Investors on Crack

Discussion in 'Economics' started by PAPA ROACH, Apr 30, 2009.

  1. It is unbelieveable to me how people base their trading/investing decisions on what they percieve as good news. What anyone finds bullish about the following article escapes me.

    "Job Cuts Avert Catastrophic Quarter as Profits Excel (Update3)
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    By Edmond Lococo and Scott Hamilton

    April 30 (Bloomberg) -- Corporate earnings worldwide haven’t been the disaster analysts predicted as companies from Ford Motor Co. to Siemens AG beat earnings estimates through job cuts, factory consolidations and a dose of lowered expectations.

    “It’s one of those things where you walk away from the car crash and think, ‘Well, that could’ve been a lot worse,’” said Andy Lynch, who helps manage about $5 billion at Schroder Investment Management Ltd. in London. “The first quarter is marginally less catastrophic than feared.”

    Some 215 members of the Standard & Poor’s 500 Stock Index have topped analysts’ estimates, or 70 percent of the 309 companies reporting so far. That’s more than the 62 percent for all of the previous quarter, Bloomberg data shows. In Europe’s Dow Jones Stoxx 600 Index, 56 percent of the 131 members reporting so far beat estimates, up from 37 percent.

    One reason is the low hurdle the companies set earlier this year by reducing forecasts, rather than any recovery from the deepest U.S. recession in a half-century, investors and analysts said. At the start of April, equity analysts estimated earnings among S&P 500 companies fell 37 percent in the first quarter. Six months earlier they had been calling for a 22 percent gain.

    “At the end of last year companies took a much more conservative stance,” said Michael Jaffe, the senior director of industrial research at Standard & Poor’s in New York. “They were being ultraconservative and looking at the worst-case scenario. That would give them an opportunity to beat estimates. They didn’t want to try and promise too much, which was probably a smart move.”

    Markets

    Stocks rallied today, aided in part by the stream of companies beating analysts’ estimates. Europe’s Dow Jones Stoxx 600 Index erased its loss for the year today with a 1.5 percent gain, capping a 13 percent jump for April, the best month on record. The S&P 500 rose 0.2 percent at 2:01 p.m. in New York. The MSCI Asia Pacific Index earlier climbed 3.3 percent.

    U.S. employers have eliminated about 5.1 million jobs since the slump began in December 2007 in an effort to cut costs. U.S. gross domestic product dropped at a 6.1 percent annual pace in the first quarter and a 6.3 percent rate in late 2008, the Commerce Department said yesterday. European unemployment reached 8.5 percent in February, the most in almost three years. "

    For full article- http://www.bloomberg.com/apps/news?pid=20601087&sid=a3fHcoDhtB4M&refer=worldwide
     
  2. More "green shoots" sprouting out of Obama's asshole.
     
  3. They can prop the markets up as long as they want. Eventually they will crash again.

    Until then, buy and let them walk it up.
     
  4. He and Bernanke must be big vegeterians!


     
  5. Analysts and companies forecasted worst case scenarios for Q1 2009. The stock market priced in those worst case scenarios which is why the markets plunged. Now that people realize the worst case scenarios are not materializing, the markets are rising to an appropriate level to reflect that.

    The rally might be overdone, or it might not, I'm not sure. But the fact of the matter is that the earnings and the economy are not as bad as everyone thought it might be at this time when the massive selloff happened in the fall.

    Things are bad no doubt, but not as bad as originally thought. Just my two cents.
     
  6. bevo96

    bevo96


    You would be correct if the "better than expected" profits were actually profits and not bullshit abuses of marked to market accounting and reporting taxpayer money as profits. I would love to have a company getting 40B in capital @ 0% interest and then loaning it back out at 5-6% collateralized. If you look at the oil and materials companies that didn't get any government help, their earnings suck balls. The "green shoots" are goverment manipulation of the economic and corporate data, not reality.
     
  7. LOL. I'm ashamed to be a registered Democrat! :)
     
  8. I think you're wrong...
    You are correct with regards to the banks but that's it. How do you explain the beats from companies such as RIMM, GD, LMT, and a slew of other companies who not only beat but blew the roof off of earnings in some cases. These are companies who have not received any money from the government and are not affected by any mark to market accounting rule changes.
     
  9. bevo96

    bevo96


    Beating earnings is not hard when you are beating median analyst estimates that have been reduced 50-75%. Its like saying Carl Lewis won the gold in the 100 at the Special Olympics.
     
  10. That's exactly my point. Analysts and even the companies themselves forecasted very very low numbers. The market then priced in those very very low numbers. Now the actual earnings are being released which are much higher than expected, which is why we are seeing this gorgeous rally the past 2 months.
     
    #10     Apr 30, 2009