I’ve just got home after a fast West Coast trip, and its pretty amazing what passes for good news these days.  Beating dramatically lowered earnings forecasts on cost cutting and layoffs — rather than top line growth — seems to be the order of the day.

The irony is that the Wall Street analyst community overestimated earnings at the top of the cycle — pure extrapolation of trend to infinity. They seem to be doing thesame thing now, only extrapolating falling earnings to zero.

What that produces is not true upside surprises, but merely jumping over a dramatically lowered bar.

Then there is the straight out bad news:

Microsoft Profit Drops 29% as PC Slowdown Weighs on Revenue; Shares Slump
U.S. Stock Futures Fall on Microsoft, American Express, Amazon.com Results
Amazon.com Profit Drops 10% as Sales Fall Short of Estimates; Shares Slide
American Express Profit Drops as Recession Pressures Cardholder Payments

We have been lightening up into the rally, and are sitting on some cash. Regardless, I expect tomorrow will sting a little on the long positions.

In this environment, capital preservation is paramount .  .  .


UPDATE: July 24, 2009 5:32am

Futures say not so much sting aftert all . . .

Category: Earnings

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

92 Responses to “You Call These Good Earnings?”

  1. alfred e says:

    Employment is no longer a lagging indicator. DUH.

    You are correct to ponder the imponderable. Are you still in?

  2. Bill in SF says:

    Well, at least someone is having a good time!



    BR: Dude, that uis frickin hysterical

    That’s my Friday 4:00 post . . .

  3. alfred e says:

    I can recall a few years back pondering with friends exactly how it was the market got to 14,000 .

    There was no fundamental support, and my smart friends were searching for off-shore companies and markets.

    Well, hey, given the fundamentals and the market, why not take a shot at 14,000 again? How about next week?

  4. Mannwich says:

    Who needs earnings in this c@sino barely disguised as a market? Nobody’s investing anymore anyway. It’s all just numbers going up and down with no real meaning behind any of them, including our currency.

  5. swood says:

    I don’t get it. You have been 70-30 and 60-40 in equities and almost 100% of your posts are negative. Look at your blog entries and tell me I’m wrong. Yet you still remain positive on the market. And you have been right. Excuse me if I’m confused. So why don’t you quote some positive news headlines since apparently that’s what side you are on. Most of your listeners criticize Franklin 411. He seems to be about the only one who has been right. I still read comments from some of your audience who still think we are going to test the lows of March again. What a bunch of morons. I made this mistake a few years ago. I only read websites that told me that the world was ending so I stayed out of the market. Same thing here including TBP. I’ve been out of the market since Oct. I’ve always thought I was a rational thinker. Guess I was wrong. I’d like to get back in, but as sure as I do the market will tank again.


    BR: Heh heh — What does one thing have to do with another . . . ?

    There is a long lag between reality and its manifestation in the markets — look at how long the dot com nonsense took before investors realized that a 200 P/E (or no earnings at all) ultimately collapsed. That fall was 78% peak to trough. Ouch. But it was a after a 100% gain in 6 months.

    And a Housing boom based on giving money to people who cannot afford to pay it back MUST eventually collapse — but we had a boom that went on for 5 years.

    You can either say WTF and stay in cash, or you can try to ride the momentum (if your clients want that) to capture some upside.

    We do the latter, but our recognition of reality forces us to use very tight stop losses . . .

  6. bitplayer says:


    get back in!


  7. matt says:


    The stock market (c@sino) and the economy are separate. Barry mostly posts about the deteriorating economy. His stock picks tend to be more momentum/technical driven, as fundamentals have significantly detached from prices. That’s the difference between trading and investing and it’s what a good money manager does in this environment (aside from just telling the client to buy a CD for 2 years).

    @Bill in SF: I love it. Thanks for sharing.

  8. harold hecuba says:

    please i luv to be called a moron. i stick with my opinion that the market will make new lows possibly below 500 in the s+p. the only important news item to come out today was the UPS earnings and they were an abomination. furthermore here you have a CEO who does not sugarcoat and says there is no bottom in sight. trucking hauling continues to plummet as well. this is not the sign of any improvemnet in the economy (actually we don’t really have an economy) no economy is based on 70% consumer spending. earnings are pathetic and due to cost cutting and layoffs. now what does that mean for housing. well simply that more defaults and more foreclosures. housing bottom is no where in sight. stock market bottom is no where in sight. we don’t have a legitimate economy so i can’t say there really is a bottom. good luck braindead bulls.

  9. thetanman says:


    I’ve wondered about that myself. Research shows that, due to anchoring, bloggers like Karl Denninger, Mish Shedlock et al over the long haul are no better than a coin flip. They are entertaining, but they know their readers are anchoring like madmen, so that’s what they do. I guess if they changed and went positive half of their gloomeisters would go do something productive. I mowed the grass today, got in some incomprehensible posts, and am ready to grind some more bullshit tomorrow. I love this crap, save but for a few posts, you’ll lose money listening to other people. Anywhere.

