Posts filed under “Blog Spotlight”

Blogger’s Take: Q4 Earnings

Welcome back to Blogger’s Take: Each week, we ask a timely and relevant question, and post a paragrpah or three from our pool of bloggers.

Today’s question is on Earnings: What might we expect from this Earnings season — good, bad, or indifferent?  Is this a particularly important Q, or is this merely another Quarter? Should we be looking for anything special?

Here’s the answers:

Discussions on earnings are always challenging, in that time frame plays an important role. In the longer term we have discussed the importance of currently record high profit margins have had
on robust earnings growth. The evolution of earnings over the long term will depend a great deal on how profit margins evolve. Over the short term, another issue springs to mind. For instance, how
the source of potential earnings growth is going to shift from once-hot sectors
like energy to other sectors. Tom Petruno in the Los
Angeles Times
discusses this mix shift, and Pui-Wing Tam in the Wall Street Journal focuses on heightened earnings expectations for the technology sector in 2007. If other sectors are not able to pick up the slack from the once-highflying energy sector, disappointing headline earnings numbers may be waiting. The bottom line seems to be that investors need to look behind the headline numbers to the sources of earnings in the New Year. Then again, isn’t that always the case?   

-Abnormal Returns

* * *

A good economy and in particular falling oil prices should help push earnings
higher.  I expect the earnings season to be a good one, but not one that has any
undue significance.  I think investors at the moment are going to pay more
attention to inflation indicators, consumer sentiment, and real estate price

Rob May

* * *

Do earnings for the Q4, 2006 matter to the market? I think we are fairly late in the stock market cycle. If this is correct I tend to take
that to mean that a good earnings season won°òt really help the market do any
better than it has been going for the last few months, meaning a good season
won’t accelerate gains. I do think that a bad earnings season has the ability to
trigger a normal 10% market correction.

If you read Barry’s site regularly you are in touch with the length of time since the last 10% correction and the last 2% single day decline.
The market will have both of these at some point again (even if we can’t time it
correctly) and earnings perceived as weak could be the catalyst.

Roger Nusbaum

* * *

I’m afraid I have some bad news to report—the profit party is coming to an end. Now I realize some of you may have missed it. Actually, if
you’re a worker, I’m pretty darn sure you missed it. But damn, what a party. Since
the third quarter of 2001, the economy has grown by 31% (in nominal terms). Not
bad. But corporate profits? Hold your hat. Up 132%. Now that’s growth! Corporate
profits now represent the largest share of the economy in over 50 years.

But all that’s coming to an end. A year ago, fourth-quarter profit growth was pegged at 15%. Not anymore. For the first time in 19
quarters, the operating earnings growth of the S&P 500 will come in below
10%. But promise me you won’t tell anyone on Planet
Wall Street. The Dow recently hit at a new all-time high (again) and I wouldn’t
want anything frightening it (facts, reality, etc.).

The picture is even bleaker than the surface is telling us. For example, insurance companies are experiencing out-sized
gains this year to thanks to a light-hurricane season combined heavy losses
last year from Katrina.

Lower energy prices are taking a toll on energy stocks. That sector is expected to report an earnings decline of
5.8%. The outlook is particular rough for the tech sector. Tech stocks are
looking at their second straight quarter of lower earnings. Plus, we’ve seen
profit warnings from once-shining stars like Advanced Micro Devices (AMD), Xilinx (XLNX) and Texas Instruments (TXN). Poor
Intel (INTC). That stock is basically where it was ten years ago (way back when Andy Grove was Time’s “Man of the Year”).

But all is not lost. Earnings growth may merely be leveling off instead of plunging into the abyss. Consider
that one-fourth of the S&P 500’s profits come from outside the U.S.  That’s a
big change from years past. Also, there are bright spots here and there. For
example, Guess (GES) just raised its fourth-quarter earnings forecast about 40% higher.

The good earnings are out there. You just have to look a little harder to find them.

-Eddy Elfenbein

* * *

Category: Blog Spotlight, Earnings

Blog Spotlight: Capital Chronicle

Category: Blog Spotlight

Blogger’s Take: Slowing Growth, or Inflation?

Category: Blog Spotlight

Blog Spotlight: Winter (Economic & Market) Watch

Another edition of our new series:  Blog Spotlight.

We put together a short list of excellent but somewhat overlooked
blog that deserves a greater audience. Expect to see a post from a
different featured blogger here every Thursday evening,
around 7pm.

Next up in our Blogger SpotlightRuss Winter’s Economic & Market) Watch. A brief background: Russ was a broker for major firms in the Pacific NW for fifteen years in the late 70s and 80s. Moved on to land development, and vintage apartment ownership. He is now semi-retired and a cashed out bear, hunkered down in the Portland, Oregon area, watching the world go around.


