Source

Interesting chart from Albert Edwards, which continues on a recent theme…

SocGen

This stall-out in earnings is something more and more folks are paying attention to.

Earlier this week, Citi’s Tobias Levkovich pubbed this chart, showing the negative trend in upward revisions, and how that seems to be at odds with the market.

Citi

So far investors don’t seem concerned, and instead are focused on the “improving economy” which seems defensible, but at some point the tension between the growing economy and the mediocre earnings picture will have to resolve itself.

Read more: http://trade.cc/aovb#ixzz1nDe3RaGd

Sell them because Wall St. loves them too much….

The Bow Tie mocks the candidates…

Source

“Financial markets breathed a sigh of relief after the agreement by European leaders for a second bailout of debt-burdened Greece. But the continent’s crisis is far from complete, many experts say. Star Harvard economist Kenneth Rogoff is one of them.

“I don’t want to be a Cassandra, but the idea that it’s over is an illusion,” he tells The New York Times.

“I am amazed by the short-term psychology in the market. I don’t think we’re anywhere near the endgame.”

The idea that Greece can be starved into prosperity would seem laughable to an objective observer. And the idea that Greece will follow through on the severe austerity it has promised, when it already faces riots in the street for previous cutbacks, also seems a bit of a stretch.

In addition, Greece’s private creditors who are expected to agree to a loss of more than 70 percent on their government bond holdings may not suffer their losses quietly.

Some of the International Monetary Fund’s debt projections for Greece appear to be taken out of thin air. “This whole debt sustainability analysis is a joke,” international economist Charles Wyplosz tells The Times.

European leaders are hoping that the Greece bailout will act as a firewall to prevent the crisis from intensifying in Portugal, Ireland, Spain, and Italy. But it looks more like this will just postpone the day of reckoning.”

Source

“Investors are viewing the recent Greek bailout with skepticism and rightfully so, says Mohamed El-Erian, CEO of Pimco, which runs the world’s largest bond fund.

Investors would be wise to avoid risky asset classes at this time, because even though the $172 billion bailout fund for Greece will steer the country away from a messy March default, it won’t solve the country’s deep-seated economic problems.

“The market is being very rational in saying it’s a step but it’s not a big enough step yet,” El-Erian says of the Greek debt deal, CNBC reports.

“Fundamentally, Greece is going to have to find a way to restore growth and restore competitiveness. If it doesn’t do that, private capital isn’t going to come in and if private capital doesn’t come in you don’t get the oxygen that an economy needs.”

Greece is still carrying massive debt loads currently at 160 percent of gross domestic product, and austerity measures attached to bailout money including public-sector layoffs and pension overhauls will slow growth in the near future.

The U.S. isn’t immune to a European implosion either….”

Read more:  

Source

The U.S. economy is recovering at an even faster pace than the data suggest, negating any need for further monetary easing, Dallas Federal Reserve President Richard Fisher told CNBC.

With unemployment heading lower andhousing sales posting gradual increases, Fisher said Wall Street chatter about a third round of quantitative easing — or QE3 — is probably “wishful thinking.”

“The tone is a lot better. It’s not brilliant, we don’t have enough new hiring taking place,” he said, adding that the numbers are “definitely moving in the right direction, and my personal feeling…is that things are better than the numbers might suggest, or at least moving in the right direction. There is a better tone out there, and I think we need to take note of that.”

Following the Fed’s  most recent Federal Open Markets Committee meeting, Fisher told reporters that QE3 is a “Wall Street fantasy” that won’t happen.

Read More

Source

HomeAway Inc. (AWAY) (AWAY US): The online vacation-rental service reported forecast revenue in the first quarter will be no more than $64 million, falling short of the average analyst estimate of $65.8 million.

Limited Brands Inc. (LTD) : The owner of the Victoria’s Secret lingerie chain forecast first-quarter earnings will be no more than 40 cents a share, missing the average analyst estimate by 4 cents.

Polypore International Inc. (PPO) : The maker of battery components reported fourth-quarter earnings excluding some items of 58 cents a share, missing the average analyst estimate by 1 cent.

