Down goes the Dow

Earnie,

OK, but what you posted, included all non-GAAP numbers, on lowered expectations. What would you think if today, right before the start of the Men's 400m hurdle race, the hurdles which should be set at 36" are lowered to 33"? It is now a different race, still 400m hurdles race however. But the standard has changed.

One has the right to interpret that as a good thing, but it removes the objective comparisons, and one reason people are cheering for that which is declining. Gold medals are already awarded to companies with negative earnings: TSLA, MFRM, CRM, NOW, and LNKD. Doping control caught up with past winners: SSYS, GPRO, VRX, and TWTR.

It's really that simple.

Igy

Ghost of Igloi wrote:

agip,

After Saturday's 5k, I plan to go into a base building period for a couple of months. There is a good fall road race schedule here, and the weather is good. If that goes well I may get serious for next track season, indoor/outdoor. Although I love cross country, once it gets cold here (mid-November), the frozen uneven surface jacks-up hip. So probably better at my age to run the shorter faster stuff. During the winter months we have access to Boise State's Indoor Track a couple of times a week (November-March).

How is the cross country prep going?

Igy

sounds like a good plan. The fall is the best time to run I think.

I'm not in good shape at all I'm afraid - I won't be in good racing shape until mid October probably. Been a strange summer. So I'll plug away and try to be in shape for a couple XC races and then be in great shape for indoor track. I enjoyed running on the track last winter - I think that will be a bigger focus for me than xc this year.

agip,

I have actually worked up to as much as five days running in one week. I haven't been able to do that since about 2010. I have been consistent with at least four days a week for three months. I think it will take another 6-12 months to build any credible anaerobic lactate endurance. Threshold tolerance has improved along with speed. Best and enjoy the rest of the summer. Hot and smoky here (burning timber).

Igy

Why would you want to build lactate endurance? Perhaps you mean H+ endurance.

coach,

I coached for twenty years and twenty years ago, so my terminology doesn't pass the test of time. What I was referring to is the physiology of sustaining hard efforts of 2-3 minutes. After several years of non-specific training, I found acquisition of speed and general aerobic endurance came quickly, but the ability to sustain a hard 800m or 1500m is coming more slowly.

Igy

You are confusing lactate with lactic acid. The former is a byproduct of the later. Lactate is good, but the other byproduct -- H+'ions -- are bad.

Your goal is anaerobic efficiency...i.e. Improving your body's ability to buffer those H+ ions.

Good luck.

Coach,

Thanks, appreciate the explanation.

Igy

Ghost of Igloi wrote:

Say,

OK. Why don't you question Wall Street's projection of 2016 S&P 500 non-GAAP EPS of $110.85, when it has fallen from $125.56 since the start of the year, and it is currently tracking at $98.36?

Igy

But I do, just like everyone else. Even those who make the projections question them. That's why they change. But it doesn't really matter because everyone is just guessing. It's the actual EPS that is important and not whether or not it beat somebody's guess of what they thought it might be.

Say,

OK, then why do investors currently rely more on non-GAAP then GAAP? And only 38% of companies have beat on GAAP.

Igy

I'm not sure where you get your data, but non-GAAP does provide information that GAAP does not. As for how many "beat", it doesn't matter. They're guesses.

Say,

OK, but information and what you call "real earnings" are two different things. Failed business units, and stock based compensation are real costs of doing business. GAAP is real earnings non-GAAP is information. To think otherwise is blind to reality.

Igy

I am incredulous that you quote me as writing "real earnings" when I never used those words. Have you no moral decency?

Wall Street was set for a weak session on Friday, capping off a volatile trading week dominated by chatter about whether the Federal Reserve will raise interest rates as early as September.

Dow Jones Industrial Average futures lost 45 points, or 0.2%, to 18,520, while those for the S&P 500 index gave up 5.35 points, or 0.3%, to 2,178.25. Nasdaq 100 index futures dropped 15.75 points, or 0.3%, to 4,792.75.

The losses came as San Francisco Fed President John Williams said late Thursday he would like to see another rate increase "sooner rather than later," suggesting he is in the camp of central bank officials that would like a hike next month.

Earlier this week New York Fed President William Dudley also hinted a September move was possible, while Atlanta Fed boss Dennis Lockhart talked about "at least one" more increase this year.

Minutes from the Fed's July meeting out on Wednesday, however, showed an almost even split between supporters of another rate hike in the near-term and others who would wait for more confidence that inflation was stirring.

"Markets could now start to look towards [Fed Chairwoman] Janet Yellen's Jackson Hole speech next Friday for some sort of idea what the doves on the FOMC are thinking as it would appear that they are still holding the balance of power," said Richard Perry, market analyst at Hantec Markets, in a note.

There were no Federal Reserve speakers or major economic data scheduled for Friday.

U.S. stock markets have this week made little moves as investors interpreted the Fed news, closing with only small gains or losses. On Thursday, the main benchmarks managed to eke out tepid advances, helped by a rally in oil prices. For the week, U.S. markets were eyeing small gains.

Oil prices also initially rose on Friday, with Brent for October topping $51 a barrel at one point. However, both the London benchmark and crude oil erased gains ahead of the U.S. market open, trading down more than 0.5%.

Say,

My apologies for the misquote, substitute "actual EPS."

Bottom line, as long as your narrative drives the conversation, there will be continued support for stocks.

Igy

Ghost of Igloi wrote:

OK, but what you posted, included all non-GAAP numbers, on lowered expectations. What would you think if today, right before the start of the Men's 400m hurdle race, the hurdles which should be set at 36" are lowered to 33"? It is now a different race, still 400m hurdles race however. But the standard has changed.

That's not a very good analogy. You're comparing expections to standards. It's apples and oranges.

Here's one that's more appropriate. As a coach, I have above average knowledge of the 400m hurdles, so some might consider me an "expert." I watch the Oly Trials and see runner X run a PB 47.9 to qualify for the Olympics. I predict he'll run 47.7 in the finals at the Games. Later I hear that his subsequent training has been going very well and I modify my prediction to 47.6. At the Games he qualifies in his trials heat in 48.2 struggling over the last hurdle. I change my prediction for the finals to 48.0. In the finals he runs 47.8 beating my lowered prediction. Good for X.

Of course, none of this matters. My "expert" opinions are essentially worthless. What matters is what X does, not what I say. This isn't Vegas.

Econ 101,

OK, but non-GAAP is the Vegas number and GAAP is what X does.

As I posted to Say Wha?, as long as your narrative dominates the conversation there will be support for stocks.

Igy

What narrative? That the estimates are fantasy numbers that don't matter? For the life of me, I don't understand why you think they're so important.

Econ 101 wrote:

What narrative? That the estimates are fantasy numbers that don't matter? For the life of me, I don't understand why you think they're so important.

Estimates are generated by Wall Street. Igy works for Wall Street. Do the math.

Econ 101,

Earnings estimates and non-GAAP EPS have been the focus of earnings season for sometime. It is clearly fantasy when Wall Street says that the market is trading at 16 times forward earnings. The narrative that stocks are reasonably priced originate from this belief.

Igy