Alarm bells went off: “Yellen props stocks,” the headline read. Somebody needs to. Politicians are actively contemplating how to most effectively send the largest and brokest debtor in history into default. Corporate revenues can’t keep up with inflation. Earnings estimates and actual earnings growth plunge. And the S&P 500 soared 16% year to date.
Companies & Markets
Apple, After 2-Year Fight, Fails to Squash “Apfelkind” Café in Germany
by Wolf Richter • • Comments Off on Apple, After 2-Year Fight, Fails to Squash “Apfelkind” Café in Germany
Apple has become a legal juggernaut. It’s taking on everyone and everything for presumed violations of its patents and trademarks. Billions are at stake. Its bitten-into-apple logo is sacred. The color red is sacred. So are red apples of any kind, apparently. Then it tried to squash a cafe in Germany, owned by a stubborn entrepreneur with a vision.
Supercars In The US, Japan, and China: How QE And Corruption Boosted Sales
by Wolf Richter • • Comments Off on Supercars In The US, Japan, and China: How QE And Corruption Boosted Sales
Supercar-makers Lamborghini, Ferrari, and Rolls-Royce are reacting to the forces whacking global markets for luxury products: a corruption crackdown in China, Abenomics in Japan, and the Fed’s money-printing in the US. The idea that sales in China, which is printing billionaires by the dozens, are crashing is a hard-to-swallow concept for the industry.
S&P Threatens To Cut US Debt To Junk
by Wolf Richter • • Comments Off on S&P Threatens To Cut US Debt To Junk
“This sort of political brinkmanship is the dominant reason the rating is no longer ‘AAA,’” S&P ratings agency wrote in a research note. More ominously, it warned that if Congress failed to pass a debt-ceiling hike before the out-of-money date in mid-October, it would cut the U.S. to “selective default.” And then there would be the post-default era.
Bubble Trouble: Record Junk Bond Issuance, A Barrage Of IPOs, “Out Of Whack” Valuations, And Grim Earnings Growth
by Wolf Richter • • Comments Off on Bubble Trouble: Record Junk Bond Issuance, A Barrage Of IPOs, “Out Of Whack” Valuations, And Grim Earnings Growth
When Blackstone’s global head of private equity, Joseph Baratta, said Thursday night that “we” were “in the middle of an epic credit bubble,” the likes of which he hadn’t seen in his career, he knew whereof he spoke. Junk bond issuance hit an all-time record in September. IPOs are flying off the shelf. But earnings growth is grim – and plunging. What gives?
J.C. Penney And Goldman: Lies, Scams, And Rip-Offs
by Wolf Richter • • Comments Off on J.C. Penney And Goldman: Lies, Scams, And Rip-Offs
Why would anyone buy this crap? No, not the clothes in J.C. Penney’s stores – which practically no one is buying – but the shares it just sold. It desperately needed to raise capital because it’s bleeding cash and won’t be around much longer without lots of new cash to bleed. So it did. At a horrendous expense, overnight, to existing stockholders.
First Cracks (And Losses) In The Insane LBO Craze
by Wolf Richter • • Comments Off on First Cracks (And Losses) In The Insane LBO Craze
It could be an aberration. Or it could be the first visible crack in the insane leveraged buyout craze that has spread across the country: JPMorgan, Bank of America, and Goldman Sachs could get hit with a loss of up to $156 million on the $780 million in junk debt they pledged to sell to fund the buyout of teen-fashion retailer rue21. With consequences for investors.
The Other Reason Why IBM Throws A Billion At Linux (With NSA- Designed Backdoor)
by Wolf Richter • • Comments Off on The Other Reason Why IBM Throws A Billion At Linux (With NSA- Designed Backdoor)
IBM announced today that it would throw another billion at Linux, the open-source operating system, to run its Power System servers. It may be making hay of the revelations that the NSA has roped in American tech companies to perfect a seamless spy network. Linux, being free of NSA influence, would be a huge competitive advantage for IBM. Or so it would seem.
US Stocks Blind To Crashing Earnings Estimates (For Now)
by Wolf Richter • • Comments Off on US Stocks Blind To Crashing Earnings Estimates (For Now)
Corporate revenues have been crummy all year, and earnings estimates for Q3 have come crashing down. A year ago, they were still expected to grow 15.9%, a sign of blind optimism. By Friday, they’d plunged to 4.7%. During that time, the S&P 500 soared 16.8% and the NASDAQ 19.6%. The Fed’s greatest accomplishment. But there is a corollary.
David Stockman – Bernanke’s (Untough) Love Child: The $27 Billion Affair At The Hilton
by David Stockman • • Comments Off on David Stockman – Bernanke’s (Untough) Love Child: The $27 Billion Affair At The Hilton
The idea that LBOs carry massive debt that is never paid down, leaving behind “financial zombies on the ragged edge of insolvency,” defies historical principles of LBOs, writes David Stockman. Blackstone’s LBO of Hilton Hotels is one of these “free market defying zombies” – “one global business slump away from bankruptcy.” And it just filed for an IPO.