  10. Moss says:

    Lets not forget UPS.
    49% drop in net. Guides lower. Stock goes up.

    No doubt the S&P was oversold at 666 but I think we are getting a little bit ahead or ourselves here.

  11. thetanman says:


    I’ve been investing/gambling for 12 years, and for my money the ERCI is worth following closely. Its real good at turns and usually goes positive early enough so even some one whos brain is 50% bong resin can make a little money every few years. That’s about it.

  12. Seattle Chill says:

    Back in March, practically everyone I knew was afraid a depression was already underway. Now, those same people are panic-buying houses and furiously pouring their paychecks into the stock market. If they spent this money instead on goods and services, it might actually help the economy recover. And yet policy makers point to the surging markets as evidence of a recovery. I don’t get it.

  13. Mike in Nola says:


    Some quotes from the UPS guidance:



    Earnings don’t matter at this point. MSM will latch onto something to hype. Heard a little of Marketplace on NPR just now. They had several people on proclaimng the end of the worst recession since the Great Depression. One actually said that. Guess he never read about how long it lasted.

  14. Groty says:


    You can find “smart” guys now predicting everything from “V” shaped recoveries (Michael Aronstein), to “W” shaped recoveries (Martin Feldstein and PIMCO), to “U or L” shaped (Gary Schilling).

    Go read Lakshman Achuthan’s post in the Think Tank of a few days ago. He and ECRI have a great track record and are bullish about an economic recovery (not sure about stocks).

    Goldman Sachs has 2010 S&P earnings at $75, while David Rosenberg thinks we will be in the $40s for a few years. Bill Miller says conditions are right for a rip roaring bull market. Lots of others don’t.

    Almost every “smart” technician said the market had formed a head and shoulders pattern and broke the neckline at ~875 a couple of weeks ago, They got short thinking we were headed to 850 or 825. Then Goldman blows out earnings on July 14 and they all ran to cover, helping to create this massive rally off of 875.

    You can find opinions from “smart” guys to support whatever view you want to form.

  15. wally says:

    Las Vegas has no fundamentals either, but look at all the people who ‘invest’ there. That’s the Wall Street reality these days: there is no fundamental investing taking place, just speculation. The big banks will circle-jerk some stocks around until they can put a nice upward graph on the news and suck Joe the Moron in because he thinks he is getting left in the dust, then they will take his retirement savings away from him. Again.

  16. In this environment, capital preservation is paramount . . .


  17. thetanman says:


    Research shows that markets often levitate on bad news. And can do so for extended periods ie in this case since the bottom in March. So a ramp like this on these shaky earnings is not some kind of magical event. I’ve learned that its not the news itself, but the reaction.

  18. thetanman says:

    One other thing. Most of us seem to think stocks going up on bad news is bearish. No. A thousand times no! Its in fact very, very bullish.

  19. Gavshire Hathaway says:


    But you’re missing the fact that our entire economy is a ponzi scheme built around an ever expanding bubble of credit. Demographic trends, lack of exports, poor economic fundamentals, global wage arbitrage, government corruption/meddling, distortions from malinvestment — everything points to a long decline in standard of living. Stay long — you may be correct. But only if we’re headed for hyperinflation. As a student of history I’ll take the other side of that bet.

  20. thetanman says:


    Thanks for your reply.

    History shows governments will blow bubbles until they can’t. Then next bubble is government debt and it is the mother of all bubbles. Check out Doug Noland at Prudent Bear for an explanation. This reflation so far is right on track with previous reflations. In the past I’ve doubted the FR, working in lockstep with the federal government, ability to blow bubbles: I doubt it no more. They’ve spent and backstopped $23T and people are surprised everything’s rising. WTF?

  21. JoWriter says:

    @ GavHath – not the *entire* economy. Granted some parts are Ponzi schemes – Social Security, banks, maybe insurance companies. But look around you – where I live in the Willamette Valley of Oregon, I am astounded by the huge numbers of new cars, existing and new home sales happening, people shopping and eating out… And our unemployment rate has been ranking around 2 nd or 3rd highest in the U.S.

    @ tanman – agree with most of your points. Call me paranoid or, heck, call me a conspiracy wingnut – but I think the market is going up due to manipulation because we have some very, very sick pension funds, including *union* pension funds. A rising market will help them out.

    Also, I’ve been 60-40 long throughout this nightmare. What else is a poor widow to do with her meagre holdings? Have moved toward 36-64 as the market has gone up. Not a single dividend has been cut and many have increased.

    Was it Sun Tzu who said, “Panic is the enemy?” No, wait. That was me.

  22. thetanman says:


    Bingo! Its being manipulated by $23T in guarantees and outright money printing. The market MUST go up or we are doomed. Never in the history of the World has it been more important for the stock market to rise. If it doesn’t we’ll go down in flames, so cheer for the ponzists. There is one more bubble after this one, the Asian consumer, then it’ll be curtains.

