Mega Bear Market Starting Monday: It’s Gonna Fall Pretty Hard Because Markets Are Ruled Right Now By Fear
People Don’t Even Have Money For Mickey D’s, Taxmageddon Approaches, APPLE earning report due next Thursday, And A New Housing Boom Could Already Be Starting
That’s the message from some financial advisers, who are telling wealthy clients that the remainder of 2012 amounts to a last-chance sale on federal tax rates. Taxes are set to rise in January in the U.S., pushing the top rate on dividends to 43.4 percent from 15 percent and the top rate on capital gains to 23.8 percent from 15 percent.
Even if Congress averts the so-called fiscal cliff of tax increases on investments, income and estates, pressure to reduce budget deficits will mean higher taxes eventually, said Ron Florance of Wells Fargo & Co. (WFC)The answer is to take advantage of historically low rates and move taxable income and investment gains into this year, said Florance, managing director of investment strategy at the company’s private bank.
The bad news piled up Friday. Sagging PC sales and trouble in Europe took a toll on Microsoft’s net income. Its stock lost 86 cents, or 3 percent, to $28.64. Marvell Technology Group and Advanced Micro Devices, which also make chips, sank sharply.
McDonald’s profit shrank as a strong dollar hurt international results, which account for two-thirds of its business. The fast-food giant’s stock lost $4.14, more than 4 percent, to $88.72.
General Electric, a bellwether of the economy, fell 3 percent. The company reported stronger profits early Friday, but its revenue missed Wall Street’s expectations.
Orders for new equipment and services sank, mainly because wind turbine orders have fallen because a key U.S. federal subsidy for wind power expires at the end of the year. GE’s stock lost 78 cents to $22.03.
Comment: If Americans don’t even have money for Mickey D’s…..then the end is neigh.
McDonald’s Earnings Whiff, And The Company Says Global Same-Store Sales Growth Now Trending ‘Negative’
From the release:
OAK BROOK, IL – McDonald’s Corporation today announced results for the third quarter ended September 30, 2012.
In constant currencies, the Company posted higher revenues and earnings per share compared with the prior year while operating income was flat. On an as reported basis, revenues were relatively flat and operating income and earnings per share decreased, reflecting the impact of foreign currency translation. “While our sales momentum and current financial results reflect today’s challenging conditions, we continue to see significant long-term opportunities for brand McDonald’s and remain confident in the underlying strength of our business model,” said McDonald’s Chief Executive Officer Don Thompson. “We have the right plans in place to drive long-term profitable growth along with the experience and alignment throughout the McDonald’s System to navigate the current environment. We expect near-term top- and bottom-line growth to remain pressured as we focus on driving guest traffic and market share by leveraging our strategies and competitive advantages in response to the global economic, operating and competitive challenges. As we begin fourth quarter, October’s global comparable sales are currently trending negative.”
From WSJ: So-called same-store sales are a key indicator of restaurant chains’ strength, and McDonald’s hasn’t seen declines by that measure in about a decade
Chief Executive Don Thompson conceded that the chain is losing momentum world-wide, with sales at restaurants open at least 13 months falling so far in October compared to the same time last year. So-called same-store sales are a key indicator of restaurant chains’ strength, and McDonald’s hasn’t seen declines by that measure in about a decade.
“While our sales momentum and current financial results reflect today’s challenging conditions, we continue to see significant long-term opportunities for brand McDonald’s and remain confident in the underlying strength of our business model,” Mr. Thompson said.
NDX has crossed its Crash Trigger at 2760 and is about to exceed its prior low. That means the crash or panic starts here with the NDX. The bears have been so beaten up that there aren’t any left, well, hardly anyone. Everyone has a bullish count for the market but virtually no one is aware of the implications of the Broadening Formations. Well, this one is triggered.
Alessio Rastani: …it’s gonna crash and it’s gonna fall prettyhard. Because markets are ruled right now …
Apple Reports After Market Close On Thursday And Analysts Are Already Start Cutting Estimates For Next Week’s Earnings. If They Still Miss, Market Will Crash.
Here’s one reason Apple’s stock has been tanking lately.
Analysts are cutting back their estimates for fiscal fourth quarter (calendar third quarter) which Apple reports next week.
Philip Elmer DeWitt has a round up of three recent notes. Essentially, all three blame iPhone 5 supply issues for a worse than expected quarter.
The iPhone 5 has been sold out around the world since day one. It could be because Apple is struggling to make the phones, or it could be because it has been very aggressively rolling out the new phone around the world. Whatever the reason may be, analysts think Apple didn’t sell that many iPhone 5s in the last week of September.
One other reason analysts are cautious is the slowdown of PC sales, which they think will affect Mac sales.
Remember the great “housing ATM”? Well, according to Goldman Sachs, we’re starting to see that effect again.
FT Alphaville’s Cardiff Garcia has a nice piece summarizing a recent Goldman note in which they make the case that housing could boost GDP. Here’s the key section:
“First, the impact of housing is shifting into positive territory. The overall impact averaged around -1/4 percentage point in 2010-2011, stands at around +1/4 point now, and is likely to increase to +1/2 point in 2013. These numbers are equivalent to a move from a depressed housing market to a ‘normal expansion’ as we defined it late last year, although they still fall well short of a ‘boom.’ (These terms are all defined with respect to the growth contribution of housing; in level terms, housing still remains far short of normal, especially as far as residential investment is concerned.)
“Second, most of the positive contribution to growth has so far come from the direct impact of residential investment, which we expect to contribute around 0.3 percentage points to growth next year. However, the wealth effect is also starting to contribute to the improvement as the swing from continued house price declines in 2010-2011 to house price gains in 2012 gradually makes itself felt in consumption.
“Third, it is important to…”
25 Years After The Crash Of 1987, We’ve Still Learned Nothing. Wall Street Is The Same As It Ever Was
THIS week’s print edition has a leader condemning the failure of governments (and investors) to learn the right lessons from the Black Monday stock market crash 25 years ago:
The biggest mistake was to do with monetary policy. Central banks around the world responded quickly to the crash, some cutting interest rates, others pumping money into the system…Calming a fraught financial system made sense at the time, but it introduced the idea of the “Greenspan put”, the notion that central banks would always intervene to support the markets when they fell sharply. This was compounded by Mr Greenspan taking the opposite position when it came to asset bubbles: that even when prices were sky-high, it was not the job of central banks to outguess markets by trying to bring them back to earth…For investors, markets became a one-way bet: central banks would intervene when markets were falling, but not when they were rising. The “great moderation” was a long period of steady growth and low inflation—and a huge build-up of debt.
Why monetarist theory is flawed
Federal Reserve Chairman Ben Bernanke really means it this time.
He will rescue the economy.
“Businesses are not hesitant to invest and hire because interest rates are too high – they’re hesitant because of the uncertainty surrounding their future prospects.”
When the August jobless rate fell to 8.1%, the widely reported reason was because so many people gave up looking for work. U.S. business startups are at record lows. Food stamp rolls recently skyrocketed. Several U.S. municipalities are declaring bankruptcy. Ratings service Moody’s just warned of a possible U.S. downgrade. And the national debt just surpassed $16 trillion.