With global growth slowing, global trade tumbling, and earnings revisions falling rapidly, equity market outperformance has been (as we noted earlier) based on the Fed/ECB's largesse. The unanswered question is - how much is now priced in? Given recent 'stability' post-FOMC, it seems the follow-through is not there (especially if we look at sectoral performance) and based on David Rosenberg's estimate of Fed QE's impact on stocks, we think we know why. In the last three months, the S&P 500 has 'outperformed' the Fed balance sheet by around 220 points - which equates to a pricing-in of around 11 months of additional QEternity.
"I might even go back to my life of crime because of the JOBS Act--because it makes fraud too easy."
UPDATE: FB -17%, AMZN -0.5%, SBUX -5.3%
A quick run-down of this evening's catastrophe among the sweetheart hope stocks. From Facebook, Amazon, and Starbucks - not pretty. Top line misses, earnings misses, and outlook guides down... FB -13%, AMZN -2% (was -6%), SBUX (-6%). Via Bloomberg...
- *FACEBOOK 2Q COSTS/EXPENSES $1.93B MOSTLY ON SHR BASED COMP
- *FACEBOOK 2Q ADJ. EPS 12C, GAAP LOSS 8C-SHR
- *AMAZON.COM 2Q EPS 1C, EST. 3C
- *AMAZON.COM 2Q SALES $12.83B, EST. $12.90B
- *AMZN SEES 3Q NET SALES $12.9B-$14.3B, EST. $14.11B
- *STARBUCKS 3Q EPS 43C, EST. 45C; FORECAST CUT, SHARES FALL
- *STARBUCKS TARGETS FY13 EPS $2.04-$2.14, EST. $2.28
- *STARBUCKS SEES 4Q EPS 44C-45C, SAW 46C-48C, EST. 48C
But have no fear - Draghi and Bernanke have our backs... so why are all the CEOs cutting outlooks? Don't they 'believe'?
President Obama ruined my morning coffee
INTC missed the Q2 topline ($13.5 billion vs Exp. of $13.54 billion), even as it met bottom-line estimates of $0.54, but it is the company's forecast for 2012 that has caught traders off guard, because the technology company is merely the latest one to revise its outlook for the year lower. To wit: "Revenue up between 3 percent and 5 percent year over year, down from the prior expectation for high single-digit growth."
iTax Avoidance - Why In America There Is No Representation Without "Double Irish With A Dutch Sandwich" TaxationSubmitted by Tyler Durden on 04/29/2012 05:44 -0500
Back in October 2010 we presented an analysis by Bloomberg which showed not only that courtesy of not paying taxes at its statutory rate of 35% Google was adding about $100/share to its then stock price of $607/share, but just how this was executed. Now, it is the turn of Apple, with its $110 billion in cash, to fall under the spotlight, with an extended expose in the NYT titled "How Apple Sidesteps Billions in Taxes" in which we learn that, shockingly, if you are at a table with only corporations sitting to your left and right, then you are the only person in the room paying taxes. Why - because global corporate tax "avoidance" schemes are not only perfectly legal, but they are actively encouraged, and in some cases form the backbone of a sovereign's (ahem Ireland) economic and even domestic policy, which just happens to be front and center in virtually every global corporate org chart permitting virtually the entire elimination of cash taxation at the corporate level.
And the numbers are out:
- RESEARCH IN MOTION 4Q REV. $4.19B, EST. $4.51B
- RESEARCH IN MOTION 4Q ADJ. EPS 80C, EST. 81C
No more guidance:
- RIMM WONT' GIVE QUANTIVE VIEWS DUE TO LONG TERM FOCUS
But here is what the market will focus on:
- RESEARCH IN MOTION REVIEWING STRATEGIC OPPORTUNITIES
A warning by the SEC in mid-March 2011 regarding repo-to-maturity trades suggests otherwise.
And the real lesson, dear friends, is that the good old USA is a subprime nation
China is trying to tell you something, are you listening?
Benefitting from two diametrically opposed systems.
