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Sorry Bubblevision—Q1 Earnings Didn’t “Beat” But “Missed” By 15%
Conta Corner ^ | 05 June 2014 | Jeffrey P. Snider

Posted on 06/07/2014 7:51:49 AM PDT by Lorianne

Nearly all (97.5%) of the S&P 500 companies have reported for the first quarter. EPS for the index companies stumbled rather spectacularly, though weather is being blamed for nearly all of it. Back on January 23, index EPS in Q1 was expected at around $29.40 (as reported). As of the latest update, EPS is only at $24.79, a 15% miss in just over four months. That means such massive over-optimism wasn’t just reserved for the retail industry. And it wasn’t just GDP that took “everyone” by surprise.

I think the major part of the problem is that the current state of business and the economy actually looks caught in between what would be considered “normal” growth and function and recession. As such, there are elements of both incorporated that muddy and muddle analysis, at least on the surface.

http://www.alhambrapartners.com/2014/05/28/the-next-fed-chief/

(Excerpt) Read more at davidstockmanscontracorner.com ...


TOPICS: Business/Economy
KEYWORDS:

1 posted on 06/07/2014 7:51:49 AM PDT by Lorianne
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To: Lorianne

2 posted on 06/07/2014 7:52:28 AM PDT by Lorianne (fedgov, taxporkmoney)
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To: Lorianne

Life sure was easier in the old days when we didn’t HAVE weather.


3 posted on 06/07/2014 7:56:07 AM PDT by fhayek
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To: fhayek

With an abundant flow of cheap money made available to businesses courtesy of a money-printing Fed through endless QE, a lot of companies have been buying back their own shares. This, of course, helps to improve their EPS (as earnings are divided by an ever decreasing number of shares).

If you remove the beneficial accounting effects of these share buybacks from the reported Q1 EPS for the S&P 500 the overall EPS figure would be even lower.


4 posted on 06/07/2014 8:06:44 AM PDT by Starboard
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To: fhayek

Excellent piece but theres one over riding consideration that seems to always be over looked in these sort of articles. Inflows. Every month, every day, funds are going into markets. Its inescapable. Between IRA’s and pensions both in the public and private sector the game is simply rigged that way. Any fund manager,and individual making these choices has the option of bonds or stocks. Bond yields,not returns over the past few years but yields, are at levels where they can never bring about the returns needed to fund a retirement. This is about math.


5 posted on 06/07/2014 8:26:25 AM PDT by wiggen (The teacher card. When the racism card just won't work.)
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To: wiggen

Also, there are lots of buyers gravitating towards dividend paying stocks for their higher yields who are . As long as interest rates remain low, there will be demand for such stocks.


6 posted on 06/07/2014 9:27:38 AM PDT by Starboard
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To: Starboard

those stocks don’t really move averages. Indexes like the utility index.


7 posted on 06/07/2014 10:00:39 AM PDT by wiggen (The teacher card. When the racism card just won't work.)
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To: wiggen

“those stocks don’t really move averages.”

*************

Not sure what you are getting at. I never said anything about “averages” nor made any suggestions relative to this. That is another topic altogether. I was responding to your comment in regards to “Inflows. Every month, every day, funds are going into markets. Its inescapable.” I don’t believe you mentioned averages either.


8 posted on 06/07/2014 10:08:15 AM PDT by Starboard
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To: Starboard

the article is about averages. averages reflect valuations. earnings multiples reflect valuations.even with little wage inflation there are too many dollars (and other currencies) chasing stocks.


9 posted on 06/07/2014 11:02:38 AM PDT by wiggen (The teacher card. When the racism card just won't work.)
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To: wiggen

“even with little wage inflation there are too many dollars (and other currencies) chasing stocks”

*************
Agree, and “chasing” is exactly the right word. Fed policy has severely distored the market IMO.


10 posted on 06/08/2014 6:31:46 AM PDT by Starboard
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To: wiggen

“distored”

**********
Typo alert. Make that “distorted”.


11 posted on 06/08/2014 6:33:11 AM PDT by Starboard
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