  23. momoso says:

    Cmon guys.

    Microsoft is a sinking ship. They would have performed terribly no matter what kind of economy or recovery or whatever. They simply no longer have a defensible monopoly in any area, and that’s the only way they can prevail because other than that they have no competitive advantages.

    And as far as Amex, out of every sector of the economy I would expect consumer credit cards to be doing the absolute worst. So again I don’t consider it a proxy for where we are on the business cycle.

  24. wally says:

    “Most of us seem to think stocks going up on bad news is bearish. No. A thousand times no! Its in fact very, very bullish.”

    It is an old phenomenon called ‘climbing a wall of worry’ and it has been around for a long time. It has to do with the mix of buyers who will move into such a market and the low volume. I don’t think of it as either bearish or bullish; it is just speculative hope. If future events turn out to be good, those who invested were brilliant. If it goes the other way, there were morons. Since that future can not now be know, only speculated upon, they have put down their money, made their choices and the wheel is still spinning. It is not in any respect different from speculating at a casino, complete with a house that profits off the transactions, not the result.

  25. alfred e says:

    @JoWriter: Oh pooh. What is a poor meager someone living off someone else’s contributions supposed to do?

    I’m sorry. I too live in the Willamette Valley. The Indians called it the valley of sickness.

    I’d say that’s a pretty good comment on our nation. You obviously moved here from someplace else and don’t need a job. Good for you.

    But don’t pretend to understand what’s going on.

    What’s the unemployment rate in Oregon? And how does it compare nationally? To like Michigan?

    Well yeah. Another Boomer that wants to say things were never better. Well hey, your stocks just jumped another 10%.

    So what if your neighbors are starving. You have a security system. And a cell phone.

    Do you also know Peter? Doubt it.

    Well yeah, panic is the enemy. Feeling pretty secure eh babe?

    Les Miserables.

    What’s your address again?

  26. Mike in Nola says:


    Shouldn’t let ant-Microsoft feelings color judgement.

    MSFT’s server and business divisions provide software for many of the big businesses in the US, each providing more the client division that provides desktop software on which 90% of the pc’s in the world run. It’s as good an indicator of what big business is doing as any. It’s really a reinforcement of the theme we’ve seen throughout earnings season: almost all of the upside earnings “surprises” were done by cost cutting, mostly layoffs and putting off purchases.

  27. Mike in Nola says:

    Here’s an offer I can refuse:

    News Corp.’s Miller Sees Charging for Content

  28. wunsacon says:

    >> Who needs earnings in this c@sino barely disguised as a market? Nobody’s investing anymore anyway.

    Hey Mannwich, let me say that in “Yogi Berra” form:
    “No one trades this market anymore — there’s too much contrived volume.”

  29. wunsacon says:

    Er, I shoulda said “invests”. (But, then again, I always suck at delivery…) Hello, “edit” feature here??

  30. greg says:

    Mike in Nola-

    I think you to say-”Almost all of the earnings “surprises” were done by cost cutting, mostly layoffs and putting off purchases, with of course the exception of Apple, who continues to astound us with its perfect execution at every level”. I mean I don’t mean to put words in your mouth, but I just sense you meant to say that.
    Hope everything is good in Nola.

  31. manhattanguy says:

    A few days ago we had some arguments pitting Apple against Microsoft. MS core products are under threat. Server OS can’t quite compete with Linux. Zune is a failure. Xbox sales still behind Nitendo and Playstation. They hardly break even on games sales. The new search engine they introduced Bing was popular for just one week. Bing? what? PC is the only market going for them. But that business will not provide them any incremental revenue as companies/customers take longer time to upgrade their computers (especially after Windows Vista nightmare).

    Apple is exceptional because of its creative product ideas and great execution. Microsoft on the other hand has not invented anything (except for Windows) and continues to copy and kill other’s business ideas. MS will experience a slow death as they continue to ride on someone’s coattail.

  32. momoso says:

    Mike in Nola:

    You got me, I’m no fan of MS. But to your point…

    Enterprise and server is a small share of revenues, and while performing, they have no prospects for growth. If anything quite the opposite: In a recession companies are forced to do more with less, which is a great driver for Open Source adoption. I remember after 911 ETrade made big news for switching their servers from Solaris on Sun to Linux on generic Intel boxes. Many companies dumped BEA for JBoss (free) and other low-cost alternatives.

    Meanwhile other large divisions such as gaming and mobile are consistent money losers.

    But of course it really comes down to their traditional cash cows: Windows and Office. And this is where their monopoly position has disappeared: Vista is being assaulted on two flanks: Apple on the high end, Linux (including Netbooks and Google OS) on the low (as in ‘free’) end. Windows 7 will be no different (it may have drastic improvements, but Snow Leopard will have even more).

