http://www.zerohedge.com/news/2013-11-14/wal-mart-misses-revenue-guides-below-expectations-fx-slow-economic-growth-blamed
Submitted by Tyler Durden on 11/14/2013 07:33 -0500
Submitted by Tyler Durden on 11/13/2013 17:17 -0500
Submitted by Tyler Durden on 11/14/2013 06:36 -0500
http://hat4uk.wordpress.com/2013/11/14/euroblown-join-up-the-dots-and-germanys-banking-union-game-plan-becomes-clearer/
Submitted by Tyler Durden on 11/13/2013 22:40 -0500
Wal-Mart Misses Revenue, Guides Below Expectations: FX, Slow Economic Growth Blamed
It's deja vu time for Wal-Mart. Spot the trend:
- Q1: Wal-Mart Misses Revenue, Guides Below Expectations: Weather Among Factors Blamed
- Q2: Wal-Mart Misses, Guides Below Expectations; Blames Weak Consumer Spending, Payroll Tax, FX And Lack Of Inflation
Spot it yet? Good. Sure enough, in Q3 continuing the trend, moments ago Wal-Mart just missed revenues, and you got it: lowered guidance.
Full breakdown:
- EPS $1.14 vs Expectations of $1.13. This was driven by a buyback of 23 million shares for $1.7 billion in the quarter
- Revenues missed $115.69 billion vs Expectations of $116.82 billion
- Q3 WalMart US comp store sales missed, and ex-fuel printed at -0.3% vs +0.5% expected, and down from +1.5% a year earlier
- Q3 Total comp store sales missed, ex-fuel printed at -0.1%, +0.3% expected,and down from +1.7% a year earlier
- WMT guided to Q4 EPS of 1.50-1.60 (including adjustments) vs expectations of $1.69
- WMT guided to year end EPS of $5.01-$5.11 (including adjustments) vs a previous guidance of $5.10-$5.30
From the report:
"For the fourth quarter, we expect EPS to range between $1.50 and $1.60. Our guidance includes the impact of approximately $0.10 per share for certain items described below. Accounting for these factors, we believe our fourth quarter underlying1 EPS will range between $1.60 and $1.70," said Holley."For the full year, we are updating our EPS guidance to range between $5.01 and $5.11. Accounting for the $0.10 of certain items that will impact the fourth quarter, our full year underlying1 EPS will range between $5.11 and $5.21," added Holley.The company's guidance reflects a view of global economic trends, including ongoing headwinds from currency exchange rate fluctuations, a competitive holiday season, and a full-year effective tax rate that is expected to range between 31 and 33 percent.
And the punchline:
"A challenging global economy andnegative currency exchange rate fluctuations impacted our sales growth in the third quarter," said Doug McMillon, Walmart International president and CEO. "In the fourth quarter, we will continue our progress on managing expenses well and staying focused on growing sales, including e-commerce. Still, the slow-growth macroeconomic environment is persisting through the first month of this quarter, and the markets continue to be competitive."
And now, BTFATH.
http://www.zerohedge.com/news/2013-11-13/tech-giant-cisco-craters-following-horrifying-guidance
Tech Giant Cisco Craters Following Horrifying Guidance
On the surface, CSCO's numbers were not terrible: the company only missed its revenue expectation which is fine: after all nobody cares about revenues anymore and the only thing that matters are adjusted, recasted, pro-forma, non-GAAP, made up EPS numbers excluding virtually all COGS, R&D and SG&A items. Just for kicks, CSCO also threw in that last refuge of a company with no growth prospects: yet another massive $15 billion stock buyback. However, in light of the ongoing idiotic hopium that a recovery is just around the corner, as has been the case for the past 5 years always to no avail, what is cratering the company in after hours trading, was its forecast for the next quarter. It was a doozy:
- Q2 EPS was expected to be $0.52. Instead the company lowered the outlook to a range of $0.45-$0.47.
