Throughout the summer, investors were treated to a steady drumbeat of sobering news.
Retail sales were flattening out. China and other emerging markets appeared set to consume less of our exports. The steady implementation of the budget sequester was leading to a drop in government spending on technology and services. And many companies showed a lot more interest in buybacks and dividends than capital spending, which is a sure a sign of CEO pessimism.
So how do you explain the surprisingly robust profit picture being delivered in the current earnings season?
With roughly 40% of the SP 500 weighing in thus far (and another 25% to go next week), 68% of all reporting companies have delivered a positive earnings surprise, according to Standard Poor's. That compares with just 18% of companies reporting negative surprises. Frankly, I wouldn't have been shocked if those numbers were reversed. The odds against yet another stellar earnings season seemed quite long.
Year-over-year comparisons tell the story. Among companies in the SP 500 that have reported third-quarter results thus far, profits are up 8.4% from a year ago, more than triple the expectations of 2.5% for these companies. The profit gains are coming on 3.3% annual sales growth (from the third quarter of 2012), which tells you that companies are once again finding ways to boost profit margins.
The key driver of those margins: productivity gains, as companies are able to produce higher output with a fixed base of employees and assets. Rising productivity is a great sign for the economy; it was the key reason for the economic boom in the 1990s.
But this isn't the '90s, not by a long shot. Today's stiff headwinds are quite real. Out in the real world, many will tell you that the economy feels lousy. Retailers are bracing for a tepid holiday season after lackluster back-to-school sales. And even as corporations report solid profits, few have discussed plans for major investments in capital expenditures, which is the real driver of future economic growth.
Another contrast with the '90s: Back then, much of the job creation and dynamic economic activity was fueled by small businesses. These days, the action squarely resides with already large companies that are simply growing yet larger.
Amazon.com (Nasdaq: AMZN) is a great example. Its shares surged nearly 10% on Friday to another all-time high as its North American sales grew a whopping 31% from the third quarter of 2012. The fact that Amazon is "still in the very early stages of international development," according to Benchmark Capital, explains why this company is expected to keep growing at a meteoric pace.
But Amazon creates a huge conundrum for investors. Its stock valuation bears no relevance to current measures such as cash flow or profits. So investors are asked to focus on the company's impressive operational execution -- and to simply ignore traditional valuation measures.
And Amazon's numbers don't signal a revitalization in consumer confidence. Instead, the company is simply stealing market share from other retailers in a zero-sum game. In the fiscal fourth quarter that begins in November, Macy's (NYSE: M), Kohl's (NYSE: KSS) and Target (NYSE: TGT) are all expected to post modest revenue drops.
The Next Month Is Crucial
Roughly a month from now, you'll start hearing a lot about the outlook for 2014. Market strategists will be doing their best to determine whether 2014 will be yet another year of stellar profit growth -- or whether this four-year profit surge is set to wane.
So they'll be looking closely at the profit reports and economic reports that have yet to roll in. Over the next two weeks, the rest of the SP 500 will weigh in, and we'll also start to hear from small and mid-cap stocks. As noted earlier, much of the recent economic activity seems to be benefiting the largest companies. The most recent report from the National Federation of Independent Businesses (NFIB) showed a modest drop in part due to a "significant increase in pessimism about future business conditions."
We're also going to start seeing how the recent government shutdown impacted the economy. In just the coming week, expect new reports on:
-- industrial production (Monday)
-- pending home sales (Monday)
-- consumer confidence (Tuesday)
-- the Chicago Purchasing Managers' Index (Thursday)
Risks to Consider: The economic risks noted earlier are still present, though the market has simply shrugged them off. Many have suspected that the Federal Reserve's massive stimulus program has pushed any economic concerns aside as liquidity simply flows into speculative assets such as stocks. But the solid third-quarter earnings season -- so far, at least -- means that it's not a purely speculative rally. Keep a close watch on the economy in coming weeks and months as you start to get a grasp out on the outlook for 2014.
