Friday, December 27, 2013

Amazon Is Discounting Earnings Back To The Fall Of The Roman Empire



The powers that be have become so habituated to the massive bubble that has been building for decades that insanity is the new normal.   And, they can find an untold number of explanations to rationalize it away.

With the Russell 2000 discounting nearly 100 years of earnings, mortgage applications collapsing, profit warnings reaching all-time record levels, with the corporate state issuing more federal debt than actual GDP growth, with more people unemployed than when Obama took office, with Twitter now worth $40 billion dollars even though it will almost certainly never make a profit with its current business model, with corporate earnings so many sigmas out of bounds that there is no historical precedence and on and on.    The swell of money placed into the hands of the pathocracy is staggering.  All while countless tens of millions of Americans rot under corporate state repression.  All accomplished by burying the dollar over the last thirty years.

And, amongst all of the other insanity, Amazon, a company whose stock I love to hate,  is now discounting nearly 1,500 years of earnings with its current price to earnings ratio.  Earnings achieved by using a payables float scheme to create working capital out of thin air as noted on here before.   1,500 years.  In the rear view mirror, that takes us about back to the collapse of the Roman Empire.  How appropriate.  Of course, discounting earnings is really a forward mechanism so the company is discounting current earnings until about the year 3,500.  The company will be lucky to survive the next ten years in its current form.  

Amazon was at astronomical bubble levels in 2000 and again in 2008 before the last collapse.  But, it took the Federal Reserve’s asinine and criminal policies of Wall Street bailouts, endless free money to the investor class and buying a trillion dollars a year of Wall Street’s toxic trash, while letting Americans rot, to really push the company’s stock into another universe.   Today’s global bubble is far and away the largest in the series of bubbles that define the 1995-present blow off topic in free market corporate capitalism.  And it is global central banks that blew it with their ludicrous voodoo economics.  

The above chart shows linear regression channels similar to those used on Apple’s stock in past posts.  And, just days before Apple stock collapsed, I showed the exact same pattern as Amazon is exhibiting and wrote of the stock’s impending doom.  (A wild rush upward out of its linear regression channels into a blow off top.)   How appropriate.  Because today, more loonies in the insane asylum are once again calling for Apple to breach $1,000 a share this coming year.

posted by TimingLogic at 11:17 AM