    Meanwhile online docs from Google, Apple or Zoho have become excellent free options for home users and students, and are starting to take market share in business channels (we use Gdocs almost exclusively at my company now). Obviously they are not right for everyone, and some companies will still be using Excel 10 years from now because of specific features or workflows they have. But even if just 1 in 10 Office users switches away every year that will mean declining revenues.
    The wildcard: China. Bill Gates is a rockstar there. The Chinese government could very well announce a stimulus program in the tens of billions to put Chinese-made PCs in most schools, all running XP or some version of Vista.

  33. Simon says:

    In my opinion the latest rally is very much unlike previous rallies. I agree that a correction is certain but an off the cliff correction? That outcome is losing credibility. Now I might be the perfect contrary indicator but then again I might not. The chances may be exactly 50:50.

    However I am beginning to think that something has fundimentally changed. The change in my view is at the Fed. I am beginning to think that the smile on Bernanki’s face may have to do with things he knows and the rest of us don’t. After all we do not really know what he has been doing except in a general way do we?

    For example take the 500 Billion in currency swaps that the Fed has on it’s balance sheet. Where exactly did that money come from? The US was not exactly replete with liquidity at the time those facilities were arranged. OK there was a flood of money returning to the US in the “flight to safety” hence the need for the swaps.

    Anyway by making those swaps the Fed has demonstrated that without a doubt it is the central bank and lender of last resort to the entire world. Or at least potentially so, certainly with regard to the 14 nations that were the lucky recipients.

    The point of the swaps was to improve global liquidity. Is it possible that this and other actions have actually improved global solvency by currency debasement on a truly magnificent scale? Worth thinking about in view of supposedly irrational market action around the world. Is it possible that the market is actually being quite rational on this occasion. Is it possible that some sophisticated recipients of massive liquidity from the Fed are better informed about this process than the rest of us? Endless questions.

    Audit the fed.

  34. Kedar says:

    Traders Profit With Computers Set at High Speed


  35. Simon:
    That still doesn’t solve the problem of how the Fed unwinds its balance sheet.

  36. Mannwich says:

    Whaddya know, more borrowed “money” (I use that term loosely) to fund enemployment bene’s. Will the till run dry someday?


  37. Mike in Nola says:


    Don’t know that it astounds everyone. Fanbois are easy to astound :) I had actually changed my near term outlook on Apple a couple of weeks ago, since I saw that they would get to count the new iPhone sales this quarter.

    Apple’s advantage at the moment is that it doesn’t really sell to businesses, despite its pretensions in that regard. I think a lot of its earning this quarter were supplied by the huge subsidies ATT is giving on the iPhones. As this article points out, it’s not a computer company anymore, really more of a phone/mobile music company, which is a good place to be at the moment, esp. as margins on the macbooks are being pressured.


    Not saying they aren’t making plenty of money, just that it’s really a different sector and can’t be considered a business bellweather.

    BTW, don’t hang on to those calls too long. I’m sure you’ve seen enough to know that a falling market affects everyone. My puts are way out and am looking into getting more, although Google may be the better short with its higher P/E.

  38. Seattle Chill says:

    “Almost every “smart” technician said the market had formed a head and shoulders pattern”

    Funny, I never saw that. Maybe I’m just not that “smart.” I always look for volume confirmation with a H&S top, and I didn’t see that in the $SPX. In fact, volume has been for the most part fading all the way up.

    Now the TLT, *that* looked like a reverse H&S to me. But again, I’m not expert. Though it’s since broken neckline, it hasn’t come anywhere near making new lows. If folks were as convinced of imminent recovery as the equity markets suggest, shouldn’t the TLT be making new lows? One of the authors here at TPB recently opined that the long bond should be yielding somewhere North of 10%. I wonder what that would do to the housing recovery…

  39. Simon says:

    Maybe the Fed is less concerned about unwinding its balance sheet than it would like us to believe.

  40. Thor says:

    Mike – as a network admin I’m going to have to agree with Manhattanguy – We, as well as many other companies are increasingly ridding ourselves of MS on the server side in favor of Linux. Far more reliable, and nowhere near as much maintenance or security holes. This isn’t to say that MS can’t pull themselves out of this long decline – when I was starting out in the IT field in the mid 90′s there was very serious talk about Apple going under, who would have thought, 15 years later, that they would be where they are today . . .

  41. Thor says:

    Mike – Apple absolutely sells to businesses, I wouldn’t be employed right now otherwise, they just don’t sell to business the way MS does. Most movies, TV shows, and commercials you watch are created on Macs. 90% of all the advertising you see is created on a Mac – most graphics period, from labels, to banners, to packaging is all created on a Mac. I agree that they seem to be morphing into a Sony like company, but their computers sales are up, as is their total market share. I know it seems as though I’m a fanboi, but hey, I work with computers for a living, my opinions are based on personal experience, not any sort of rabid devotion to Apple.