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Some people instantly make us feel important. Some people instantly make us feel special. Some people light up a room just by walking in. We can't always define it, but some people have it: They're naturally charismatic. Unfortunately, natural charisma quickly loses its impact. Familiarity breeds, well, familiarity. But some people are remarkably charismatic: They build and maintain great relationships, consistently influence (in a good way) the people around them, consistently make people feel better about themselves--they're the kind of people everyone wants to be around...and wants to be. Fortunately we can, because being remarkably charismatic isn't about our level of success or our presentation skills or how we dress or the image we project--it's about what we do. article, Here is some news I read about the Dewji family in Forbes (Asian Addition) but when i looked up for this in the Forbes I did not see any article on the MO as he is called This is not surprising but there is more I need to add >In comparison, the recipients of the Economics Nobel have distinguished themselves. Kissinger and Le Duc Tho produced no lasting peace in Indochina, but Wassily Leontief, who won the economics prize that year, invented input-output analysis. This technique is used to measure the value added (and destroyed) by different economic activities, and has been adapted by Google to rank the relevance of websites. Likewise, the men who were applauded for making peace between Israel and the Palestinian Arabs turned out to be failures, but the economists honored in 1994 -- John Harsanyi, John Nash and Reinhard Selten -- have made important contributions to our understanding of game theory and negotiations. (Nash, of course, even got played by Russell Crowe in a movie.) This isnât to say that economics has been free of embarrassments. In 1997, the award was given to Robert Merton and Myron Scholes for their (valuable) work on options pricing. In an attempt to profit from their theoretical insights, the two men had co-founded extremely profitable Long-Term Capital Management in 1993. It blew up spectacularly just one year after they won the prize because of bad risk management. There are plenty of good reasons to be skeptical of economicsâ pretension to being a science like physics or chemistry. Alfred Nobelâs decision not to give it a prize shouldnât be one of them. I thank you FirozaliA.Mulla DBA
As has been pointed out on other sites, including IT-oriented ones, throwing a bunch of "experts" at a cocked-up software rollout won't produce results in a hurry, and may not produce results at all.
The experts first have to familiarize themselves with the goals of the software, i.e. what it is supposed to do -- and that is badly defined, with some of the details not released by the government until a month before the rollout. Then they have to figure out why the software isn't doing what it is supposed to. Then and only then can they begin to fix it.
A frequently quoted rule of thumb is 100 lines of code per day per programmer. This is slowed down considerably when the programmer is not writing clean code, but fixing bad code -- and the current estimate is that five million lines of code out of five hundred million, will have to be fixed. Because of political pressure, I forsee a bunch of hasty ad hoc bandaids being applied. Some won't fix the problem they're aimed at. Some will cause other problems. I don't think Obamacare will be ready for prime time for at least a year.
Merakle is upset about her USA intrusions on her Nokia phone.
Aber, mein lieber Gott! She should be much more upset that neither Nokia, nor her own intelligence guru’s, whom I presume report up to the Defence Minister in cabinet de la Maizière (who is receiving his leaving certificate from President Gauk on the 29th Oktober - because of another cock-up), could even start to protect her phone, or even thought of providing her with more secure communications technology. Remember O’Bama having to trade-in his insecure Blackberry.
http://www.spiegel.de/internat...
So yes Irish Intelligence double-agent O’Bama could have been, and probably was, monitoring Angie’s calls home about Kartoffelsalat or to her old, pre-1990 masters in Moscow (quickly forgotten, huh).
Europeans have always spied upon each other. The USA spies on a budding European bloc that is tolerated as long as certain political and economic philosophies are endemic and the USA retains a strong defence and security leverage within Europe’s self-defence organisation – aka NATO.
At this time the USA – and yes it is a hegemony, but tell me which hegemony you would prefer, USA, China, Russia, the current European model – is probably much more sensitive because of the Spring in the Arab world is perceptibly broken and a much more assertive Russia mouths its script in the wings.
This much more assertive Russia is using radical Islam via its Iran and Syrian (now near failure) out-sourcing, so Angie’s unprotected Nokia could have been listened to by any or all of the former, or the Chinese already accused of hacking into USA
industrial secrets, or…..the list is endless.
Anybody, good, bad or indifferent could have been listening to her every word.
So Germany and of course the French who run perhaps the most aggressive intelligence service in the world – ask New Zealand, ask the francophone communities in Switzerland or Belgium – are now taking the intelligence issue to the greatest, largest and most arachnidic political intelligence agency in the world – the UN. Note that the motion proposers are Germany and Brazil, because France is a permanent member and does not want to risk being the (co-)author of a UN motion that could be viewed badly and possibly vetoed by at least 2 other permanent members – the same members France was going to take on with the USA over Syria but wilted.
Germany is also being pretty hypocritical in that until it all went wrong, less than a year ago (de la Mazière again), they were in charge of a European command
and control surveillance arm. This arm, based on gathered intelligence (by whom
Australia?) capable of launching and directing drones.
Obamacare is essentially the same as Hillary care. The attempt to keep all insurance companies alive results in a baroque monstrosity. Apparently this country has become -- not a democracy, not a republic, not a monarchy, but a lobby-ocracy, where nobody's business can be impacted by new laws. It reminds me of the boat in a C. S. Lewis novel where they tried to keep everything aboard, including a dragon that would not fit even when wrapped around the planks.