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Tag Archives: Profits

8/6/21: This Recession Is Different: Corporate Profits Boom

Corporate profits guidance is booming. Which, one might think, is a good signal of recovery. But the recession that passed (or still passing, officially) has been abnormal by historical standards, shifting expectations for the recovery to a different level of 'bizarre'.Consider non-financial corporate profits through prior cycles: Chart 1 above shows non-financial corporate profits per 1 USD of official gross value added in the economy. In all past recessions, save for three, going into...

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Eugene Fama’s Efficient View of Stimulus Porn

The key word in the whole thing is “bias.” For a very long time, people working in and around the finance industry have sought to gain tremendous advantages. No explanation for the motive is required. Charts, waves, technical (sounding) analysis and so on. To many dispassionate observers there was always this sort of improper religious fervor to it rather than honest science. The first major figure who had sought to change all that was the unfortunate Louis Bachelier. While Eugene Fama has...

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Previous Employment Concerns Becoming An Ugly Reality

“Every financial crisis, market upheaval, major correction, recession, etc. all came from one thing – an exogenous event that was not forecast or expected. This is why bear markets are always vicious, brutal, devastating, and fast. It is the exogenous event, usually credit-related, which sucks the liquidity out of the market, causing prices to plunge. As prices fall, investors begin to panic-sell driving prices lower which forces more selling in the market until, ultimately, sellers are...

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Earnings Lies & Why Munger Says “EBITDA is Bull S***”

Earnings Worse Than You Think Just like the hit series “House Of Cards,” Wall Street earnings season has become rife with manipulation, deceit and obfuscation that could rival the dark corners of Washington, D.C. What is most fascinating is that so many individuals invest hard earned capital based on these manipulated numbers. The failure to understand the “quality” of earnings, rather than the “quantity,” has always led to disappointing outcomes at some point in the future.  As Drew...

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The Booming Depression

It is the inversion of the seventies. Four now five decades ago, the economy was caught in the grips of an inflationary condition it seemed unable to escape. It just went on and on, and while it was roaring officials up and down the spectrum assured us that they were doing their best, the only things that were able to be done (even idiotic Nixonian interference like wage and price controls). Toward the end, of course, we found out that just wasn’t true. The problem wasn’t so much embedded...

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Consistent Trade War Inconsistency Hides The Consistent Trend

You can see the pattern, a weathervane of sorts in its own right. Not for how the economy is actually going, mind you, more along the lines of how it is being perceived from the high-level perspective. The green light for “trade wars” in the first place was what Janet Yellen and Jay Powell had said about the economy. Because it was strong and accelerating, they said, the Trump administration gambled that such robust growth would insulate the US system from any fallout. Flush with confidence...

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The Fed & The Stability/Instability Paradox

“Only those that risk going too far can possibly find out how far one can go.” – T.S. Eliot Well, this certainly seems to be the path that the Federal Reserve, and global Central Banks, have decided take. Yesterday, the Fed lowered interest rates by a quarter-point and maintained their “dovish” stance but suggested they are open to “allowing the balance sheet to grow.” While this isn’t anything more than just stopping Q.T. entirely, the markets took this as a sign that Q.E. is just around the...

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Today’s Melt Up Triggers Tomorrow’s Melt Down

Since November of 2016, the NDX has soared by 72% and is poised to break the recent all-time high of 8027. Today, it seems that sentiment is shifting back to selling bonds and buying riskier equities with hyped estimates. FAANG stocks have fueled an ongoing rally, via stock buybacks, non – GAAP financial gimmicky, and promises of eventual profitability for many unicorn startups. Source: Stockcharts.com – 9/12/19 Sentiment has moved prices up as the market has suspended its...

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The August Jobs Report Confirms The Economy Is Slowing

After the monthly jobs report was released last week, I saw numerous people jumping on the unemployment rate as a measure of success, and in this particular case, Trump’s success as President. Unemployment November 2016: 4.7% Unemployment August 2019: 3.7% Argument solved. President Trump has been “Yuugely” successful at putting people to work as represented by a 1% decline in the unemployment rate since his election. But what about President Obama? Unemployment November 2008: 12.6%...

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Strongest Economy Ever? I Warned You About Negative Revisions

Over the last 18-months, there has been a continual drone of political punditry touting the success of “Trumponomics” as measured by various economic data points. Even the President himself has several times taken the opportunity to tweet about the “strongest economy ever.” But if it is the “strongest economy ever,” then why the need for aggressive rate cuts which are “emergency measures” to be utilized to offset recessionary conditions? What the Market wanted to hear from Jay Powell and...

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