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Earnings season kicked into high gear this week and most of the bellwethers the Street tracks beat on the bottom line.But sluggish revenue and weak demand weighed on many the companies, with Google, Intel, and Microsoft all missing expectations.
Wall Street’s top minds have weighed in on the difficulties plaguing global growth, including the growing crop crisis in the U.S. and its impact on the agriculture industry.
'When we get the real crash and everything implodes, and it's really Armageddon style collapse, my fear (again) is that capitalism and free markets take the blame for problems that were created by government ... We might have to have a violent revolution years in the future or maybe our children or grandchildren will have to fight for their freedom...'
'You look at retail sales there were negative for three consecutive months, April, May, June. That's happened only 27 times there were first reported in 1947 and in 25 of the 27 it was in a recession or within three months of a recession.'
Unconventional policy could include 'targeting the 10-year Treasury at 1 per cent, doing credit easing rather than quantitative easing, targeting nominal GDP, price-level targeting and lots of stuff that is more esoteric,' Roubini says. 'Eventually if everything goes wrong, they can even buy equities.'
MOHAMED EL-ERIAN: The Risk Of Collateral Damage And Unintended Consequences Caused By The Fed Is Material And Growing
'But, more of the same will not have a durable beneficial impact, especially if other policymakers remain missing in action. Indeed, the advantages of another round of unusual Fed activism are declining while the risk of both collateral damage and unintended consequences is material and growing.'
'The information content within negative earnings surprises has increased,' says Bernstein. 'A negative surprise shows that the bad results were worse than the IR spin (i.e. worse than the company expected).'
'To us, extending the current guidance that rates will remain 'exceptionally low….at least through late 2014' seems the path of least resistance should the Fed choose to ease in August or September. Moving the guidance out to mid-2015 would simply maintain the nearly three-year freeze implied by the current guidance when it was originally rolled out in January.'
'Overall real GDP growth was stronger during military conflict phases that included defence build ups than during the two-year periods that followed, in three of four cases during the past seven decades.'
'The world faces serious problems in agriculture. We are facing shortages of everything ... But any weather problems will have big effects because of the dire situation in farming. Agriculture will be one of the best sectors of the world economy for years as I have told you often.'
'Hence we note that the aggregate monthly analyst optimism data has slid below the previous lows of last year and the year before, to the sub-40% mark. This has taken the 6-month change in optimism back into negative territory, which is beginning to drive the equity market back into bear market territory.'
'S&P 500 globalization accelerated in the past decade, further increasing the differences between US GDP and the S&P 500 ... This soft patch is worse for S&P EPS than it is for US GDP given its global nature and raises risk of a deeper S&P 500 dip.'