Why Intel Better Not Be Economic Bellwether This Time Around

For those who missed it earlier, Intel reported results that were just slightly better than expected, and yet the stock tumbled over 3% after hours. The reason is because despite a weak quarter which had been pre-guided down by the sellside community every so effectively, the semiconductor manufacturer saw even more weakness in Q4. Those who wish to read the details can do so here. For everyone else who is more of a visual learning bent, we present the following chart which shows the year-over-year change in Intel revenue, which shows that for the first time in 12 quarters, INTC reported a decline in annual revenue. Furthermore, there is virtually no question that Q4 will also see a revenue decline: the only question is whether it will be greater than Q3's 5.5% Y/Y drop.

Why is this notable? Because the last time Intel posted two, or even one, consecutive declines in Y/Y revenue, the recession was found to have already been in place for nearly a year, starting in December 2007.

Intel is held by many as the canarie in the coalmine of the ever so critical tech sector, which is also a proxy for high-margin electronics products, and from there marginal demand in the economy as a whole. One can hope that the central planners have this latest recessionary confirmation under control (and with China sternly refusing to join the easing party the conclusion so far is they absolutely do not), or else the market will find itself at such a disconnect between the synthetic, correlation driven and implied value from the ES and SPY relative to cash flow intrinsics that not even QE?+1 will be able to save the policy vehicle that is the market, let alone the economy.