S&P 500 Profit Flips Negative for Q3

This slipped by quietly last week:

Standard & Poor’s U.S. corporate earnings projections for Q3 has slipped from prior levels, and are now negative for the quarter. Earnings for the S&P 500 companies are expected to decline 2.5%. Lackluster results, especially from Consumer and Finance companies, led to this outcome.

On a year-over-year basis, the S&P 500 earnings declined 8.48% from Q3 2006, marking the first such negative quarter since 2001 (-24.2%). As recently as October, the consensus estimates were for a gain of 3.3%. Quarterly revenue is forecast to fall even further — a decline of 4.1%.

Q4 numbers have also been scrubbed lower — though not quite as thoroughly as Q3. Its almost as if the analysts don’t yet accept Q3 as anything more than an aberration. Reuters is estimating Q4 S&P500 profits of +5.9%, which has slipped from growth expectations of 7.6% percent last week. In Q3, perhaps the one time massive $39 billion charge by GM is thought of as the reason for the poor quarter. If GM gets most of the blame, we do not have to consider the unholy trinity of problems in the Housing, Credit and Consumer sectors.

Speaking of which: In Q3, the big losers were Consumer companies, down 26% sequentially and 38.9% Y-Y. The Financial sector was down 33% Y-Y. Several sectors shown strength, notably, Health Care and Technology, at +12% and 15% respectively.

S&P reported Friday that "with 93% of the data in, third quarter operating earnings for the
S&P 500 are preliminarily set at $21.08 per share, compared to
$23.03 for the third-quarter of 2006."

For those of you who like to play in Excel, I uploaded the full database of S&P500 estimates via Standard & Poor’s website: SP500EPSEST.XLS. Tables below . . .


Sector Performance



S&P500 Quarterly History





Download SP500EPSEST.XLS
Standard & Poors

Q3 Financials Sector Earnings Plunge 33.1%; S&P 500 Earnings Decline 8.48%
PR Newswire
S&P 500 Q3 Earnings Ex-Financials Up 1.6%
November 15, 2007: 12:20 PM EST

S&P 500 profit outlook for dims further
Justin Grant
Reuters,  Nov 19, 2007 11:12 AM GMT136

Category: Corporate Management, Data Analysis, Earnings, Investing, Valuation

The Panic of 1907 (Book Excerpt)

Panic_of_1907_jacketTime for another book excerpt:

I previously mentioned The Panic of 1907: Lessons Learned from the Market’s Perfect Storm by Robert F. Bruner and Sean D. Carr, in a linkfest a few months ago.

I found the book, published exactly a century after the original event, to have some rather interesting parallels to today.

The significance of the 1907 Panic as an economic event went far beyond the mere crash and recovery.  It eventually led to the creation of the U.S. Federal Reserve.

There is a video excerpt from the book here.

The authors point out the following Déjà vu — 100 years later:  "War was fresh in mind. Immigration was fueling dramatic changes in society. New technologies were changing people’s everyday lives. Wall Street was wheeling and dealing . . ."

They also name 7 factors are required to develop a financial panic:  Buoyant Growth, Systemic Architecture, Inadequate Safety Buffers, Adverse Leadership, Real Economic Shock, Fear and Greed, Failure of Collective Action.

The Intro, and Chapters 1 -3 follow after the jump.






Read More

Category: Books, Markets, Psychology

Falling Houses

Category: Credit, Derivatives, Real Estate

Wall Street Definitions, via Jeff Matthews

Category: Corporate Management, Earnings, Investing

GS: Our Bonus Pool is Bigger than Bear Stearns’ Market Cap

Category: Corporate Management, Finance, Technical Analysis

If the US has a Recession, Who is to Blame?

Category: Consumer Spending, Economy, Federal Reserve, Psychology

Pre-Thanksgiving Linkfest: Week in Preview

Category: Financial Press

3 Things You Need to Do (but Won’t)

Category: Apprenticed Investor, Investing

Pre-Thanksgiving Linkfest Week in Review

Category: Financial Press

The Big Threat of Mortgage Credit Losses

Category: Credit, Derivatives, Economy, Real Estate