How Wall-Street Hocus-Pocus Inflates S&P 500 Revenues…”Despite what you might think, there’s a difference between our financial markets and casinos in Las Vegas: casinos aren’t rigged.”
by Wolf Richter
WolfStreet.com
May 9, 2016
But even the well-oiled machine couldn’t hide the decline.
Despite what you might think, there’s a difference between our financial markets and casinos in Las Vegas: casinos aren’t rigged.
In a casino, the odds are officially against you. You know what they are, and you subject yourself to them – statistically speaking – to lose money … while having a blast.
Wall Street on the other hand has become an ingenious hocus-pocus machine where even the most taken-for-granted and often-cited data points are systematically inflated. Yet this particular trick – one of many – is perfectly legal. It’s how it is supposed to be done. And that makes it even more insidious.
The S&P 500 companies account for about 75% of the US equity market capitalization. So when aggregate revenues of the S&P 500 companies rise or fall, it’s an important indicator as to what is happening in the US business scene. It’s also a gauge of the global economy since many of these companies derive their revenues from around the world. So we pay close attention to it.
With 87% of the S&P 500 companies having reported first-quarter results so far, according to FactSet, revenues fell 1.6% from the first quarter 2015, when revenues had already fallen from Q1 2014. It’s the fifth quarter in a row of year-over-year revenue declines. The revenue recession continues.
But it’s actually worse than that.
For example, Telecom Services. According to Wall Street data, revenues in the sector soared 11.2% year-over-year. FactSet cautions that the biggest – or rather only – contributor to growth was AT&T, which reported $40.5 billion in revenues, up a dazzling 24%.
The Rest…HERE
