• Sprott Money
    05/05/2016 - 06:02
    Why is a Deutsche Bank mouthpiece suggesting “negative retail deposit rates or perhaps wealth taxes”? The answer is to (supposedly) stimulate our economies.

GAAP

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Non-GAAP Earnings Are About To Plunge The Most Since 2009; As For GAAP Don' Even Ask...





The estimated earnings decline for Q1 2016 is -8.0%. If this is the final earnings decline for the quarter, it will mark the first time the index has seen four consecutive quarters of year-over-year declines in earnings since Q4 2008 through Q3 2009. It will also mark the largest year-over-year decline in earnings since Q3 2009 (-15.7%).

 
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The Most Painful Part Of The Short Squeeze May Be Yet To Come, JPM Warns





Does this mean the short squeeze - whether ordinary course of business or engineered by banks to push the price of both the S&P and oil higher so that energy companies can sell equity and repay secured bank loans (as we speculated last week) - is over? According to JPM, not just yet, even though by now the weakest hands have clearly tapped out. In fact, since there has been virtually no rotation into ETFs, the most brutal part of the squeeze may be just ahead. Here's why:

 
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Mitt Romney Is The Real Super-Fraud: Here's The Proof, Chapter And Verse





"...the GOP establishment’s putative “jobs” candidate from 2012 was never really a businessman at all. Willard M. Romney is no expert on shiny things on a hill. The country would be far better served if he would get his dimming light back under a bushel where it belongs."

 
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Earnings 'Optimism' Crashes To 7-Year Lows





As the gap between GAAP and non-GAAP converges (and not in a bullish way), BofA reports the earnings estimate revision ratio (ERR) fell for the sixth consecutive month, to 0.47 from 0.49 – its lowest level since April 2009. So despite the exuberant, we're going back to record highs, rally off the lows, the real mother's milk data suggests more than twice as many cuts vs. increases to earnings forecasts over the last three months... and it's not just Energy anymore.

 
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Herbalife Stocks Plummets After Company Admits Its New Member Data Was Cooked And Overinflated





Today, however, may be a time for some modest celebrations for perennial Herbalife bear Ackman, because moments ago, Herbalife released an 8-K with some of the most unprecedented data revisions we have seen in a long time, one explaining that the company's "Active New Members" data has been not only completely wrong but massively inflated in the past year. The culprit: "database scripting errors." One wonders if there was perhaps a person who created this database...

 
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US Stocks Are The Most Overbought In 12 Years





With GAAP valuations topping 22x, macro data weakening everywhere, and US equities at their most overbought since 2004, what could possibly go wrong?

 
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Why JPMorgan Refuses To Buy The Market





JPM's Mislav Matejka writes, "equities are down ytd, but notably the ’16 P/E is not much cheaper today than it was at the start of the year. In fact, for the US, the P/E multiple is currently higher than it was on 1st January, at 16.8x vs 16.6x then. For MSCI World, P/E is flattish vs Jan as the ’16 EPS has been revised lower by 5% so far ytd." JPM then adds why it refuses to buy the market: "Earnings rollover is the key headwind to buying the market outright over the medium term horizon."

 
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The Great Corporate Earnings Fraud





Corporate earnings reports for the fourth quarter are pretty much in the books. The deception, falsification, accounting manipulation, and propaganda utilized by mega-corporations and their compliant corporate media mouthpieces has been outrageously blatant. It reeks of desperation as the Wall Street shysters attempt to extract the last dollar from their muppet clients before this house of cards collapses.

 
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Workers At Tesla's Gigafactory Stage Mass Walk Out Protesting Out Of State Employees





All is not well in the non-GAAP paradise known as Tesla's Gigafactory, where labor tensions are suddenly running high.

 
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"Extreme Downside Leadership": Investech Shows Why This Is Just Another Bear Market Rally





"Extreme negative leadership readings of this duration generally only occur in bear markets", which in addition to the PBOC's panicked RRR cut overnight to halt the latest swoon in stocks, confirms that this is merely the latest bear market rally.

 
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The Three Charts That No Small Cap Asset Manager Wants You To See





A funny thing happens to an index's valuation when you choose not to entirely ignore the companies that have negative earnings (i.e. losses). Ever wondered what the P/E ratio of the Russell 2000 was given that it is full of companies where the 'E' is negative? The answer is simple - and ugly - as The Wall Street Journal exposes, the aggregate P/E of the Russell 2000 is over 200x which perhaps explains the gaping chasm between bond and equity valuations for this highly credit-sensitive cohort.

 
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Mind The Non-GAAP: Real S&P Earnings Are The Lowest Since 2010





If using I/B/E/S GAAP earnings, which exclude the barrage of pro-forma write offs, addbacks, "non-recurring items" and countless other "misleading numbers that can deceive investors", what one gets is a true shocker: instead of 118 in LTM EPS for the S&P 500 (shown in red in the chart below) the true, Warren Buffett-approved number (shown in blue in the chart bellow) is a paltry 91.5! This is also the lowest S&P500 GAAP earnings per share since 2010.

 
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"We Need Shed No Tears For The Capitalists" - Key Highlights From Buffett's 2015 Annual Letter





Earlier today Berkshire Hathaway released its 2015 annual report, which among other things includes Buffett's traditional annual observations and insights. Buffett brushes past last year’s disappointing stock performance, muses on the future of America while taking a swipe at Donald Trump, dwells on Berkshire’s ties to Brazilian PE firm 3G, talks about Berkshire’s big 2015 deal, defends manufactured-housing unit Clayton Homes, bashes inequality and capitalists (just not the crony kind), and concludes with a summary of the biggest risks facing America.

 
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Global Stocks, Oil Continue Streamrolling Shorts On Last Minute Hopes For G-20 Stimulus Announcement





With the conclusion of this weekend's G-20 unknown, and many still expecting a major stimulus, the squeeze will likely continue into the close of trading ahead of the  weekend when nobody will want to be caught short into what may end up being another global coordinated intervention to prop up markets. “With a lot of policy events coming there is a fair chance of more stimulus plans so the markets can squeeze higher,” said Benno Galliker, a trader at Luzerner Kantonalbank AG. "The big reversal shows that there is some expectation building up into those events."

 
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3 Things: Earnings Lies, Profits Slide, EBITDA Is Bulls**t





History is pretty clear. As long as earnings are deteriorating, you don’t want to be invested in stocks. As Charlie Munger once said: “I think that every time you see the word EBITDA, you should substitute the word ‘bullshit’ earnings.”

 
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