    Simple easy question for those who care to answer though – for those of you who have moved over to Macs – would you ever go back to Windows? Is there anyone here at all who was on a Mac, didn’t like it, and went back to Windows?

  42. Mike in Nola says:


    Think you need to actually look at the earnings statement. The server division produced abotu 30% of the revenues, business division more. Gaming and entertainment are maybe 7-8%.

    You might enjoy this engadget podcast which starts with a critique of the alleged chrome os, and how it will further hurt linux if it ever actually comes to market, because it will produce even splintering of the very disorganized linux community.

    Have fun on the ubuntu forums :)

    The end of the podcast has some entertaining ideas on how Steve will explain the introduction of an iPhone with a physical keyboard. All in good fun. They actually talk about Apple’s wisdom in not getting involved in the low margin netbook market.

  43. Thor says:

    The Unix admin for the company I work with is actually an avid reader of this blog, maybe this will be the perfect opportunity for him to finally speak up ;-)

  44. KidDynamite says:

    Richard Bernstein wrote a nice piece today on earnings beats:


    key quote: “The primary catalyst behind the secular increase in positive earnings surprises has been the on-going development of more sophisticated investor relations techniques.”

    also, @ Swood – the key when reading blogs is to seek out those that advocate the position OPPOSITE yours. Unfortunately, natural tendency is to seek out CONFORMING views, which don’t educate you. I’m incredibly bearish. I’ve read the bull case – i’m fully aware of what it is – and it’s pretty much non-sensical to me. I find the bear case much more likely. That doesn’t mean it will happen right away – as we can see, the truth is fighting with the sentiment manipulation war that the press and the administration have undertaken. HOPE!

  45. Mike in Nola says:


    We are talking AAPL’s and oranges. Completely different focus. MSFT’s revenue comes largely from businesses. Apple’s comes largely from the iPhone/iPods. MSFT got more revenue from businesses alone than Apple’s entire revenues from all sources.

    BTW, the Lord of the Rings animation was done on linux.

  46. Mike in Nola says:

    Signing off for the night. Nite all.

  47. Thor says:

    Mike – you had me with Lord of The Rings (favorite movie). Note that I didn’t say most CGI was done on Macs (it’s not). But yes, I will concede your point on revenues. As I said earlier, I think Apple has pretty much turned into a Sony/Nokia hybrid.

  48. DiggidyDan says:

    Hmmmm. . . I don’t know how much more this rally can last. Must say I’m glad i read Livermore’s Confessions of a Stock Operator in this environment–Follow the path of the least resistance in trading terms, however follow broader terms in the long run. I sold several dogs and non yielding stocks and what was left of my crappy mutual funds I wanted to get out of before the crash in May, and I let my 30% longs run in reflation/recurring demand stocks, and stacked up cash for the last 3 months and am starting to get that “Oh crap” feeling like I missed out on the best buys in march at the devil’s bottom. . . which in the real world equates to bear capitulation, thus foretelling the soon top in this rally.

    I will put in some trailers on some of my longs soon, others are there for perpetuity to keep dividend income flowing. However, I still hold strong to my S&P drop to 474 beginning in October. I think 3Q earnings and Economy are going to be quite dismal and start the second drop (hunt for Red October part Deux as some have said). That tight a-hole feeling probably portends the reality. However, in the market I have found, as in reality, the insanity and stupidity of the mainstream and crowd mentality prevents the herd from slowing down as it approaches the cliff. Those that go against the herd get stampeded in the rush to the edge. Those that are the most exuberant plunge to their deaths first. Those who are cautious and at the back of the pack may be able to stop in time to avoid the plunge and survive to enjoy a new environment with less competition.

    Corroberating my bear view are the comments from my 401k newsletter i just got yesterday in the mail:
    Q. Doesn’t it make sense to get out of the stock market and return once it starts to recover?
    A. Whenever the stock and bond markets begin to recover, they could easily outperform the limited interest that a bank account, cd or money market account would earn. Unfortunately, it’s impossible to identify the best time to get in or out of the stock market. In hindsight, an ideal time to sell may have been around October 2007. By selling now and waiting until the market begins to rebound before buying again, you could easily miss some of the rebound, whenever that occurs.

    Also had a definition of deflation. haha. thus, second dip is likely to occur still, to bitch out the regular joe and 401k clients to ultimate non faith in the financial market whatsoever. . . question is if and when.

  49. dougc says:

    I heard somewhere that”markets can remain irrational longer than countertrend traders can remain solvent” I may not believe the rally but I am unwilling to bet against it.

  50. Dennis says:

    You cite bad earnings from American Express, despite AMEX ads running all over the site? Must be nice to be independently wealthy.


    BR: First, I do not consider myself wealthy (thats the top half of the top 1%).

    My income is based in large part on my reputation for being bluntly honest (being more right than wrong doesn’t hurt either). If I were to ignore the AMEX miss, if I were to risk the truthfulness rep, then the readers wouldn’t be here.

