Career News 24/7: The Big Picture

Friday, September 30, 2011

The Big Picture

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:

May	-1.35%
June	-1.83%
July	-2.15%
August	-5.68%
September	-7.18%
October	?

Hat tip @TBPInvictus

Succinct Summation of Week’s Events (9.30.11)

Posted: 30 Sep 2011 12:30 PM PDT

Positives:

1) Only a few more countries left to approve EFSF, moment of truth soon arriving for Greek bondholders past the debt exchange currently being done
2) Greece takes another step in getting next tranche with property tax hike
3) Chicago PMI surprises to upside likely led by auto sector
4) Final Sept UoM confidence rises almost 3 pts from depressed Aug level, one yr inflation expectations fall to lowest since Dec as gasoline prices drop to cheapest since Mar
5) Aug Durable Goods better than feared, core cap ex component up 1.1%
6) Initial Claims fall below 400k BUT seasonal adjustment issues make it faulty
7) Aug Pending Home Sales fall 1.2% but a touch less than estimated
8) Refi apps rise 11.2% to most since Nov
9) China HSBC final mfr’g index at 49.9, a bit better than preliminary reading of 49.4 and flat with Aug

Negatives:

1) Germans will fight tooth and nail a further leveraging of the EFSF
2) Greece hikes property taxes, step closer to economic ruin and bankruptcy
3) Euro zone Economic Confidence falls to lowest since Dec ’09
4) German IFO at lowest since Jan but slightly better than expected, Aug Retail Sales down 2.9% m/o/m
5) Shanghai index falls to lowest since July ’10
6) US New Home Sales fall to lowest since Feb
7) Within confidence data, those that said jobs were Hard to Get rose to most since 1983
8) REAL Income growth down .3% and REAL Spending flat in Aug
9) IR earnings guidance a canary in the old earnings mine?

Social Security Reform Bill Encourages Americans To Live Faster, Die Younger

Posted: 30 Sep 2011 11:30 AM PDT

The new law will remove restrictions on cigarettes, drugs, and alcohol as well as provide tax incentives for seniors who bungee jump off of cliffs.

Google Analytics Goes Real Time

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:

The web is getting faster, and not just the speed of the pages, but also the speed of change. Before, it was fine to build a website and modify it only when new products were launched. All of us avid Analytics users know that's just not good enough. We need to be constantly on the lookout for problems and opportunities.

Currently, Google Analytics does a great job analyzing past performance. Today we're very excited to bring real time data to Google Analytics with the launch of Google Analytics Real-Time: a set of new reports that show what's happening on your site as it happens.

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.

Source:
What's happening on your site right now?
September 29, 2011
http://analytics.blogspot.com/2011/09/whats-happening-on-your-site-right-now.html

FlowChart: NPR’s Top 100 Sci/Fi & Fantasy Books

Posted: 30 Sep 2011 09:45 AM PDT

Amusing look at NPR’s list:

click for ginormous flowchart

Hat tip Flowing Data

SOCIAL MEDIA REPORT: STATE OF THE MEDIA Q3 2011

Posted: 30 Sep 2011 09:30 AM PDT

Nielsen social-media-report-2011

View more presentations from ricardodepaula

UoM Confidence, Chicago PMI

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.

Another Huge Earnings Miss Coming?

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.

Source: Bianco Research