But the punchline... wait for it:
- Q2 revenues was expected up 4%. Instead it will be... drumroll... -8 to -10%!
Yup: the company expected an up to a 10% drop in revenues. Welcome to Mr. Yellen's recovery.
Because who really needs the internet... Oh yeah, with the social media bubble in full force, apparently insolvent retailers do: after all FB, TWTR, LNKD et al are all trading based on the assumption that advertising budgets are getting infinite-er by the day.
Curiously, the stock is trading after hours as if the vacuum tubes algos don't know that fundamentals haven't mattered in ages, and all CSCO has to do is boost its 2022 multiple by another 5-6 turns to get back to even.
and......
Central Bank interventions failing in Europe and Japan.......
Eurozone Narrowly Avoids Return To Contraction In Third Quarter Led By French Weakness
- Bond
- European Central Bank
- Eurozone
- France
- Germany
- Gross Domestic Product
- Italy
- Japan
- Recession
- recovery
- Unemployment
Following the second quarter 0.3% rise in Eurozone GDP, which ended a multi year European recession (and who can possibly forget all those "strong" PMI numbers that helped launch a thousand clickbait slideshows), the proclamations for an imminent European golden age came hot and heavy. This was before the imploding European inflation print was announced and certainly before the ECB had no choice but to cut rates and even hint at QE, shattering all hopes of European growth. And just over an hour ago, the latest validation that just as we expected Europe is on the verge of a triple dip recession, came out of Eurostat (which may or may not get back to the issue of Spanish data integrity eventually), which reported that just like in Japan, the sequential growth rate in Europe is once again not only stalling but was dangerously close to once again contracting in the third quarter when it printed by the smallest possible positive quantum of 0.1%.
The WSJ map below conveniently shows that while Germany grew 0.3% in Q3, even if said growth is precarious, and Spain had a laughable 0.1% growth despite nearly 30% unemployment, it was France and Italy, both contracting at a 0.1% rate, that was the marginal source of disappointment.
The full breakdown by Euro area nation:
WSJ has a detailed breakdown:
Euro-zone GDP expanded 0.1% from the previous quarter, or 0.4% at an annualized rate, the European Union's statistics agency Eurostat said Thursday. That is down sharply from roughly 1.2% annualized growth in the second quarter. The euro-zone economy contracted for six-straight quarters from late 2011 through the first three months of this year.Germany's GDP increased 1.3% in the third quarter from the preceding period on an annualized basis, according to calculations by J.P. Morgan matching economists' forecasts. That marked a significant slowdown from the second quarter, when German GDP swelled 2.9% annualized, buoyed by a rebound in construction and other production after a harsh winter.France's GDP unexpectedly contracted by 0.6%, at an annualized rate, in the third quarter. Household spending increased slightly, but not enough to offset steep slides in investment and net trade.Analysts see little evidence of a quick turnaround in France. "Private consumption will remain hampered by high unemployment while a strong export-led recovery will remain unlikely before further efforts are made to increase the country's attractiveness," said Julien Manceaux, economist at ING Bank, in a research note.Italy's economy shrank slightly, its ninth-straight quarterly contraction.Germany, France and Italy combine for two-thirds of euro-zone GDP....Yet even if the euro zone is, technically speaking, no longer in recession, by many measures including unemployment, wages and inflation the currency bloc remains stuck in a severe downturn. The jobless rate is at a euro-era high of 12.2%. Annual inflation slowed to a mere 0.7% in October, far below the ECB's target of slightly below 2% over the medium term.
And considering that it is now the ECB's primary mission to lower the Euro, since in its view the threat of redenomination is gone and Draghi can afford lower EUR pairs without setting off the sovereign bond sell off timebomb (he is wrong), expect even more such disappointing reports in the future to justify the weaker currency. Sure enough, if yesterday's warning by the ECB's Praet of potential QE was not enough to push the EURUSD pair lower, today's GDP report has once again succeeded in lowering the pair from 1.35 to just above 1.34.
