Posts filed under “Earnings”
Torsten Sløk, Ph.D., Deutsche Bank Research:
We are experiencing a profit recession without an economic recession. This is not surprising given that the problems are very concentrated in the energy sector. Lower energy prices is bad for earnings in the energy sector and some of the industrial and materials sectors but good for the bottom line in all other sectors. In fact, the first chart below shows that despite oil prices having fallen for the past 15 months overall S&P500 profit margins are still trending higher as the profit losses in the energy sector are more than offset by increasing margins elsewhere, in particular in tech, healthcare, and consumer discretionary. Lower energy prices and a higher dollar are hurting certain parts of corporate America at the moment but with the China shock fading and the dollar and energy prices stabilizing it is becoming clearer that we are not about to enter an economic recession because the service sector – which makes up 85% of the US economy – is doing just fine, see the second chart below. Or put differently, to generate an economic recession we need a much more broad-based slowdown across companies and that is not what we are seeing and hearing in the anecdotes during this earnings season, including from Wal-Mart yesterday, which was a Wal-Mart specific story and not a consumer slowdown story (see also our WMT analyst Paul Trussel’s note on this).
Every now and then a remarkably bad idea springs to life. It gets debated, ridiculed and eventually discarded. In the marketplace of ideas, free and open debate help to determine which ideas are useful and which wind up in the rubbish heap. (John Stuart Mill was onto something). We tolerate reprehensible ideas because, ultimately, free…Read More
With the stock markets down almost (OMG!) 5 percent from their all-time highs, lots of folks are looking for signs that the bull is dying, if not dead. One of the more portentous omens is the recent decline and volatility of Apple’s stock. Or so it seems. For reasons too numerous to list here, Apple…Read More
I am pleased to introduce to Big Picture readers someone I have known and admired for many years: Bruce Bartlett worked for Congressmen Ron Paul and Jack Kemp, and in the Office of Policy Development in the Reagan White House, and at the Treasury Department for George H.W. Bush. He is now a political independent….Read More
Apple’s first-quarter earnings were blow-out numbers. Far beyond what anyone forecast, the figures show Apple arguably had the single-greatest quarterly performance in U.S. corporate history. A quick overview: Apple’s net profit of $18 billion is an astonishing gain of 38 percent over the already-huge $13.1 billion in the same quarter last year. (So much for…Read More
Markets were under intense pressure earlier today, with the Dow Jones Industrial Average down almost 400 points. Most indexes were down 2 percent or so around the globe before recovering some of the losses. As is often the case during big market swings, numerous narratives attempt to explain the causes of the market turmoil. Consider…Read More