Questcor Pharmaceuticals Inc. (QCOR) : The drug company reported fourth-quarter profit excluding some items of 47 cents a share, exceeding the average analyst estimate by 4 cents.

Gapping up

VVUS +110.4%, ONVI +30.6%, OREX +23.1%, ARNA +14.4%, QIHU +8.6%, QCOR +5.6%, RIG +5.1%, PVA +4.9%, MEG +4.8%, RGR +3.8%, LOOP +3.1%,

WLL +2.9%, ONXX +2.9%, MT +2.3%, SGY +2.3%, SNTS +2.2%, UBS +1.9%, ANW +1.7%, BCS +1.5%, CLR +1.5%, GOLD +2%, RIO +1%, BBL +1%,

SLV +0.5%, BHP +0.3%, LYG +4.1%, ING +1.8%, CS +1.5%, UBS +1.1%, BCS +1.1%, BAC +1%, MS +0.9%, C +0.4%, ONXX +2.9%,CLR +1.5%, ROIC +1.5% ,

DNDN +2%,  LL +1.7%,

Gapping down

PPO -12.7%, GNK -10.5%, SMSI -7.3%, AWAY -5%, LTD -2.8%, PSEC -2.7%, ADI -2.4%, CXO -1.7%, HPQ -1.5%, AVGO -1.5%, FLR -1.3%, TSL -4.2%, HPQ -3.8%,

NIHD -3.7% , KBR -1.5%, ESRX -1.2%, ADI -2.4%, CXO -1.8% , JASO -2.4%, SOL -2.1%, STP -2.0%, SPWR -1.7%, FSLR -1.1%,  MCOX -8.4% ,

In Play

On the Wires 

All aboard!

Well this is going to be the hot read of the day.

SocGen’s Albert Edwards blasts the recent stock-market rally, and says there’s still way too much “hope.” Only when the hope is totally gone will we know the great ice age is over.

One key lesson from Japan is that an essential ingredient to the end of a long valuation bear market is revulsion. It is when buyers-on-dips become sellers-on-rallies. It is when volume dries up to almost nothing. It is the loss of hope.

In Japan we saw huge rallies in the Nikkei on the back of short-lived cyclical recoveries. Each cyclical failure and further new lows in the equity market saw hope being progressively crushed. Previous US valuation bear markets typically take 4 or 5 recessions to fully play out. We have only had two.

The market is once again in a hope phase hoping that the US is now in a self-sustaining recovery; hoping that China might be soft-landing; hoping that the Greece bailout and the ECB liquidity polices have settled things down in the eurozone. These bursts of hope are essential in long bear markets. Essential in the sense that hope must be crushed. It will be crushed. Hope still beats in the breasts of equity investors. The market will rip out that hope and consume it in front of investors’ eyes. Only then can the bull market begin.

As evidence that the current hope will be quashed again like last year, he posts this chart…

Read more: http://trade.cc/aoqi#ixzz1nDBquqw1

Hendry is out with what a real hard landing will look like in China….

[youtube://http://www.youtube.com/watch?v=8UsiHn9crVM 450 300]

A number of analysts are pointing out that oil prices may have moved up too quickly and the move is potentially unjustified. These price increases (with a large move today alone – see chart below) have been driven by two factors:

1. The Greek “resolution” may be pointing to a global economic stabilization that will increase demand.
2. Iran’s belligerent attitude and nuclear ambitions are creating fears of supply disruptions.

Let’s address both of these items.

Today’s move in Brent crude

1. The Greek resolution still has numerous risks even if the deal closes. But that’s not the real issue. People forget just how broken the Eurozone’ financial system is. Credit is extraordinarily tight, bank deleveraging has only just begun, and the dependence on central bank financing will take a long time to heal. A Eurozone-wide recession is inevitable and with that will come a reduction in oil consumption (as the chart below from Capital Economics shows.) With slower growth expected across BRIC nations as well, the GDP “stabilization” is not likely to support large increases in demand for oil.