    Besides, I couldn’t live with being a corporate whore anyway . . .

  51. Mike in Nola says:


    Apple is doing a much better job of being Sony/Nokia than either of them is doing. Neither has come out with a hit product in a long time and neither has any real differentiation from the rest of the market.

  52. Mike in Nola says:

    Schumberer’s revenue dropped by over 20% y/y and slightly m/m. Earnings over 50% down y/y. Statement says:

    Schlumberger, the world’s largest oilfield services provider, reported a 57 percent drop in quarterly earnings on Friday and said revenue declines were slowing, but it did not expect any rebound in spending by its oil- and gas-producing customers this year.

    Yet stock is up over 2%.

  53. Mike in Nola says:

    UK GDP down .8% this quarter, twice what was expected. Market roaring over their.

  54. Mike in Nola says:


    Better get ready to cash out those calls.

    Cramer political rant on how tech is immune from the politburo in D.C. Mentions possibility of Apple going to 200. Partying like like it’s 1999.

  55. cvienne says:


    “This isn’t to say that MS can’t pull themselves out of this long decline – when I was starting out in the IT field in the mid 90’s there was very serious talk about Apple going under, who would have thought, 15 years later, that they would be where they are today . . .”

    yeah, a couple more Zunes and MS ought to be right back on top of the heap! :-)

  56. I am actually hoping for a mini-irrational climax to the upside so we can get a nice flush and readjustment to build on.

    Hope all is well in the north!

  57. cvienne says:



    FWIW – I have several corporate business accounts and from my experiences, by far AMEX is the best to do business with.

  58. franklin411 says:

    Where’s that guy that always posts “See you at S+P 150?” The bears set us up beautifully for this rally by overselling how bad things were and how bad they were going to get. It seems we’re not going to see US GDP go to 0, as one poster I could name has claimed it would.

    PS–I’m on free in flight internet…very nice!

  59. jc says:

    Analysts cut forecast earnings so much there are lots of upside surprises but looking across the landscape revs are off 15-20% at so many companies. It’s a lot easier to fudge quarterly earnings than revs!

    MSM has also been a team player picking the most favorable comparisons from the myriad of months RE sales and unemployment numbers that are reported.

    Unless this surge creates a wealth effect that drives up consumer spending then the crushing reality of high job losses will eventually pop this stock bubble.

  60. cvienne says:


    Franklin, since the start of the recession (December 2007), the economy has lost 6 million jobs (and “average hours worked” are at their lowest level in decades…When those jobs come back, we’ll all be happy as you…Actually, for myself, I’m pretty happy, but I feel bad for the struggles of many people…

    As far as the S&P is concerned…it could be 150, it could be 1,150…It has nothing to do (or I should say, “a lot less to do” with either politics, or fundamental reasoning than you might imagine)…

    This rally may continue (as some ‘technical’ factors can now give it a life of its own)…But understand something, when the music stops, there is going to be EVEN GREATER misery…

    Bottom line IMO, the higher we go THE MORE LIKELY we take out 666 to the downside eventually (not the other way around)…If everyone had been patient, we might have been able to muddle through without too much hurt, now it’s going to get UGLIER than before…

    What was “balance sheet” crisis is now going to become a FULL BLOWN crisis (thanks, in part, to the fact that Washington is treating this as business as usual)…

  61. Mark Down says:

    Earnings …. who needs stinking earnings! Stories will move this market the juicer the better the move upward!!!!

  62. cvienne says:


    …and before you waste your time trying to come up with FUNDAMENTAL REASONS for optimism, read the links to this post that BR gave

    - Microsoft = soft REVENUES
    - Amazon = sales fall short
    - AMEX = Cardholder payments pressured

    Translation: people aren’t BUYING things, and furthermore, they can’t pay for the things that they already bought…And we’re not talking REGIONALITY here…These companies represent an across the board panorama…Amazon is arguably the BEST retailer out there, and the easiest to shop with…

    So as you continue to scour the headlines for some “earnings beats” that you like to pepper this board with, consider that those earnings beats are result of COST CUTTING…It means workers are being fired, cut back on hours, and not buying new equipment (which, in turn, hurts other commerce)…

    That type of pattern (until it changes) WILL eventually take GDP down, maybe not to zero, but remember…when you factor GDP, IMPORT/EXPORT & GOVERNMENT SPENDING are components of that…They’re probably the only two things holding GDP fairly steady at the moment (giving silly people hope)…

  63. wally says:

    “Is there anyone here at all who was on a Mac, didn’t like it, and went back to Windows?”

    I’ve use Apple, Windows and Linus. Linux is where I am now. Apple does have excellent product design strengths, but their real secret is their target market. They don’t build products for people who have no money to spend.

  64. [...] Big Picture: Of the Dow closing above 9,000 yesterday, Barry Ritholz says, “It’s pretty amazing what passes for good news these [...]

