Posts filed under “Cycles”
One of the knocks on last year’s earnings was that it was cost cutting was driving profitibility — not organic revenue growth. The recovery could not turn into an expansion, we were told, without solid revenue gains. Earnings may have surpassed Wall Street expectations for seven straight quarters, but sales have trailed forecasts since 2008. And there is only so far you can “cut your way to prosperity.”
Which makes the latest S&P500 sales data encouraging: “More U.S. companies are exceeding sales forecasts than any time in four years, helping extend the biggest stock-market rally since 1936.”
In Q4 2010, 71% of Standard & Poor’s 500 companies are reporting more revenue than analysts estimated. This is the largest proportion since 2006. Sales beat projections by an average 2.2% — the most in two years.
And the forecasts are even stronger. Here’s Bloomie:
“Total revenue for S&P 500 companies may rise 7.5 percent this year, the most since 2007, to an all-time high of $1,017.44 a share, according to analyst estimates compiled through Feb. 6 by Bloomberg. Sales fell 13 percent between November 2008 and October 2009 as the worst U.S. recession since the 1930s forced businesses and consumers to cut back on spending . . .Since the start of the third quarter of 2008, when Lehman Brothers Holdings Inc. filed the largest bankruptcy in U.S. history, sales for S&P 500 companies have missed estimates by an average of 0.1 percent, while earnings have surpassed forecasts by 2.9 percent, data compiled by Bloomberg show. The fourth quarter was the first time since 2008 that the average sales surprise reached 2 percent, the data show.”
One caveat: Analysts tend to extrapolate out to infinity. AT tops they are too bullish, at bottoms they are too bearish. Hence, there forecasts catching up to reality is not always cause for celebration.
Still, the actual sales is a data point that the cyclical analysts have been forecasting. The cycles seem to be still painting the broad overview more accurately than anything else . . .
S&P 500 Beating Estimates for Sales by Most Since 2006
Whitney Kisling and Lynn Thomasson
Bloomberg, Feb. 7 2011
Is it Really Different this Time? A Cyclical Perspective Is it Really Different this Time? A Cyclical Perspective
> Lakshman Achuthan discusses ECRI. He is not an economist. But all he hass done for 20 years is study recessions and recoveries. At ECRI, they make economic forecasts based on our leading indexes, none of it is based on the regressions, correlations or econometric models that drive most of the forecasts you hear about….Read More
I frequently discuss the 1966-1982 market cycle, with its cyclical bull and bear markets within the broader context of a longer secular bear market.
Ron Griess (of The Chart Store) has taken it this a step further, looking at ALL of the longer secular markets going back to 1927, including the cyclical markets occurring within those broader cycles.
Its fascinating stuff:
Awesome chartporn from the Atlantic showing the changes in the US wrought by the credit crisis and Great Recession: > click for truly ginormous chart > Source: What a difference two years makes Timothy Lavin January February 2011 http://www.theatlantic.com/magazine/archive/2011/01/how-the-recession-changed-us/8347/
We’ve taken many longer term looks at the markets (See, for example, this, this, this or this) but the following chart from UBS Technical Analyst Peter Lee really tickled my fancy: > click for larger graphic > Source: 2011 Technical Market Outlook Peter Lee – Chief Technical Strategist Wealth Management Research December 2010
The National Federation of Independent Business (NFIB) released its Small Business Economic Trends Report (SBET) [.pdf], and the news was an improvement over the prior month: The National Federation of Independent Business Index of Small Business Optimism rose 1.5 points in November rising to 93.2, the highest reading since December 2007, and the fourth consecutive…Read More
The Fed released its report on consumer credit, and it comes as no surprise that revolving credit eased for the 26th consecutive month as consumers continue to shed credit — either by paying it down or, in some cases, walking away from it. From a high of $973.6 billion in August 2008, revolving credit has…Read More
The Bureau of Labor Statistics just released its most recent Job Openings and Labor Turnover (JOLTS) data, and the number of job openings increased to 3.4 million (from 3.0 million last month; it was a gain of +351k openings, to be precise). Consequently, the number of unemployed per job opening has declined from 6.25 (Oct. 2009,…Read More
I have been a fan of Felix Zulauf’s approach to investing for many years. The longstanding Barron’s roundtable member is a straight shooter, with a superlative track record. That was why I was thrilled to do an extensive interview with this Summer (Interview, Transcript). Felix is advising on a new fund (Disclosure: We are investors…Read More
Gordon Long has an interesting graphic on what he describes as the New Economic Cycle. > > Quite fascinating . . . > Source: We’ll Need The Courage Of Our Forefathers The New Economic Cycle Gordon T. Long The Automatic Earth, November 8 2010 http://theautomaticearth.blogspot.com/2010/11/november-8-2010-well-need-courage-of.html