NEW$ & VIEW$ (3 OCTOBER 2012)

Obama-Romney debate this evening. There is however no debate on the earnings trends in America:

EARNINGS WATCH

Factset:

For Q3 2012, 82 companies have issued negative EPS guidance and 21 companies have issued positive EPS guidance. If the final percentage of companies issuing negative guidance is 80% (82 out of 103), it will be the highest percentage recorded for a quarter since FactSet began tracking guidance in Q1 2006.

For Q2 2012, 107 companies issued quarterly EPS guidance. Of these 107 companies, 69% reported actual EPS above guidance, 23% reported actual EPS below guidance, and 7% reported actual EPS equal to guidance. The percentage of companies reporting EPS above guidance is below the five-year average and the overall percentage for the S&P 500 for Q2 2012.

For the current fiscal year, 143 companies have issued negative EPS guidance and 105 companies have issued positive EPS guidance. The Materials, Financials, and Health Care sectors (with a minimum of ten companies) have the highest percentages of companies issuing negative guidance while the Utilities sector has the highest percentage of companies issuing positive guidance.

Over the past five years, companies that issued either quarterly or annual EPS guidance have
outperformed companies that did not issue quarterly or annual EPS guidance.

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September was a quiet month for guidance. For Q4 2012, nine companies in the S&P 500 issued quarterly EPS guidance during the month. All nine of these preannouncements were negative.

For Q3 2012, five companies in the S&P 500 issued quarterly EPS guidance during the month.

For the current fiscal year, 15 companies in the S&P 500 issued annual EPS guidance during the month. Of these 15 preannouncements, seven were negative while eight were positive.

DEBATING A U.S. RECESSION

Here’s a link to a lively Just kidding debate on whether or not a recession is imminent. Before you click on the link, you might want to read the conclusion:

So, given the dearth of forecasts of recession, and the fact that not all indicators are trending down, I rate the likelihood of imminent recession as low — but of course the data could be revised down, going forward. Furthermore, crises abroad, or more likely failure to address the fiscal cliff could yet put us in a self-inflicted recession.

“On the one hand, on the other hand.” Winking smile

Growth in Apartment Rents Slows

The apartment-rental market remained robust in the third quarter but, with home sales improving, the sector is showing signs of losing steam, according to a new report from Reis.

(…) [image]The rental-apartment vacancy rate declined to 4.6% during the third quarter from 4.7% in the second, said Reis, a real-estate research firm. (…)

Rents increased 0.8% in the third quarter to an average of $1,090 a month, according to Reis, which tracks trends in 79 markets. That is slower than the 1.1% increase in the second quarter but strong compared with historical averages. (…)

The apartment-rental market also may be weakening because developers have responded to rising rents by adding supply. Research firm Zelman & Associates expects 235,000 units to be started this year, followed by 285,000 in 2013 and 320,000 in 2014.(…)

 Commodities’ Engine Stalls

For years, commodities investors had it easy—just buy anything that China was buying. Now, with China’s growth slowing and demand for raw materials easing, investors are being forced to work a bit harder.

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Storm cloud  China Non-Manufacturing Index Falls as Economic Growth Cools  China’s non-manufacturing industries expanded at the weakest pace since at least March 2011 as officials struggle to reverse a slowdown in the world’s second- biggest economy.

The purchasing managers’ index fell to 53.7 in September from 56.3 in August, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in Beijing today. Readings above 50 indicate expansion.

Rainbow  Chinese property is baaaaack!

(…) But, as of the last three months or so, there has been something of an upturn. More cities are recording price rises than price falls — a reversal of the late 2011 and early 2012 pattern. And Standard Chartered’s China strategists, who follow the sector quite closely, are fairly confident that is more than a dead cat bounce.

Standard Chartered noted a few months ago that there were a few signs that the property market might be stabilising after many months of downward drift. And lo, they have since found yet more signs. And those signs, when fed into Excel and spat out into charts with StanChart colours and logos, look like this:

China  - property sales & inventory to Q3 2012 - Standard Chartered

The report’s authors, Stephen Green, Lan Shen and Andy So, say that year-on-year apartment sales are back in positive territory, at least in the 25 tiers 1 to 3 cities they track, after eight months of decline. And there’s more:

More significantly, the decline in area under construction appears to have bottomed (there is considerable volatility in the numbers, so we plot the three-month moving average). This measure has been contracting for most of 2012, dragging on overall growth. But we believe it could well move back into positive territory in Q1-2013. At any rate, we believe that the worst of the contraction in construction growth is probably over.

Plus, the slowdown in building of new apartments has dramatically curtailed the problem of huge excess inventories, write Green, Lan and So.

In fact, they say, sales are picking up so much — and unit completion has been so slow — that inventory depletion could be a problem in the second half of 2013, at least in the top-tiered cities.

 

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