You're in a situation now where the rest of the world has increasingly lost confidence in the U.S. Dollar
Goldman not happy with with the fact that contrary to market expectations, the Amazon negative margin retail caterpillar keeps on refusing to transform into a beautiful apple. To wit: "Amazon reported 4Q11 results after the close. Despite upside to EPS versus consensus and consolidated segment operating income which came in materially above the Street, in our view the focus will be on the shortfall in revenue, which came in at $17.4bn versus consensus of $18.3bn. In fact, the 4Q2011 quarter marks the second consecutive quarter that Amazon has fallen short of the consensus revenue forecast. Along with a slowdown in growth in video games and consoles and an impact on certain sales due to the floods in Thailand, management also referenced the macro environment as a cause for the miss, with weakness in Europe called out in particular. As for its Kindle and Kindle Fire performance in 4Q2011, we estimate sales hit 10.6mn, below our forecast of 13.9mn units. That said, we believe the company hit our more important Kindle Fire unit forecast of 6mn, suggesting the Fire cannibalized sales of traditional e-readers. As for guidance, Amazon gave an outlook below consensus on all major metrics; revenue, GAAP operating income, and CSOI. As such, we are lowering our revenue forecast for the year by roughly $2bn to $63.6bn versus the Street prior to last night at $65.3bn, and our GAAP operating margin is being reduced to 0.3% for CY2012, versus consensus of 1.8%. On lower expected sales and higher expenses we are reducing our 2012/2013 GAAP EPS by 75%/40% to $0.36/$2.11 from $1.42/$3.57 versus consensus of $1.88/$3.75 prior to the call. On lower expected earnings we are reducing our 12-month price target to $182 from $190. At around $177 in the after market, Amazon is trading at 29X our 2012 non-GAAP EBITDA estimate of $2.57bn. Our price target is based on our equally weighted DCF, P/E, and EV/EBITDA analysis." Time for Amazon to make up for ever lower margins with even higher volume. Or something.
It seems self-evident. The government can debase the currency and thereby be able to pay off its astronomical debt in cheaper dollars. But as I will explain below, things don’t work that way. In order to use the debasement of paper currencies to repay the debt more easily, governments will need to issue and use the gold bond. The paper currencies will not survive too much longer. Most governments now owe as much or more than the annual GDPs of their nations (typically far more, under GAAP accounting). But the total liabilities in the system are much larger. The US dollar game is a check-kiting scheme. The Fed issues the dollar, which is its liability. The Fed buys the US Treasury bond, which is the asset to balance the liability. The only problem is that the bonds are payable only in the central bank’s paper scrip! Meanwhile, per Bretton Woods, the rest of the world’s central banks use the dollar as if it were gold. It is their reserve asset, and they pyramid credit in their local currencies on top of it. It is not a bug, but a feature, that debt in this system must grow exponentially. There is no ultimate extinguisher of debt. In reality, stripped of the fancy nomenclature and the abstraction of a monetary system, the picture is as simple as it is bleak. Normally, people produce more than they consume. They save. A frontier farmer in the 19th century, for example, would dedicate some work to clearing a new field, or building a smokehouse, or putting a wall around a pasture so he could add to his herd. But for the past several decades, people have been tricked by distorted price signals (including bond prices, i.e. interest rates) into consuming more than they produce. In any case, it is not possible to save in an irredeemable paper currency. Depositing money in a bank will just result in more buying of government bonds. Capital accumulation has long since turned to capital decumulation... I propose a simple step. The government should sell gold bonds. By this, I do not mean gold “backed” paper bonds. I mean bonds denominated in ounces of gold, which pay their coupon in ounces of gold and pay the principal amount in ounces of gold. Below, I explain how this will solve the three problems I described above.
GOOG, first on deck, swing, and a miss - Source
- GOOGLE 4Q ADJ. EPS $9.50, EST. $10.50
- GOOGLE 4Q REVENUE $10.58 BILLION, EST. $8.41
- GOOGLE 4Q COST-PER-CLICK DOWN ABOUT 8%
Beat on top line, miss on EPS - Margin Compression?
Next: MSFT - Source
- MICROSOFT 2Q REV. $20.89B, EST. $20.92B
- MICROSOFT 2Q EPS. $0.78, EST. $0.76
- MICROSOFT CORP BING U.S. MARKET SHARE, AT 15.1% UP 300 BPS Y/Y
- More layoffs: Microsoft is revising operating expense guidance downward to $28.5 billion to $28.9 billion for the full year ending June 30, 2012.
Beat on bottom, miss on top
Next: IBM - Source
- IBM 4Q REV. $29.49B, EST. $29.71B
- IBM 4Q OPER EPS: $4.71, EST. 4.62
- Full year 2012 Expectations: GAAP EPS of at least $14.16 and operating (non-GAAP) EPS of at least $14.85
Beat on bottom, miss on top
Next: INTC - Source
- INTEL 4Q REV. $13.89B, EST. $13.72B
- INTEL 4Q EPS 64C, EST. 61C
- INTEL SEES 1Q REV. $12.8B +/- $500M, EST. $12.76B
Beat on top and bottom.