  65. franklin411 says:

    Sorry, my flight is about to land and I spent the whole time shopping for, and buying, computer hardware for my two latest builds. So it would seem that at least one person out there is buying goods and services. Considering that the bears said that nobody would be buying anything anymore; that we’d all be feasting on cream of weed for breakfast; that unemployment would reach 100% and then go right through to 200%; and that man would return to a Hobbsean state of nature by Christmas, I’d say that’s a green shoot!

  66. cvienne says:


    OK amigo…

    There’s no way I can counter your buying enthusiasm…

    Spend away my friend, your President needs you to (or he’s going to look pretty silly in the end)…

  67. cvienne says:


    BTW…I thought I’d pass on these two articles to you to help you get a more “aggregate sense” of what awaits (outside of the local electronics store)…


    Happy Landings!

  68. rootless_cosmopolitan says:


    “Where’s that guy that always posts ‘See you at S+P 150?’ … It seems we’re not going to see US GDP go to 0, as one poster I could name ..”

    You are really good with constructing straw man arguments here like the one above. But you still haven’t answered some serious questions, e.g. what do you think how 375% total debt to GDP ratio (much higher than before and during the Great Depression) and still increasing, is going to play out in the future. Aren’t you at least a little bit concerned about this? Do you believe everything is fine or will be and the increasing mountain of debt from which world capitalism feeds will go away magically somehow? I don’t believe it will w/o any dramatic global convulsions/crisis compared to which the current recession has been nothing so far. I just don’t know when it will happen. This time might not be it yet so that the blind believers in capitalism won’t get their reality check yet.

    I doubt we will ever get any serious answer here from you with respect to these topics, though.


  69. Ben says:

    While it is easy to focus on the negatives, there are some positive things going on in the world believe it or not. For instance, the Brazil and Chinese economies (as the most obvious examples) are recovering nicely and their stock markets are not being driven by a cost cutting boom. Unemployment has started dropping in Brazil and retail sales are very positive there. Investment and retail sales are booming in China. This is what needed to happen for the world economy to become more balanced; namely consumption needed to increase in emerging markets and shrink in developed markets. That is the positive that most bloggers fail to grasp. Now if the U.S. can just allow the markets to work and find something it can export to these countries, things will get better. The risk is we interfere in the markets too much and promote further misallocations of capital through the bailouts and subsidies for housing, etc.

  70. cvienne says:


    …one more thing…

    Check out this link


    This explains how the recent “technical” breakout over 956 could achieve a life of it’s own…

    It is something VERY REAL that I’m considering right now…Even though I remain “bearish” on fundamentals…

    Anyway, a move higher (to areas reflected in that link), would only ‘solidify’ the idea that Washington (which is fully bought & paid for by bankers), remains asleep at the switch, and are sowing the seeds for further chaos…

    So as the S&P keeps rising, it would be “erroneous” to think of that as “signs of a recovery”…It more suggests “signs of desperation”…

    Obama and his pals own this one now…

  71. cvienne says:


    There are SERIOUS signs that the strength in China’s economy right now are only due to massive government stimulus that’s being funnelled in “speculative” ways…

    China is simply in the throes of creating it’s own “bubble” (like 1929, or the NASDAQ in the late 90′s)…

    Brazil is beneficiary of it’s commodity based economy (which is fueled by “dollar hedging” – and is probably due to unwind at the first sign of the next crisis)…

    Believe in the Brazil & China stories at your own risk…

  72. batmando says:

    thetanman at 7:57 pm
    “bloggers like Karl Denninger, Mish Shedlock et al over the long haul are no better than a coin flip”
    BR responded to Swood “our recognition of reality forces us to use very tight stop losses” as does Mish.
    Since 10/28/08, S&P up from 940 to 976 (yesterday’s high), ~ 4% up
    For the same period, I am up 34% with Mish’s Absolute Return.
    For the long haul…?
    August ’05 thru June ’09
    S&P, 1226 to 946 (June high), ~ 20% down
    Absolute Return ~ 60% up
    Better than a coin flip.

  73. I-Man says:

    What up with COF today?
    Any news to spark this squeeze? Or just a pivot reversal + pile on the shorts?

  74. [...] was pointed out last night by Bill in SF, some viewers are less than enthralled with Dennis’ [...]

  75. batmando says:

    Thor -
    First computer was an Apple IIe in ’87, but had to move to a PC when I went into tech writing in ’90s.
    Still on a PC at work, but in ’07 when my home PC went blue screen one too many times and then died, I picked up my MacBook. No way I’d consider a PC at home now. I do have Windows XP on a virtual PC on the Mac in case I need to operate in the PC world

  76. [...] pretty amazing what passes for good news these days,” FusionIQ CEO Barry Ritholtz writes at The Big Picture, noting many of the reported profits are based on cost-cutting and layoffs [...]

