No Growth, No profit, No problem

[marmar]

No Growth, No profit, No problem
by Wolf Richter • July 17, 2015


It was a historic day. Google’s market capitalization jumped by over $60 billion, enough to bail out Greece for a couple of years, and handily beating the prior single-day record of $46 billion held by Apple.

The thrilling event occurred on the news that Google’s second-quarter revenues rose 11% year-over-year – which seems like a lot in a quarter when S&P 500 revenues are expected to shrink – and “net profit” rose 17%, while net earnings per share of its class A common stock inched up a measly 1%, which sent these shares up 16%.

Or maybe it was on the news that Google finally hadn’t disappointed analysts’ expectations. Or rather, that they’d finally lowered their expectations enough to where Google could exceed them.

The action gave the NASDAQ a big push to rise almost 1% to another all-time record. It’s now 4% above the prior crazy record of March 2000. And this time, everyone agrees, it’s different.

.....(snip).....

So this time,the asset bubbles are far broader than they used to be, after years of central-bank money-printing and zero-interest-rate policy in major economies around the world, whose sole purpose it was to inflate asset prices. This was supposed to create a “wealth effect,” which was supposed to stimulate the economy. It certainly worked in inflating asset prices.

Now nearly all assets are overpriced. And enthusiasm for even more asset-price inflation is palpable. The insane asset-price stimulus is still rampant, though the Fed has terminated its money-printing binge and is contemplating the idea of raising interest rates from zero to nearly zero. We’ve never had this sort of global environment. Not in 2000, not in 2007. So yes, this time it’s different. But in the wrong direction. ......................(more)

http://wolfstreet.com/2015/07/17/no-growth-no-profit-no-problem/