Citi: Fear the Oilmaggedeon; the ‘Death Spiral’ is Here

Citi is out with a super-duper bearshitting report, just in time for the weekend. With it, I am sure they intend to scare people and look incredibly well learned during cocktail parties over the coming weekend.

Led by Stubbs, a well pronounced bear, Citi is suggesting the collapse in oil will continue and the dollar will strengthen, creating a ‘negative feedback loop that is sure to astound and leave investors staggered with mammoth sized losses.

“It appears that four inter-linked phenomena are driving a negative feedback loop in the global economy and across financial markets,” the analysts write, citing the resilient U.S. dollar, lower commodities prices, weaker trade and capital flows, and declining emerging market growth.

“It seems reasonable to assume that another year of extreme moves in U.S. dollar (higher) and oil/commodity prices (lower) would likely continue to drive this negative feedback loop and make it very difficult for policy makers in emerging markets and developing markets to fight disinflationary forces and intercept downside risks,” the analysts add. “Corporate profits and equity markets would also likely suffer further downside risk in this scenario of Oilmageddon.”

“But, the collapse in oil/commodity prices and sharp fall in the pace of world trade means that these same economies will likely experience an aggregate current account deficit for the first time since 1998,” says Citi. “In turn, this is likely to put pressure on SWF and broader emerging market liquidity as governments and emerging market economies would need to ‘lean’ on reserves in order to maintain economic, political and social stability. This has clear feedback loops across emerging markets.”

Citi concludes: “We should all fear Oilmageddon,” Citi concludes. “Global recession, as we define it, would leave nowhere to hide in equities. Cash wins.”

GET ON THE ARK.

Clearly, David is drinking the LinkedIn koolaid, after the company announced a most horrendous earnings outlook. David cite a wide array of reasons to like LNKD, from its high net worth, professional demographic, to its expansion in dog eating China. Nevertheless, the stock will now join the ranks of YELP, TWTR and Z, of former social media darlings turned into drek.

Even after tonight’s 30% drop, LNKD is trading upwards of 7x sales and 35x earnings–putting in the same ballpark as FB–who is actually crushing numbers. If it were to fall in line with, let’s say the losers at TWTR, then the stock could drop by another 30% from where it’s trading in the after hours.

The good Dr. gives zero fucks about the PBOC’s efforts. He’s declaring insanity to be reigning inside the confines of the Chinese Central bank. What they’re doing, according to him, is unsustainable and will only lead to massive devaluation–to the tune of 10-15%.

Related: The Chinese government keeps tossing good money after bad, attempting to stabilize the Yuan, fending off capital outflows.

The central bank will say Sunday that the currency hoard fell by $118 billion to $3.2 trillion in January, according to economists’ estimates in a Bloomberg survey. That would exceed a record $108 billion decline in December, which brought last year’s total draw-down to more than half a trillion dollars and capped the first annual decrease in the reserves since 1992.

“China is facing a significant capital outflow problem,” said Krishna Memani, who helps oversee $217 billion as chief investment officer at Oppenheimer Funds Inc. in New York. “It’s an astounding reduction in their capital account position. This is an issue they’ve been aware of, and they have to find a way of managing it. The economy itself cannot turn this around.”

The NIKKEI is lower again this evening, down to the tune of 230 points or 1.37%. Mostly all other asian markets, with exception to the kangaroo lovers in Australia, are flat to up. Oil is edging higher, up 0.2%; but no one seems to care.

NASDAQ futures are down 9–because the specter of DATA and LNKD horrific earnings shortfalls are going to wreak a biblical-styled reckoning upon longs tomorrow.

Plus, let’s not forget that Fed’s Mester made a ridiculous speech this evening, craven with lunacy, proclaiming the Federal Reserve rate hikes shall commence, despite all of the hardship and pain being inflicted on an already bedraggled and worn investor class.

He’s all over the road on this one.

The dollar might stop going higher.

Commodities might start going up.

The Fed, may, in fact, be your friend, or at least not your arch enemy.

Fund managers need exposure to moronic plays like AA, which Cramer seems to love.

Oh, but don’t chase these stocks, unless of course you’re chasing AA, which he endorses.

Instead, buy the high growth stuff that is coming down now.

etc.

One of the more hawkish Fed heads just said the rate hikes will continue, while wringing her hands and bellowing out a witch-like, craven, laugh.

“While the actual path the fed funds rate follows will depend on the economic outlook, and thus, will be data dependent, my current view is that economic conditions will evolve in a way that will warrant rates moving up gradually over time to more normal levels,” Mester said, according to prepared remarks marks she was to deliver to a Market News International gathering in New York.

She acknowledged the decline in energy prices and net exports among other weakness in the economy. However, she also noted “solid labor market indicators, including strong payroll growth and healthy growth in real disposable income” that “suggest at underlying U.S. economic fundamentals remain sound.”

It’s all about those extra Target and Walmart jobs being added to the mix that’s making the Fed nervous about inflation.

“Until we see further evidence to the contrary, my expectation is that the U.S. economy will work through the latest episode of market turbulence and soft patch to regain its footing for moderate growth, even as the energy and manufacturing sectors remain challenged,” she added.

FML

That’s funny, since the idiots who trade the Fed rate hike probabilities have eliminated the chance of another hike this year.

Can you say ‘downside surprise’? The Fed doesn’t give a shit about your portfolios.