The currency wars are now once again fully back on, and like every time, the scramble to telegraph one's economy is weaker is of paramount importance.
Source: Eurostat
And Germany waiting in the wings......
EUROBLOWN: join up the dots and Germany’s Banking Union game-plan becomes clearer
BUNDESBANK v ECB: Round 13
German power is about to prove decisive.
Here we are again, back at the Target 2 system that allows peripheral eurozone States to get a stealth bailout by having huge outstanding liquidity (loans really) from the ECB, while Germany has equally huge liquidity (deposits really) at the central bank. Target 2 was originally designed purely as a monetarist transmission system. But national ClubMed central banks have perverted this by simply drawing on it, up to but not including putting anything back.
Controversial (but very smart) German economist Hans-Werner Sinn continues to argue that “It is as though the ECB were acting as a purchasing agent of German savings, which it then services and distributes to the crisis countries at whatever conditions it deems appropriate”. Sinn represents Bankfurter concerns, and for years he has been rubbished by CDU spokespeople/Berlin bureaucrats who did the “Yes I know it looks like a turd Tsunami heading our way, but it’s really only accountancy of no significance”. Clearly Sinn was and is on the ball: and in the New Germany that has risen from the Bundesrepublik elections, he is now in fashion rather than out on the wacky moons of Saturn.
Germany and Nordeuropa have been outnumbered on the ECB board since May 2010. The ECB board’s actions since that time are pretty clearly at odds with article 125 of the EU treaty, by having created a giant volume of public credit and guarantees in favour of ClubMed and other strugglers. A Frenchman and then an Italian have, in the final analysis, fiddled the system to stuff the German Weidemann. Trichet and Draghi used the system to their advantage, but now Berlin and Schäuble are on Weidermann’s side….and on the ECB’s case.
Let us suppose that the inevitable does happen in southern Europe: Greece defaults in March, Italy stays as she is – a car in neutral, sinking into the quicksand – and Spain’s empty banks get themselves into trouble on one of seventeen perfectly predictable dimensions. The write-offs will, I would argue, be far more than the half a trillion euros of capital that underpin the ECB….and I haven’t even included the French 2cv heading for the wall at top speed.
Germany’s Target2 credit with the ECB was at one time around 800 billion euros, an increase of over 200% immediately after the eurocrisis began.
But what’s to stop Berlin simply taking its ball home? The truth is, it’s already happening: the stock of German banks’ claims on peripheral Europe has fallen to €300 billion.
And now look at what Germany has clearly laid down as the law on Greece. Rehn has said emphatically that Antonis Samaras the Greek PM will not get his promised Christmas debt relief. Nobody has a solution to this, so what happens?
The answer is “anything”, but this time it certainly isn’t going to be “nothing”: because Mario Draghi may have the ECB votes, but a strident Germany has far less cash at risk than before.
What we have here is a game of poker: Draghi is gambling that Berlin will do anything to keep Greece from defaulting. Schäuble and Weidemann are gambling that a threat to start taking German funds out of the Target2 would scare the crap out of Draghi.
There are even hawkish bankfurters who say “Get what money we can out of Target2, and let Draghi’s bank go under – then we take over”.
Go back to Germany’s banking union diktat: it makes a deliberate fist of smudging and blurring the Sovereignty of the EU even further. This to me is a further sign that Berlin will play hardball, saying simply, “We will take over the EU’s finances in Frankfurt…but not until the ClubMed dung-heap is cleared away”. From the start, Berlin has refused to get lumbered with the bill. The Germans are saying, “No taxation without domination”.
Whatever commentators may say at the moment, in the end those who invest in the eurozone would rather have solidly boring German money management than the slippery money-printing bondholder-subordinating Draghi. The German High Command knows this. So does Mario Draghi.
Yesterday, ECB executive board member Peter Praet told the media, ““The balance-sheet capacity of the central bank can also be used. This includes outright purchases that any central bank can do.”
