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Staples Disaster Offers At Least The Potential For Competing Explanations

By |2014-03-06T15:02:08-05:00March 6th, 2014|Economy, Markets, Stocks|

There is undoubtedly a high degree of resistance to the idea that the economy is slowing, or, much worse, has already slowed considerably. For the most part, counter explanations (more narratives than evidence) revolve around the silly to absurd – snow, cold, government shutdown, etc. Office retailer Staples’ latest announcement of a sales disaster, however, actually creates a worthwhile discussion [...]

Shrinking Is The Basis For Recovery Expectations

By |2014-02-28T16:36:23-05:00February 28th, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

There is a growing incongruence in the mainstream narrative as it relates to the rather sunny and sanguine dispositions of current economic expectations. By now you have heard that 2014 is set to be “the year”, for once finally breaking free of all those mysterious “headwinds” that have cast asunder all the best laid plans to this point. This is [...]

Where Have All The Bellwethers Gone?

By |2014-02-13T12:44:40-05:00February 13th, 2014|Economy, Federal Reserve/Monetary Policy, Markets, Stocks|

The term “bellwether” is derived from Middle English and the practice of placing a bell on a castrated ram (wether) as he led his flock from place to place. That way, no matter the weather or topography, a shepherd would have a good idea where the flock was located and where they were going by listening for the sound of [...]

Corporate Revenues Back To Low Point

By |2014-02-03T17:35:11-05:00February 3rd, 2014|Economy, Federal Reserve/Monetary Policy, Markets|

Going back to the snow debunking from earlier today, the primary impediment to wider economic expansion outside of bifurcation and artificial monetary channels is income and employment. Mainstream commentary aside, employment has been mostly atrocious for some time. The clear divergence between the Establishment Survey and the Household Survey, both from the BLS, establishes that break in October 2012 – [...]

No Second Half CAT Magic

By |2013-10-23T11:20:58-04:00October 23rd, 2013|Markets|

Following up on yesterday’s inflection narrative, Caterpillar seems to have fallen prey to the same blindspot as economists. Everything with regard to economics and the economy is always assumed to move in a straight-line, forever. Linearity is a feature of the predictive economic model, and it is such an obvious weakness. In the earning’s release for the first quarter of [...]

It Simply Doesn’t Add Up

By |2013-08-29T10:28:18-04:00August 29th, 2013|Markets|

Second quarter preliminary GDP estimates were revised upward over the advance estimate, from 1.7% to 2.5%. Based on trade data released in the past month, this is not much of a surprise, though the size of the revision is somewhat larger than expected. Of course, because the purchase of imported goods (and a few services) is negative in the GDP [...]

Earnings And Sales Continue To Run Below Great Recession

By |2013-08-26T15:55:23-04:00August 26th, 2013|Markets|

Last week it was Target’s turn to turn in a disappointing quarterly report. While being quite unique in blaming Canada, even the results in the US segment were lackluster, at best. Earnings expectations for the fiscal year were dimmed back in May, from a range of $4.85 to $5.05 down to $4.70 to $4.90. The latest estimates, concurrent with Q2’s [...]

If Hasn’t Already, It Is Beginning Now

By |2013-08-06T17:15:21-04:00August 6th, 2013|Markets|

The fact that companies coming out of the Great Recession have been running lean in terms of labor costs cuts both ways. It is a negative factor for employment growth since businesses have been very reluctant to add to staff levels without sustained revenue growth (which never materialized outside of currency translations). However, it also meant that those lucky, official [...]

No Hiding From Revenues

By |2013-07-23T16:29:17-04:00July 23rd, 2013|Markets|

Earnings season is in full bloom and markets care little about the details as long headlines continue to provide optimism. That’s a pretty low bar since “beating” estimates is a rigged game. However, revenues are much more difficult to tailor by accounting conventions, so they offer a more reliable (not perfect) window into the fundamental circumstances of each company. We [...]

Commonality in Earnings

By |2013-04-23T15:12:28-04:00April 23rd, 2013|Markets|

General Electric Revenue: $35 billion, -0.5% Y/Y Net Income: $3.6 billion, +13% Y/Y EPS (GAAP): $0.35/share, +17% Y/Y Organic Revenue -6% Europe revenue -17% Service revenue in Europe -22% Sales in Core Industrial Equipment & Services -6% (-11% profit) Sales in Power Generation and Water Treatment -26%, (-39% profit) GE Capital Revenue (ex NBC sale) -6% (+9% profit) SG&A expenses [...]

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