Mester says financial market volatility is ‘not a rationale for making a monetary policy decision’

He came, he saw and he conquered all of the fossil fuels. Under his tutelage, President Obama has overseen the destruction of the coal, natural gas and now oil industries. He refers to oil as “dirty fuels”, almost evil in the methods by which they heat our homes.

The real story here isn’t the fact that Obama wants a solar panel on every housing tenement in America; but the fact that he doesn’t want to let the housing tenement renter enjoy these lower  gasoline prices. He intends to tax everyone, with an outrageous $10 per barrel levy–which will fund more bridges to nowhere and 30 year highway jobs to union controlled contractors.

In the last year of his presidency, Obama has said the country must stop subsidizing the “dirty” fossil fuels of the past and focus on clean, renewable fuels that do not exacerbate climate change.

“By placing a fee on oil, the President’s plan creates a clear incentive for private sector innovation to reduce our reliance on oil and at the same time invests in clean energy technologies that will power our future,” the White House said in a statement.

The long-shot proposal for the oil fee, set to be announced in Obama’s fiscal 2017 budget plan on Tuesday, would provide nearly $20 billion a year to help expand transit systems across the country and more than $2 billion a year to support research and development of self-driving vehicles and other low-carbon technologies.

With approximately $900 billion in distressed oil and gas debt, this tax is equal to rubbing salt into the wounds of someone who was just fatally shot in the head.

The hits keep coming this afternoon.

On the surface, the company reported solid results. However, licensing revenues are slowing down at a significant pace, +31% Y/Y vs. +57% in Q3.

Reports Q4 (Dec) earnings of $0.33 per share, $0.18 better than the Capital IQ Consensus of $0.15; revenues rose 41.9% year/year to $202.8 mln vs the $200.66 mln Capital IQ Consensus.

• License revenue grew to $133.1 million, up 31% year over year.
• International revenue grew to $53.7 million, up 63% year over year.
• Added more than 3,600 new customer accounts.
• Closed 414 transactions greater than $100,000, up 36% year over year.

Shares are down nearly 40% in after hours.

Related software plays are down in sympathy, including CRM (-4%), SPLK (-9%), WDAY (-3.3%).

Guidance on the call is as follows:

• Q1
• DATA sees Q1 EPS in the range of ($0.12)- ($0.08), Capital IQ consensus $0.15
• DATA sees revenue in the range of $160-165 mln, Capital IQ consensus $179.53 mln.
• FY16
• Sees 2016 EPS in the range of $0.22-0.35, Capital IQ consensus $0.61.
• Sees FY16 Revenue in the range of $830-850 mln, Capital IQ consensus $871 mln (Prior $845-865 mln)
• Q1 seasonality will be amplified
• 2016 an investment year.

They blamed the dollar, the weather and whatever else they could conjure up to mask incompetence. They just lowered guidance from 0.57 to 0.07, ok. Margins are eroding. Sales are declining. This company is toast and so are their ridiculous furry boots.

Reports Q3 (Dec) earnings of $4.78 per share, $0.03 better than the Capital IQ Consensus of $4.75; revenues rose 1.4% year/year to $795.9 mln vs the $832.94 mln Capital IQ Consensus.
Reports Q3 gross margin of 49.1% vs 52% prior guidance, ~51% estimate and 52.9% year ago

The decline in gross margin was driven by greater than planned promotional activity and a 110 basis point impact from foreign exchange headwinds caused by the strengthening of the U.S. Dollar.

Co issues downside guidance for Q4, sees EPS of $0.07 vs $0.57 prior guidance and $0.39 CapIQ consensus; revs growth +7.2% vs +18% prior guidance and +13.5% to $387 mln consensus. DECK Q4 guidance is based on gross profit margin of 45.5% vs 44.7% year ago and ~46% estimate.

“Our third quarter was more challenging than we expected as warm weather and weak store traffic across retail pressured demand.”

We need moar rate hikes.

LNKD just posted a disastrous quarter, with poor revenue guidance and pathetic earnings power. Watch the premium get sucked right out of the shares. This is the beginning of the end for Linked In, an utterly useless for of social media, otherwise relegated to hucksters with profile pictures in suits and cheap ties.

It’s like a fucking living resume. Fuck you Linked in.

Reports Q4 (Dec) earnings of $0.94 per share, excluding non-recurring items, $0.16 better than the Capital IQ Consensus of $0.78; revenues rose 34.0% year/year to $862 mln vs the $857.26 mln Capital IQ Consensus.

Co issues downside guidance for Q1, sees EPS of ~$0.55, excluding non-recurring items, vs. $0.74 Capital IQ Consensus Estimate; sees Q1 revs of ~$820 mln vs. $866.50 mln Capital IQ Consensus Estimate.

Co issues downside guidance for FY16, sees EPS of ~$3.05-3.20, excluding non-recurring items, vs. $3.73 Capital IQ Consensus Estimate; sees FY16 revs of $3.6-3.65 bln vs. $3.91 bln Capital IQ Consensus Estimate.

In the quarter, cumulative members grew 19% to 414 million, unique visiting members grew 7% to an average of 100 million per month, and member page views grew 26%. This yielded 17% year over year growth in page views per unique visiting member, continuing a pattern of strong engagement growth over the past several quarters. Mobile in particular grew 3x faster than overall member activity, and now represents 57% of all traffic to LinkedIn.

Absolutely poleaxed.