• 1 min Airbnb In Acquisition Mode Ahead Of IPO
  • 3 hours Gold Hangs At $1,300 Ahead Of Fed Meeting
  • 5 hours Champagne Sales Slow As European Economic Worries Grow Louder
  • 21 hours Putin Signs “Digital Iron Curtain” Into Law
  • 1 day Russian Metals Magnate Sues U.S. Over Sanctions
  • 1 day Tesla Looks To Jump Into Indian Market
  • 1 day Global Banks Lay Groundwork To Re-Inflate Asset Prices
  • 2 days Homeowners Experiment With Risky New Investment Trend
  • 2 days U.S. Tech Stocks Look Increasingly Vulnerable
  • 2 days De Beers To Expand World’s Most Profitable Diamond Mine
  • 2 days Ford CEO Gets Raise After Massive Layoff Round
  • 3 days Germany’s Flirtation With Recession Could Cripple The Global Economy
  • 3 days Where To Look As Gold Miners Inch Higher
  • 4 days Google Faces Billions In Fines From European Regulators
  • 4 days The Energy Industry Has A Millennial Problem
  • 5 days Russian Banks Scramble For Sanction Loopholes
  • 5 days Gold ETFs Take A Hit After Four-Month Run
  • 6 days European Union Takes Aim At Ten New Tax Havens
  • 6 days Goldman Defends Trillion-Dollar Corporate Buyback Spree
  • 6 days $600 Billion At Risk As Boeing Fallout Continues
Lending: The Good, Bad, And Ugly

Lending: The Good, Bad, And Ugly

Aristotle said, “The most hated…

The Chatroom Cartel Running Global Bond Markets

The Chatroom Cartel Running Global Bond Markets

Eight major banks have been…

  1. Home
  2. Markets
  3. Other

Wall Street Earnings Recession is No Cause for Worry; Stock Market Bull has Been Ignoring It

"Irony is the form of paradox. Paradox is what is good and great at the same time." ~ Friedrich Schlegel

We could sum it up in two words as to why earnings recession was, is and will be a non-event; Hot Money. However, for some strange reason when it comes to the markets individuals happen to love long explanations even though in most cases the long answers reveal a lot less than the short ones do. So let's take a look at some of these meaningless statistics.

S&P 500 companies are going to report what will turn out to be the 6th consecutive quarter of lower earnings. This is one of the longest earning slumps in over a decade and logic dictates that the markets should have been trending lower, but the opposite is taking place.

An investor following the old paradigm could not be faulted for making this statement "well then there is no way stocks can keep rising" or how long can they grow in such an environment

To get the right answer, you need to ask the right question.Such questions are irrelevant in today's environment, and answering such questions is not going to provide you with any insights on how to play this market. One person will state it cannot rise because of the negative factors listed above. The other penguin will say it can rise because inflation is low, unemployment is low, gas prices are low and a host of other rubbish.

It would be far better to focus on trying come up with the right questions. For example:

When will central banks stop flooding the markets with money?

When hell freezes over is the answer; this means that this market will rise for much longer than most naysayers can stay solvent.

An even better question would be "what side of the market are the masses on."

Now we are getting somewhere; the masses are decidedly negative, and that means until they embrace this market, it will not crash.

So there you have it. However, even this is not enough for many individuals. So let's look at a few more meaningless reasons as to why earnings might be dropping.

Energy and other commodity based companies have seen their profits dive, and that is why these sectors have been the worst performing sectors for over 18 months. U.S. firms in the aggregate have reported lower earnings because energy, commodity and basic materials companies have seen their profits decimated by lower prices.  The energy sector will once again lead the way with massive losses.

A strong dollar; the dollar has been in an uptrend, and this affects multinationals profits. This is simple to understand as we in the midst of a massive currency war; a strong dollar is not okay for multinationals and vice versa.

It also affects our exports as it makes our products more expensive overseas.


Conclusion

The only two things you need to pay attention to are; We have an extremely accommodative Fed and secondly the masses refuse to embrace this market. Both developments are extremely bullish for this market.

Data that is readily available to everyone is like news; the moment you hear it is no longer news but Gossip.

"A taste for irony has kept more hearts from breaking than a sense of humor for it takes irony to appreciate the joke which is on oneself." ~ Jessamyn West

 

Back to homepage

Leave a comment

Leave a comment