Down goes the Dow

Say,

You may be trying to pull my chain, but to answer your question they are doing both. Currently analysts are projecting a huge recovery in 2016 Q3 and Q4. However, last year they were projecting a huge recovery in 2015 Q4 and 2016 Q1 and Q2. Since then they have lowered their forward earnings for Q4 2015, Q1 and Q2 2016. Get it, got it, done!

Igy

So they are adjusting their predictions. Got it.

More on earnings and recession risk:

http://www.cnbc.com/2016/02/25/recession-sign-is-in-play-and-has-81-accuracy.html

Ghost of Igloi wrote:

More on earnings and recession risk:

http://www.cnbc.com/2016/02/25/recession-sign-is-in-play-and-has-81-accuracy.html

more recovery highs - SP500 and Dow

still amuses me when everything goes up - treasuries, stocks, gold, oil

the computers must just flood markets when things go up

I do agree with igy that the markets aren't as tethered to the real economy as usual - they move now on currents of computer driven money

agip,

Today, the first move was above the 50 day moving average at 1935, and the last move over the 200 day moving average at 1948.6. Keep in mind the "recovery low" was 1802 exactly two weeks ago. What has fundamentally improved? Nothing. High frequency trading playing the algorithms I am afraid.

Igy

Ghost of Igloi wrote:

agip,

. Keep in mind the "recovery low" was 1802 exactly two weeks ago. What has fundamentally improved? Nothing. High frequency trading playing the algorithms I am afraid.

Igy

well that's not fair. The market fips and flies and flops. The hard part is determining the signal from the noise.

The market fell 5% from Feb 4 to the 11th and nothing fundamentally changed there either.

You can't just look at the ups and say they are the only moves that don't make any economic sense.

agip,

It is absolutely fair. You agreed, I believe, that the FactSet estimates were reduced to reflect lower earnings. So the true "set of facts" is the stock market is only beginning to factor in lower earnings.Yet FactSet, and I am assuming you do too, project that in the infinite wisdom of the market it is projecting LTM operating earnings jump from a Last Twelve Month (LTM) average of $102.74 to $120.16. I am sorry but that is so much malarkey. If there was anything other than hype to explain the up days you might have a sliver of support from me.

Igy

There is seriously very little that suggests a recession is imminent. I have to think the decline in SP500 earnings is illusory, based on energy companies, materials companies and the stronger dollar. Otherwise, how do you explain all the positive economic numbers?

WASHINGTON (Reuters) - New orders for long-lasting U.S. manufactured goods in January rose by the most in 10 months as demand picked up across the board, offering a ray of hope for the downtrodden manufacturing sector.

While other data on Thursday showed new applications for unemployment benefits increased last week, they remained below levels associated with a tightening labor market. The reports suggest economic growth accelerated at the start of the year after stumbling in the fourth quarter.

The Commerce Department said orders for durable goods, items ranging from toasters to aircraft meant to last three years or more, surged 4.9 percent last month, reversing December's 4.6 percent plunge.

January's increase was the largest since March and beat economists' expectations for only 2.5 percent rise.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, jumped 3.9 percent after tumbling by a revised 3.7 percent in December. These so-called core capital goods orders were previously reported to have decreased 4.3 percent in December.

agip wrote:

this may or may not be interesting or meaningful:

I looked at factset from feb 2015 to see what the estimates for 4Q2015 were...and what they turned out to be

they were estimated to be 32.54

and it looks like they will come out to be around 29.68

down around 9%

and guess what...the sp500 is down around 7% over a year

although including dividends it is only down around 5%

I'm not making any conclusiuons from that...I suppose it shows that the market isn't whistling past the graveyard...earnings have fallen and the market has fallen in roughly the same amount.

(disregarding the operating vs GAAP issue)

Agip, Yardeni Research has charts going back to 79 showing SP 500 forward eps consensus analysts’ estimates beginning 2 years out and how they trended up to the actual results; " squiggles " Current quarter no different than most of the past.

Also check this out, re write-offs, specifically figures 7 and 8.

muy loca,

I am not sure what point you are illustrating with the Yardeni squiggles. The fact is analyst will revise their earnings estimate up or down in relation to the facts as they appear. Analysts typically revise their earnings downward as the year goes on. That is because analyst will typically mark up their estimates of earnings and the market multiple to create an S&P 500 target that is 8-10% above the previous year. Don't kid yourself into thinking these Wall Street market mavens have any magic or knowledge more than a reasonably intelligent person.

Igy

Why would an analyst automatically assume 8-10% annual earnings growth? That makes no sense.

The following comment it not directed at you. I find it interesting that when the market was below 1850 many posters and investors were silent. Now that the market is off the low and trading at 1950 the "brave" return thinking they have received the "all clear signal." That could not be further from the truth. If one was afraid to buy the market at 1802 why would you be confident at 1951? Nothing has changed other than the institutions will be happy to sell their stock to the uninformed.

Igy

Wow. You've got quite an imagination.

Lemons,

You miss quoted me. Analysts mark up earnings and the market multiple to arrive at a S&P 500 that is 8-10% higher than the previous year. The analyst just use the historical return of the "market" going back over 100 years.

Igy

Lemons,

And you know far less than you think you do.

Igy

That makes two of us.

agip,

Reminds me of a line from a song from my youngers years: "don't stop believing."

Igy

"If one was afraid to buy the market at 1802 why would you be confident at 1951? Nothing has changed"

It is arguable that sentiment has changed, and that it is sentiment upon which the market lives.

Confidence, Igy...confidence!

I'm still winning with my bet of 16-17k range this year. Lower bound was tested tough except for IIRC 1 day far down, today's 16.7k is unsurprising, and unremarkable.