With "safety" stocks at all-time record high valuations and the energy sector trading at over 100x forward earnings expectations, it should apready be clear that a Christmas miracle is what equity bulls are hoping. However, as the following two charts expose all too well, the voyage to the hoped-for hockey-stick in earnings - you know the one that is predicted to occur every time mother's milk dries up - is rapidly falling down and to the right... This will not end well.
Shortly after the close today, Apple will report its much watched earnings which will be closely watched for several reasons. The biggest one is that since Q1 2014 AAPL has contributed 25% of the S&P’s 4.2% growth rate (excluding the EPS benefit of the company's massive buyback program). Furthermore, roughly 40% of the nearly 9% jump in Tech margins since 2009 is attributable to Apple alone. However, that was all in the past: this quarter Apple is actually forecast to subtract 0.7% from the S&P's bottom line.
Unfortunately, when central-planners "drag forward" future consumption today, you leave a "void" in the future that must be filled. That future "void" continues to expand each time activity is dragged forward until, inevitably, it can not be filled. This is currently being witnessed in the overall data trends as seen in the deterioration in corporate earnings and revenues. The only question is whether Central Banks can continue to support asset prices long enough for the economic cycle to catch up. Historically, such is a feat that has never been accomplished.
Something big happened in the gold market. It was a stunning trend change in mainstream gold demand during the first quarter of the year.
Don't expect any optimistic emails from Tim Cook to Jim Cramer for a long time, because according to a just released report in Japan's Nikkei, Apple will continue its reduced production of iPhones in the April-June period in light of sluggish sales, according to parts suppliers notified of the plan. The website reports that slow sales of the flagship iPhone 6s and iPhone 6s Plus, which debuted last autumn, have forced Apple to adjust inventories. It lowered production for the January-March quarter by about 30% from the year-earlier period. With sales still sluggish, the U.S. company has told parts suppliers in Japan and elsewhere that it will maintain the reduced output level in the current quarter.
Finance Professor Invests In Jim Cramer's "Buy Right Now" Portfolio, Loses Money On 67% Of Stock PicksSubmitted by Tyler Durden on 04/12/2016 17:54 -0400
In case you've ever wondered what happens one year later after following Cramer's stock-picking advice, here is the answer.
The US Dollar Index is sitting at 94.62, just above a critical support zone at 93-94. Meanwhile, the Trade-Weighted Dollar Index has pulled back ~3.4% from its high on Jan20’16. It is hard to tell that long USD is a consensus trade because investors have lost their conviction.
Caution is called for because of Fed’s limited ability to reduce policy rate, Federal Reserve Bank of New York President William Dudley says, Dudley comments in text of speech in Bridgeport, CT. “Although the downside risks have diminished since earlier in the year, I still judge the balance of risks to my inflation and growth outlooks to be tilted slightly to the downside”
The most important aspect of the US economy - consumption - appears to face a headwind as despite "awesome" jobs data, exuberant Manufacturing surveys, and talking heads fighting each other to come up with the most superlative superlatives for the US economy, UMIch exposes the fact that income growth expectations for Americans (the ones that are throwing their support behind Trump and Sanders) continues to slide.
In Q1 2007, the so-called "godfather" of technical analysis Ralph Acampora told a 'Goldilocks'-prone Larry Kudlow on CNBC that "I'm bullish, but I don't think I am bullish enough...there's new leadership." That call turned out to be very close to top-ticking the market before it's collapse. Fast-forward nine years and Ralph is back, proclaiming that Yellen has "lit a fire under the stock market... and the correction is over." Trade accordingly...
And so the confusion remains: why did Yellen go uber dove three days ahead of a day in which the BLS reported that in March not only were 215K jobs created, more than the consensus 205K, if below last month's 245K, but in which average hourly earnings rebounded a solid 0.3%, above the 0.2% expected, and well above last month's -0.1% decline.
"Stock whisperer" Janet Yellen has a major problem. Despite the world's central banks' coordinated easing-driven surge in stocks off the mid-Feb lows, consumer comfort in America has collapsed to its lowest since Dec 2015. The "wealth creation" engine is not transmitting to animal spirits and exuberance among average joes... despite Jim Cramer's exposition that "Yellen is speaking for the common person."
In response to what seemed like a rather stunning statement by CNBC entertainer Jim Cramer that "Fed Chief Yellen is speaking for the common person," we thought the following simple chart might provide some useful food for thought when considering everything that escapes his mouth...
To now dismiss Fed policy causation as “correlation theory” is laughable. The markets are now so intertwined and Fed dependent the observation of whether correlation is causality has been rendered moot. Without the Fed – there is no market. That’s now a proven fact. Period.