This week’s topic:  Understanding Consumer Ponzi Finance   

Ponzi’ finance units must increase outstanding debt in order to meet its financial obligations.”
-Hyman Minsky

Credit Suisse on a monthly basis puts out one of the most data filled reports in the biz on mortgage and consumer finance. A careful reading of the latest issue, enables one to piece together the nature of the American asset Bubble consumer financing Ponzi scheme. A look at the following chart on housing cash out refinancings, clearly illustrates Joe Soccer Mom’s (JSM) largely unrestrained ability (so far), to effectively service their old debts and continue spending, with new debt. That’s true even with the kind of extremely low levels of cash in the bank, that I pointed out in my blog on demand deposits, earlier this week.



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Category: Blog Spotlight

Blogger’s Take: The US Buck

Category: Blog Spotlight

Blog Spotlight: Mish’s Global Economic Trend Analysis

Another edition of our new series:  Blog Spotlight.

We put together a short list of excellent but somewhat overlooked
blog that deserves a greater audience. Expect to see a post from a
different featured blogger here every Tuesday and Thursday evening,
around 7pm.

Second up in our Blogger Spotlight:  Michael Shedlock and Mish’s Global Economic Trend Analysis.
Mike is one of the editors of The Survival Report, covering stocks and
the economy. He also writes for the Daily Reckoning, and co-edits
Whiskey & Gunpowder. He also runs stock boards on the Motley Fool,
Silicon Investor, and TheMarketTraders. He is an avid photographer,
when not writing about stocks or the economy, with over 80 magazine and
book covers to his credit.



A Mortgage Broker’s Synopsis

The following post is an email from Michael J. Dorff, a mortgage broker with Trans World Financial about the state of affairs in Orange County California. Monday evening I will have an update from Mike Morgan to share:

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Category: Blog Spotlight

Blogger’s Take: Holiday Retail Sales

Category: Blog Spotlight, Retail

Blog Spotlight: The Mess That Greenspan Made

For the next edition of our series Blogger Spotlight:  Tim Iacono and The Mess That Greenspan Made.
Tim is a software engineer in his mid-forties, living in Southern
California. He calls his blog is a "vain attempt to stave off a
mid-life crisis, and here’s hoping that it’s going to work."

This is part of our ongoing short list of excellent but somewhat overlooked
blogs that deserves a greater audience. Expect to see a post from a
different featured blogger here every Tuesday and Thursday evening,
around 7pm.


This is Tightening?

Much has been made of the "tightening" by central
banks around the world, particularly the multi-year "baby-step" therapy applied
to short-term interest rates here in the U.S.

treatment was just concluded a few months ago under the watchful eye of Fed
Chairman Ben Bernanke – the baby steps weren’t the new Fed Chief’s idea, but he
is saddled with what they have produced.

Having wondered what effect these rising rates have had on the creation of both
consumer debt and new money, the construction of a chart showing all three laid
together is a task that has sat near the top of the To Do list around here for
some time.

It can now be checked off.
Nearly all of this data is available at the Federal Reserve website. The only
part for which one has to look elsewhere is the last six months of M3 Money
Supply – the central bank stopped divulging this data earlier this

The latest M3 data is now available in reconstructed form at Now and Futures and John
Williams’ Shadow
Government Statistics

The trend is still up -

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Category: Blog Spotlight

Blogger’s Take: FOMC Minutes

Category: Blog Spotlight

Blog Spotlight: Economist’s View

For the next edition of our series, Blog Spotlight, we travel West to Mark Thoma at the University of Oregon for his  Economist’s View.

Mark Thoma is a member of the Economics Department at the University of Oregon. He joined the UO faculty in 1987. His research involves the effects that changes in monetary policy have on inflation, output, unemployment, interest rates and other macroeconomic variables, and he has conducted research in other areas, such as the relationship between the political party in power and macroeconomic outcomes. Mark blogs daily at Economist’s View.

This is part of our ongoing short list of excellent but somewhat overlooked
blogs that deserves a greater audience. Expect to see a post from a
different featured blogger here every Tuesday and Thursday evening,
around 7pm.


Today’s focus commentary looks at:  Worker Security, Social Insurance, and Protectionism

More on the decline in worker security:

US faces globalisation without safety net, by Alan Beattie, Commentary,
Financial Times
: If Americans are feeling ever more insecure about
inequality, jobs and globalisation, they are not alone. The concerns of the
"anxious middle" income earners are echoed across the Atlantic. But …
Americans have tended to display a much greater tolerance for the type of
economic dislocation that can accompany globalisation…

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Category: Blog Spotlight