  77. Thor says:

    Rootless – where are you getting the 375% debt to GDP number?

  78. Thor says:

    Ben – I agree with Cvienne – Why would you believe for one second any economic numbers coming out of China? You think WE massage our numbers, what do you think the government in China is capable of? They are a disaster waiting to happen. I’ve been saying this for months, if I end up being wrong I’ll eat crow – but I’ll believe the “Chinese Miracle” when I see it.

  79. rootless_cosmopolitan says:

    Thor, for instance from here:


    Or, if you want the numbers directly from the Fed, look at their quarterly Flow of Funds Report that lists the total debt and the debt by sector as well as the GDP:



  80. Thor says:

    Rootless – thanks for that! I thought you were referring to the federal deficit rather than all outstanding debt (federal, corporate, consumer)

  81. batmando says:

    cvienne @ 10:34 am
    There are SERIOUS signs that the strength in China’s economy right now are only due to massive government stimulus that’s being funnelled in “speculative” ways…

    Agreed. Chinese banks pressured by the government to loan multi-billions to industry, but what are they doing with that money? The chief of the biggest aerospace firm said they have billions foisted upon them but have no projects of sufficient ROI potential to which to apply the loans.
    What is really happening within Chinese industry?

    Here’s just one data point:
    As previously reported, with no confirmed orders on the books, in June we went to 4 days a week here at a southwest Ohio ag product processing equipment manufacturer. This last Tuesday, the other boot dropped. Our president got off the phone with our manufacturing & distributing partner in China who reported that the government had called a halt to the previously approved project. Our only other previously scheduled order (for an Argentinian plant) is also in limbo. Neither order is expected to be re-considered for confirmation until at least January.
    The upshot? Our prez called two employee meetings: the first group (10 employees) was laid off indefinitely, the second (16 including management) will remain on 4 day weeks for now with 35% increase in health insurance premiums and tripling of deductibles. Effectivley a 50% reduction in workforce.

    Until the REAL economy starts manufacturing real things again, brown shoots, Franklin, brown shoots.

  82. Boots or Hearts says:

    BR @ 7:33 pm :

    Perfect response. so perfectlyto the point and well, correct.

  83. Ben says:

    China can keep up its lending for a long time – their banking system has much higher capital levels. Also, their consumers are much less levered. And I don’t believe what their government says, I believe what their companies are reporting, which is accelerating growth. I agree that Brazil is a beneficiary of China and the two are linked.

    Of course there’s this….


  84. ben22 says:

    cream of weed

    Hmmm, is that something they only sell in Cali Franklin. lol. That was a funny typo.

    Do others notice the higher level of bull posts on here the last two days, especially yesterday?? Gotta love seeing the bulls get all excited over something that could have been predicted back in February.

    Also, Eric Tyson, where are you? Please respond to my questions in the Financial Profits and Rising Debt Era thread where you decided to try to get people to read your article on Prechter. I wrote the last post there as I didn’t see your question to me until last night. I found many mistakes in your article that your readers should be aware of and I’m curious to hear your responses.

  85. ben22 says:


    I posed the OTB link for you in that other thread yesterday night. It’s worth a read if you still want it.

  86. I-Man says:

    @ CV:

    What say ye?

    I’ve been poring over some weekly, daily, and 15 min COF charts trying to ascertain what happened here today…

    Are there fibo’s in play here? Or just a plain jane pivot reversal?

    Thanks for the followthrough, btw, I’ve been keeping pretty quiet today. Just kind of lurking around. Have to admit that seeing the market reverse and trade higher today kind of frustrated me. But it is what it is. Back to the drawing board I suppose. I thought for sure that super rising wedge on the 60 min SPX charts was going to play out. Foiled again.

  87. I-Man says:

    Ahh… just checked the monthly chart…

    Aug 2002 and March 2003

  88. matt says:

    @Thor”Simple easy question for those who care to answer though – for those of you who have moved over to Macs – would you ever go back to Windows? Is there anyone here at all who was on a Mac, didn’t like it, and went back to Windows?”

    I have a newish iMac. My warranty runs out next April. The replacement will NOT be a Mac.

    As I’ve mentioned before, I don’t like OS X. The only thing that I do like about it is the fully operational CLI.

  89. matt says:

    PS: I should also mention that there is a decent GUI feature in OS X that I like: F9, F10, and F11 (default mappings).

    These are very nice features, but they are so important that I will get another Mac just to have them.

  90. schmoo says:

    “I’m shocked, shocked to find that gambling is going on in here!” — Captain Renault

    Pay no attention to these smarty pants bloggers.
    Just listen to our economy’s Baghdad Bob – Larry Kudlow.
    Or if that hurts too much, you can just turn the volume down and admire the money honeys.

    Viva CNBC!

  91. [...] Barry Ritholtz and Robert Reich believe investors should not be pleased with recent positive corporate earnings surprises. [...]