My riposte to this would be, “Not without German cooperation you can’t, matey”.
The future’s tight. The future’s German.
Japan stumbling and bumbling......
http://www.zerohedge.com/news/2013-11-13/japanese-q3-growth-tumbles-abenomics-cracks-following-slide-consumption-and-exports
Japanese Q3 Growth Tumbles As Abenomics Cracks Following Slide In Consumption And Exports
Earlier today we reported that the Japanese cries of "more QE" have not only started but are getting progressively louder, when after a massive initial surge in the first half of the year following an epic currency dilution, the Nikkei's performance since May has largely been one big dud, which is putting not only the psychological "wealth effect" at risk, but also is tearing Abenomics apart, since perhaps the only key variable for the Prime Minister's plan of "growth" is the constant increase in the stock market, much the same as in the US. But while the market has gone nowhere fast, it is the economy that is truly starting to crack at the seams, as was confirmed hours ago when Japan reported that in the third quarter its economy grew an annualized 1.9%, following a quarter when the GDP grew at more than double that pace or 4.3%, which in turn succeeded a quarter with 3.8% growth. What's worse, in nominal terms, the actual third quarter growth was a paltry 0.4%: the lowest in all of 2013 while actual nominal consumption plunged to the lowest level since just after the start of Abenomics.
Paradoxically, and certainly tied to the lack of gains in the market, and lack of losses for the Yen which has stabilized in the upper 90s range, the GDP losses were driven by the two core focal points of Abenomics: exports and consumption. The WSJ reports: "the two growth pillars lost much of their momentum in the reporting period, as exports fell 0.6% from the previous quarter while growth in personal consumption slowed to 0.1%. Exports gained 2.9% and consumption rose 0.6%, in the April-June window. Both figures were also revised Thursday."
Naturally, like every other Keynesian basket case, Japan was quick to place the blame elsewhere, in this case accusing "slowing growth overseas" as the main culrpit. "Japan's growth rate halved during the July to September period compared with the first half of this year,as falling demand from emerging markets as well as weaker consumption put the brakes on the economy's expansion."
It gets better:
"Weaker exports could become a major threat Mr. Abe's mission to haul the economy out of its 15-year-long deflationary malaise.Exports have been hit by decreased demand for cars from the U.S. while sales in emerging Asian economies have been hurt by financial market speculation over the Federal Reserve's plans to downsize its asset-buying program. "
In other words, it was all the US' fault that Abenomics is now failing. Where it wasn't the US fault, is in showing the way that when all else fails, only government funded "growth" is the only answer: "Government-funded public works helped prop up the third-quarter growth. Public works spending rose 6.5% from the previous three-month period, mostly as a part of the government's ¥10.3 trillion stimulus package earlier this year. Ahead of the tax increase, Mr. Abe is compiling another package worth ¥5 trillion."
Some however saw through the triple: Goldman cautioned that “exports have failed to grow in volume despite expectations they would rise with a time lag following a weakening yen, suggesting there may be a structural problem hurting exporters’ competitiveness and exporting capability." Well, since the primary beneficiary of a plunging yen is, at least on paper, the export industry, can one just call it a ballgame for Abenomics?
As for that key sticking point, and so far most undisputed failure of Abenomics by far, declining wages, well: they declined. Goldman says that employee compensations, a key focus of overseas investors, came in with a negative growth in both real and nominal terms for the first time in three quarters.
Amusingly, the weakness in consumption is thought to be short-lived: "Concerns over personal spending during the remainder of the fiscal year to the end of March are not so strong, as analysts expect last-minute demand ahead of Japan's sales tax increase to 8% from 5% in April to prop up consumer spending."
Remind us to look back at this post in 3 months when instead of the widely predicted economic spending Golden Age supposedly driven byeven more taxation in the future, consumption instead craters as the population retrenches in anticipation of more upcoming hardship.
But then again economists, like all hacks, were never good at actually figuring out how common sense works.
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