Tuesday, September 08, 2009

Satire Everywhere - Even Where Unintended

The first article I opened this morning was a Bloomberg piece titled "Stocks Cheapest Since '89 Show Why Analysts Say Economists Wrong on Growth." I scratched my head and plowed through the article, which spends a lot of time actually detailing some risks that the market faces going forward. Then I found the part where they explain the headline - the cheapness of stocks (emphasis mine):

"The gains spurred the steepest rise in the S&P 500’s price- earnings ratio since at least the 1950s, pushing the index to 19 times operating earnings from the past 12 months, the most expensive level since 2004, according to data compiled by Bloomberg. Based on analysts’ forecasts for 2010, the S&P 500 trades for 13.5 times income, the lowest since 1989 when compared with the trailing P/E ratio before Lehman Brothers Holdings Inc.’s collapse a year ago."

Then I read this piece on ZeroHedge, which highlights JPMorgan's upgrade of General Electric today. Remarkably, the report is titled after Pink Floyd's Comfortably Numb. We're truly in a remarkable spot in the markets when the justification for upgrading behemoth GE is that investors seem numb to the downside! I guess that means there is no downside - if we ignore it, it can't happen!

A colleague sent me this comment this morning from an analyst whom I will keep anonymous, but suffice it to say that this analyst is not a moron, and was actually mostly bearish throughout 2006 and 2007 before everything fell apart:

"All in all, we expect the coming weeks to put an end to the debate on recession vs. recovery and to bring about a major lift in investor sentiment. In essence, we expect our bullish thesis to become consensus within months if not weeks."

I replied, "WHY? Because all those people who are unemployed and having trouble with their mortgage resets will suddenly be exposed to mind erasing gas like in the second to last Batman movie?" I'd love to hear the logic for everyone suddenly waking up to the reality of the new bull market - as I'm expecting quite the opposite. I'm expecting the bulls to realize that rampant unemployment, understated job losses, stagnant wages, continuing job losses, weak hiring outlook, lack of home equity, and an eventual inevitable end to government subsidies will require us to finally address the problems in the economy. But maybe the plot of Batman Begins will turn into reality, and the government will unleash its happy gas to control the populace.

Iowahawk has written a phenomenal satirical piece which puts a mainstream media spin on the current trends in joblessness. Some snippets:

"Brian Smalley was laid off by in late April. He didn't panic. He didn't rush off to a therapist. Instead, the 33-year-old Santa Monica resident discovered that being jobless "kind of settled nicely, once you get used to the heating grate..."

What most people would call unemployment, Smalley embraced as "funemployment." What other people would dismiss as starvation, he whimsically terms a "starve-cation..."

"Horton, who was recently laid off from her job as a ElectoChill D.J. at a boutique hotel aromatherapy spa, says lack of a daily job obligation has been "a godsend..."

"I get to sleep in late at the shelter, and I finally have time to catch up on Tweeting," she says. As she recently mused on Twitter, from an Austin public library: "Recession? More like relax-cession!...""

Never heard of funemployment? Here's Urban Dictionary's definition: "The condition of a person who takes advantage of being out of a job to have the time of their life. I found a burrito with only one bite in it; funemployment rocks!..."

"Melissa Browning, 34, is another funemployed L.A. single who has found new meaning in prostitution. After losing her job as a program coordinator for a non-profit Feng Shui education group in late March, Browning decided to go on a three-week interstate highway trek through the truckstops of central Arkansas with two friends, earning up to $30 per night while sleeping in tent-like yurts.

"I used to be so absorbed in the details of work, but prostitution has allowed me to come out of my shell," Browning said. "Now it's just so much easier for me approach new people, in idling semis, at 2 am. It's just gives you such a positive pro-active outlook. I guess that's why it's called pro-stitution." "

It's sad when the Iowahawk piece is the most sensible story I've read today...



Anonymous said...

"Based on analysts’ forecasts for 2010, the S&P 500 trades for 13.5 times income, the lowest since 1989 when compared with the trailing P/E ratio before Lehman Brothers Holdings Inc.’s collapse a year ago."

could you please tell me, the idiot, what the hell does that mean?

Kid Dynamite said...

I'm not sure if you're being sarcastic - because that sentence is absolutely absurd, which was kinda my point.

They are comparing the price to earnings ratio based on future expected earnings to previous actual HISTORICAL (trailing) price to earnings ratios, which is an apples to oranges comparison.

Kid Dynamite said...

to clarify further - the P/E based on future expected earnings is almost ALWAYS lower than the P/E based on trailing earnings, because earnings are usually rising!

Anonymous said...

KD, thanks for the reply.

i think the sentence is 1. an absurd comparison 2. just doesn't make any sense even if you accept that comparing future to trailing earnings is OK.

specifically the part that is nonsense to me is: " the lowEST since 1989 when compared with the trailing P/E ratio BEFORE Lehman Bro collapse...."

a given metric (p/e) can the lowEST since 1989.

a given metric (p/ future e) can be lowER than a metric (p/ trailing e).

but how can a metric (p/ fut e) be the lowEST since 89, when compared to a metric (p / trailing e) BEFORE a particular date which passed months ago?

i think they are saying -

the future value of these apples has never been higher when compared to the value these orange had before jose, the orange picker, lost his job.

multi-layered nonsense.

anyway, thanks for the response.

good vegas stories btw. you got your gambling bit down solid. your stripper game needs work.

AmyC said...

I'll tell how bad the analysts are right now...I have to come to your site for sanity:)

Hang tough darlin'. They have no idea what the "new normal" really means.