We’re all doomed. Really society????…..really??????
Stocks are still joined at the hip with oil. Oil opened down today and so did stocks, but when oil caught a bid, so did the stock market. This is an amazing dynamic that will probably be with us for a while. It will disconnect at some point, but so far nothing doing.
Here is a 5 minute chart of oil today. As you can see the bounce started around 11;30. That’s also when stocks reversed. I guess we should all just stop trading stocks and become oil traders.
We had big gains on the short side this morning, just so you know, I covered nothing and I am still short.
Things not what they seem
Today FactSet came out with some interesting news. S&P Earnings Are Far Worse Than Advertised
There’s a big difference between companies’ advertised performance in 2015 and how they actually did.
How big? With most calendar-year results now in, FactSet estimates companies in the S&P 500 earned 0.4% more per share in 2015 than the year before. That marks the weakest growth since 2009. But this is based on so-called pro forma figures, results provided by companies that exclude certain items such as restructuring charges or stock-based compensation.
Look to results reported under generally accepted accounting principles and S&P earnings per share fell by 12.7%, according to S&P Dow Jones Indices. That is the sharpest decline since the financial crisis year of 2008. Plus, the reported earnings were 25% lower than the pro forma figures—the widest difference since 2008 when companies took a record amount of charges.
I am not trying to channel Zerohedge here, but the implication is that even after a brutal start to 2016, stocks may still be more expensive than they seem. Even worse, investors may be paying for earnings and growth that aren’t anywhere near what they think. The result could be that share prices have even further to fall before they entice true value investors.
See you in the morning.
Joe