Friday, September 30, 2011
- Monthly SPX changes
- Succinct Summation of Week’s Events (9.30.11)
- Social Security Reform Bill Encourages Americans To Live Faster, Die Younger
- Google Analytics Goes Real Time
- FlowChart: NPR’s Top 100 Sci/Fi & Fantasy Books
- SOCIAL MEDIA REPORT: STATE OF THE MEDIA Q3 2011
- UoM Confidence, Chicago PMI
- Another Huge Earnings Miss Coming?
- Leading Economic Indicators: A U.S. Recession?
- From Darth Vader to Jesus
Posted: 30 Sep 2011 03:04 PM PDT
This is what the past 5 months have looked like in terms of Monthly S&P500 closes:
Hat tip @TBPInvictus
Posted: 30 Sep 2011 12:30 PM PDT
Posted: 30 Sep 2011 11:30 AM PDT
Posted: 30 Sep 2011 10:40 AM PDT
Those of you who use Google’s excellent free site analytics tool (aka Dashboard) will be thrilled to learn that the analytical software tool you us to analyzing past performance is now going to be real time:
That is pretty awesome. There are lots of tools that claim to measure traffic (Alexa, Compete, etc.) but they are mostly empty estimates. I will address this in a future post.
Bottom line is Google Analytics is free, its very very good, and its about to get a whole lot better — and real time to boot.
Posted: 30 Sep 2011 09:45 AM PDT
Posted: 30 Sep 2011 09:30 AM PDT
Posted: 30 Sep 2011 08:45 AM PDT
The final UoM Sept confidence figure was a better than expected 59.4, up from 57.8 in the preliminary report. Both Current Conditions and the Economic Outlook rose from early Sept but most of the gain since Aug was seen in Current Conditions. One year inflation expectations fell to 3.3% from 3.7%, the lowest since Dec, likely helped out by lower gasoline prices which have fallen to the lowest since March, 13.5% off the high of the year in May. The markets as seen think little about this better than expected number as it didn’t with the Chicago PMI because the evidence notwithstanding is that of a slowdown in economic activity around the world. The European response to Greece in Oct will help determine how quickly clarity can be brought to that region and corporate earnings beginning with AA on Oct 11th will quantify the profit impact and outlook that got all muddied up beginning in early August.
The Sept Chicago PMI was much better than expected at 60.4 vs the estimate of 55 and up from 56.5 in Aug. It’s the best since June as New Orders jumped to 65.3 from 56.9, the most since April. Backlogs though fell 4.2 pts to 45.5, the lowest since Oct ’09. Employment snapped back by 8.5 pts to a 4 month high. Prices Paid fell by 6.3 pts to a one month low. Inventories rose by almost 8 pts to back above 60. Bottom line, following negative reports from Philly, NY, Richmond and Dallas and a positive figure from KC, I can’t explain the bounce in Chicago and the market doesn’t seem to believe its sustainability either. I venture to say that the auto industry in the Midwest seeing normalcy after the Japanese supply issues in the Spring was likely an influence. The national ISM out on Monday will be the key focus anyway so as to reconcile the conflicting regional surveys and we’ll see if it can remain above 50 with the forecast being 50.4. The global economy is in the midst of a slowdown with the degree of weakness the only question now I believe.
Posted: 30 Sep 2011 08:30 AM PDT
The chart above shows S&P operating earnings (red line) and their 12-month forward forecasts shifted ahead 12 months to the month they are predicted to happen. The second chart shows the difference between the forecasts and actual releases. The shaded areas highlight official recessions.
Wall Street is one of the few places where practice does not make perfect. Notice that every subsequent recession sees larger earnings error rates than the previous recession.
During the 1990/1991 recession, top-down forecasters (strategists) were too optimistic by 10%. Bottom-up forecasters (adding up the 500 company forecasts) were too optimistic by 25%.
During the 2000/2001 recession, top-down forecasters were too optimistic by 25%. Bottom-up forecasters were too optimistic by 23%.
During the 2007/2009 "Great Recession", top-down forecasters were too optimistic by 39.6%. Bottom-up forecasters were too optimistic by 40%.
Also notice the difference between the top-down and bottom-up forecasts. Current strategists are getting significantly worse at predicting earnings than their 1980s and 1990s counterparts.
What Does This Mean?
If the economy goes into recession, earnings forecasts are not 10% to 12% too high. Instead they might be 20% to 40% too high. In other words,if the economy goes into recession, the earnings forecasts are horribly wrong. They might be so wrong that one can make the case that the market might be overvalued. We believe this is part of what is bothering the markets, the epiphany that the economy is much weaker than expected and a recession will blow a hole in earnings forecasts to the point that the market might not be cheap anymore.
Posted: 30 Sep 2011 07:49 AM PDT
Posted: 30 Sep 2011 07:33 AM PDT
Telling history via Pictograms:
Source: Brain Pickings, From Darth Vader to Jesus
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