to grow well-above average over the next several years. With a global ad load between 1% to 2% and 85% from mobile, we think TWTR has more revenue runway than any other company in the Internet space. Our target is $55."
Well, the leak (which ironically came out on Twitter only, and not Facebook) was right, and the full story is even worse than Selerity reported:TWITTER 1Q LOSS PER SHARE 25C; TWITTER INC 1Q ADJ. EPS 7C , EST. 4C.
That much we knew. Here is where it gets worse:
- TWITTER 1Q REV. $ 435.9M, EST. $456.2M
- TWITTER SEES 2Q REV. $470M TO $485M, EST. $538.1M
- TWTR SEES YR REV $2.170B-$2.270B, SAW $2.3B-$2.35B, EST $2.37B
And now perhaps someone will ask how much of Facebook's 1.4 billion "users" are actually real.
Presented with one comment... Di(e)Vergence?
With lumber prices plunging to fresh 3 year lows, the divergence between homebuilders and the most economically-sensitive commodity is starting to suggest a rather scary case of deja vu all over again.
"Service has been fully restored. We experienced a combination of hardware and software failures in the network, which caused an excessive volume of network traffic. This led to customer disconnections as a result of the machines being overwhelmed. We discovered the root cause quickly, isolated the faulty hardware, and restarted the software. We are reviewing our multiple redundant systems, which failed to prevent this disruption."
The past six years have transformed my disposition toward the markets from excitement to frustration to despair to disillusionment to sheer tedium.