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Editor's Note: The Early Look is Hedgeye Founder & CEO Keith McCullough’s daily morning macro note. Here is complimentary access to today's edition. |
EARNINGS SLOW TO CYCLE LOWS
“The call to stillness comes quietly. The modern world does not.”
- Ryan Holiday
When you have time today (or this weekend if you have a boss that’s manic about “pivots”), take a look at the modern game that you are playing. Take a step back, question your in-game decision-making process. Can you capitalize on the noise?
Another book by Ryan Holiday can help coach you through this. It’s called Stillness Is The Key. “… we have cars, cell phones, social media notifications… but who has the power to stop? Who has time to think?”
“Stillness is what aims the archer’s arrow. It inspires new ideas. It sharpens perspective and illuminates connections.” It’s not what generates a stop-loss at a single-factor Old Wall 50-day Moving Monkey.
Back to the Global Macro Grind…
The META of all Bubbles just lost more than $500 BILLION in market cap and Bubble Boy’s TSLA was just notified that the DOJ has opened a criminal investigation on how he marketed “self-driving” cars.
BUY STAHKS!
The Bank of Canada raised by 50bps instead of 75.
BUY STAHKS!
US Consumer Confidence continued to crash (102.5 in OCT vs. 108 in SEP) and New Home Sales were -10% this month.
BUY STAHKS!
That last narrative is my new fav. “KM, bad news is good …”:
A) OK. So what do you say on “good news” (like maybe GDP this morning or the next jobs report)?
B) And why do you then tell me “KM, you have to admit, earnings have been pretty good”?
This is the problem with the opposite of stillness. There is no process. There’s just manic-clicking from narrative to narrative.
BREAKING: EARNINGS SLOW TO NEW CYCLE LOWS
A) That headline is nowhere in your Old Wall media this morning … but
B) It’s 100% empirically true
“but, but, KM… stop tweeting facts”:
A) 189 of the SP500s companies have reported an aggregate year-over-year EPS DECLINE of -3.3%
B) Communications Sector aggregate earnings have crashed -24.3% year-over-year
“but, but… if you back out META Bubble and don’t back out Energy”:
A) See… you’re losing me again…
B) You need to take an adult time-out and look at the numbers instead of Perma Bull narratives
Obviously if you backed out what most funds own (Energy) that’s ridiculous. The DOWN -3.3% SPX EARNINGS includes Energy Earnings +196% year-over-year!
What’s also beyond ridiculous is someone telling me “I have to admit bad is good … but earnings are better”?
A) 3-6 months ago Old Wall Consensus was for a 2H of 2022 Earnings to be up +8-10% (now its +3-5%)
B) DOWN -3-24% is not up +3-5% or +5-10%
Of course, AFTER the US stock market crashed, the “better than expected” may or may not be true relative to a stock’s price that’s already crashed. That said, both GOOGL and META are making lower-lows this morning. That’s what bear markets do.
Need a solution to all of this narrative nonsense?
A) Get The ROC (rate of change) of Real GDP GROWTH, INFLATION, and EPS right at the turns in the Full Investing Cycle
B) Then you’ll get the ROCs of company REVENUES and EARNINGS (if they have those) right
If you want to crush both your peers and competition, that’s how The Game is played at the highest level. The call to generating consistent alpha across the Full Investing Cycle sharpens perspectives and illuminates the steady stillness of success.
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