EU GDP (with forecast by Capital Economics) vs. EU oil consumption

2. China and India, the only large customers for Iranian oil now have that nation in a vice. The only reason to buy from Iran and risk upsetting the US and EU is obtaining a material discount. China and India can always wait and buy crude at market prices elsewhere, but Iran cannot afford to forego critical oil revenues for very long. It will cave in and sell what it can to India and China at rock bottom prices – its revenues deteriorating further.

In the mean time Iran is struggling to pay for the food imports the population desperately needs. Many Middle Eastern brokers who sell gran to Iran have not been paid and food cargo ships are not unloading. Domestic inflation is out of control. The official numbers point to inflation that is now above 20%.

Iran official YOY CPI (Bloomberg)

This is in fact consistent with the latest numbers from the CIA:

Source

“The Secretary of State wants American companies to focus their efforts – and their cash piles – on spurring job growth by investing at home and abroad.

By Tory Newmyer, writer

Clinton: Businesses need to start spending.

FORTUNE — Secretary of State Hillary Clinton on Tuesday issued a challenge to American business: Stop hoarding your cash, and start investing both at home and abroad to spur domestic job growth.

“We can’t help you if you’re not hungry enough to get out there and compete for the business that is going to be available,” Clinton told a lunchtime crowd gathered at the State Department for a first-of-its-kind global business conference. Noting that American companies are sitting on “large cash reserves,” Clinton called on them to “take informed risks that have always been the key to success.”

Full article

To print or not to print ?

“Stocks have done well this year, with the S&P 500 rising 1.4 percent to 1,361 in a week, up 24 percent from its October low and just points shy of its 2011 high.

The Dow, meanwhile, passed the 13,000 mark for the first time since May 2008.

Still, stocks may be due for a breather, and profit taking appears to be likely in the forecast, says Sam Stovall, chief equity strategist at S&P Capital IQ.

“The market continues to work its way higher. We are knocking on the door of the April 29 recovery high. It feels like there are an awful lot of people calling for a correction — or at least a digestion — and I’m one of them,” says Stovall, according to CNBC.

Stocks fell late in 2011 and normally under such scenarios, the rally that follows see equities rebounding about 23 percent in six months.

Stocks already gained that much in less than five months, which ups the chances of a correction, normally defined as a 10 percent drop.

“We think we’re going to get to where we are now, or even as high as 1380 (on the S&P) and then maybe go down to the low 1300s before approaching 1400. That’s the scenario our technicians are talking about,” Stovall says.

Others agree that a correction may be likely, and while it won’t mean the market will necessarily finish the year in negative territory, don’t expect blue skies ahead either thanks to homegrown and European uncertainties.

“This rally is not about irrational enthusiasm as much it is getting rid of irrational fear,” says Brad Sorensen, director of market and sector research for Charles Schwab in Denver, according to CNNMoney.

“There will be more bumps in the road. The whole year is not going to be as smooth as the first six weeks have.”

Read more:  

The stars are aligning…but for whom ?

If prices rise will this take a bite out of the consumer economy ?

Unfortunately, these changes will hurt the so called middle class…at least the upper echelon.

Source

Brightpoint Inc. (CELL) : The wholesaler of mobile phones reduced its forecast for 2012 earnings excluding certain items to no more than $1.13 a share from as much as $1.17.

Brocade Communications Systems Inc. (BRCD) : The maker of switches for data-storage networks forecast revenue in the second quarter of $530 million to $545 million, compared with the average analyst estimate of $537.7 million.

DealerTrack Holdings Inc. (TRAK) : The maker of software for car dealerships forecast revenue in 2012 of no more than $372 million, falling short of the average analyst estimate of $380 million.

Dell Inc. (DELL) : The third-largest maker of personal computers forecast fiscal first quarter revenue that missed analysts’ estimates as lackluster demand for PCs and competition from Apple Inc. eroded growth.

La-Z-Boy Inc. (LZB) : The maker of living-room recliners reported third-quarter earnings of 19 cents a share excluding some items, topping the average analyst estimate by 1 cent.

Texas Roadhouse Inc. (TXRH) : The steakhouse chain forecast earnings in 2012 will rise 5 percent and boosted it’s share buyback by $100 million.