To All, Reality Check, Chapter 72. The stock market was up today on "great earnings" reports, according to CNBS. Yes, I do love raining on parades, but this drunken march could stand a little mixer. <G> Let's look at the "great" earnings without the rose-colored glasses.
1. O.K., it isn't fair to look at GM because it isn't fair to look at any company with really lousy eps during a strike. But, I feel I should comment that eps down more than 80% is not an unreservedly wonderful performance for the biggest car co, no matter who's on strike.
2. JP Morgan. The terrific eps reported by JPM was cited several times today as one reason why the market was up. Folks, JPM's net income was up 6.6%. In the best of all worlds for a bank. How much of that was fictional earnings from derivatives? We will never know, but I think there is reason to suspect that this was not a gangbusters' result, even if we consider the number an honest one.
3. Merrill also had fully diluted earnings per share up a little over 6%. Has there ever been a better environment for brokerage companies? And all you can give us is 6.4%. El Stinko Profundo, IMHO.
4. Intel eps were down 28%, year to year. All the analysts could say was how well they did in this environment. Crazy. They burned $3 billion over the past year, or more than 30% of the cash horde they accumulated during the good years. The debt has gone up. I don't consider this great performance. In fact, the word crappy comes to mind almost immediately.
O.K., my cloudburst has ended. But if this is the standard the analysts and media are setting for great reports, then they will never spot trouble before it hits.
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