Well, we missed this. No wonder futures are down..

Chinese exports fell by far more than expected last month, and when measured in renminbi terms by the most on record. Exports fell 25.4 per cent year-on-year in February in US dollar terms, compared to the 14.5 per cent drop economists were expecting and a 11.2 per cent drop the previous month. That is only a nudge over the worst slump on record, in May 2009, when exports contracted 26.4 per cent. Imports fell 13.8 per cent, also worse than the 12 per cent economists were expecting but less than the 18.8 per cent drop in January. When measured in renminbi terms, however, exports fell by a record low, of 20.6 per cent compared to the 11.3 per cent slump economists were expecting and a 6.6 per cent drop in January. Imports fell 8 per cent, slightly better than the 11.7 per cent economists were expecting and less than the 14.4 per cent drop in January.

Chinese exports slumped by near-record amount in Feb

Not attempting to spin this (this is solidly negative) but it measures old China. Services and consumer spending are still ok, sort off.

Grinding to a halt:

The OECD now forecasts growth of global output in 2016 “to be no higher than in 2015, itself the slowest pace in the past five years”. Behind this is a simple reality: the global savings glut — the tendency for desired savings to rise more than desired investment — is growing and so the “chronic demand deficiency syndrome” is worsening.

Helicopter drops might not be far away - FT.com

In January of 2014, we wrote this article (here an excerpt):

However, underneath, things are deteriorating, not improving. Italian debt is crossing 130% of GDP. That's still not as high as Greece (170%) or Japan (220%), but we really fear it is reaching a point of no return. Continuation simply doesn't seem possible for very much longer

The Ticking Time Bomb Under The World Economy | Seeking Alpha

Now we read this:

Shares of Italy's largest financial institutions have plummeted in the opening months of 2016 as piles of bad debt on their balance sheets become too high to ignore. Amid all of the risks facing European Union members in 2016, the risk of contagion from Italy's troubled banks poses the greatest threat to the world's already burdened financial system. At the core of the issue is the concerning level of Non-Performing Loans on banks' books, with estimates ranging from 17% to 21% of total lending. This amounts to approximately €200 billion of NPLs, or 12% of Italy's gross domestic product.

Italy isn't Greece — it's worse - Business Insider

So it's no longer just the sovereign debt, it's the shaky loans in Italy's banks. This is somewhat surprising because Italy actually has comparatively low private sector debt, but it shows what years of stagnation and absence of inflation can do and also the problems are more severe in the South where the economy is doing much worse..

But what if corporate profits right now aren’t as strong as companies are telling us? Currently, profits as measured by standardized accounting principles are much lower than the profits executives are spouting to their investors. And it has billionaire investors and Wall Street strategists wrestling with the possibility that the much of the profit growth we’ve seen is actually just an illusion

Wall Street is wrestling with the possibility that stocks are being propped up by an illusion of profits - Yahoo Finance

This is what we were getting at in relation to ELLI earnings, GAAP earnings are less than half the non-GAAP earnings and the difference is mostly stock options for management, which keeps on selling stock so it's just basically "normal" remuneration and one really should take GAAP earnings.

Which makes the stock terribly expensive, no matter how well run the company is.

A it seems we're heading towards a substantially higher opening..

Cramer reiterated that investors should never buy into a strong market opening, as there will always be a better time to buy. He added that investors should also ask themselves why the markets are heading higher. If there is little news, or the news doesn't make sense, then following the herd is even more of a fool's game.

Jim Cramer's 'Mad Money' Recap: Don't Follow the Herd - TheStreet

Interesting stuff from Zacks, at times, these articles provide a nice overview:

There’s no sugar coating it – the S&P 500 has been far from impressive over the last three quarters. Sure, the Energy drag has been seismic and resource-sensitive sectors like Materials and Industrials have also taken it on the chin. Still, Zacks Investment Management is seeing notable weakness in other sectors as well which is painting a broader picture of “muddle-through” growth for the U.S. economy. 

We now have three quarters of back-to-back negative earnings growth and this picture isn’t expected to change in the current [Q1] and following [Q2] periods either. In fact, the entirety of 2016 earnings growth is now expected to come during the second half of the year, with growth likely to be negative during the first six months. 

 

This isn’t ideal for stock prices and will likely weigh on them. Read: volatility will be the norm for 2016, not the exception. But, the earnings weakness is not exactly shocking news and it does not change our 2016 outlook for the economy and stocks. We still see modest growth for the U.S. (less than 3%) and think stocks will post modest single digit returns for the year. Keep in mind – stocks still have higher yields than bonds or cash and we see the risk of recession as low. You want to own stocks in that kind of environment, in my view. 


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Earnings growth is still likely to be positive, on balance, for the year which would support higher stock prices. Estimates for 2016 have softened recently with total earnings for the S&P 500 index currently expected to be up only +2.1% from the same period last year. This is down from expected growth of close to +8% at the beginning of the year. What’s different this year (and last) is the removal of QE in the U.S. which has dried up a source of liquidity that nudged investors further out onto the risk curve. In other words, the era of multiple expansion in this bull market is probably behind us. The focus is on earnings and the growing skepticism is good. It gives room for upside surprise. 

So What Happened to Earnings, and Why be Hopeful? 

We now have Q4 results from 490 S&P 500 members that account for 98.9% of the index’s total market capitalization. Total earnings for these companies are down -6.4% from the same period last year on -4.6% lower revenues with 64.4% beating EPS estimates and 44.2% coming ahead of revenue estimates (beats were in-line with historical averages). Energy continues to be the big drag, with total earnings for the sector expected to be down -77.5% from the same period last year on -35.2% lower revenues. Strip away Energy, and earnings growth was flat for the S&P 500. 

 

Zacks Investment Management believes earnings improvement for the second half of 2016 will likely result from the anticipated end to the Energy sector’s “drag” based on consensus expectations of a stabilization in oil prices. We’re already seeing incremental signs of stabilization occurring with crude prices heading back toward $40 recently. It’s too early to call this an outright stabilization, but the picture is starting to look better (though do continue to expect price volatility for crude). 

When we break S&P 500 earnings down by sector, it’s plain to see the profound strain that resource-intensive sectors are placing on aggregate earnings. Basic Materials (-23.4%) and Industrials (-17.2%) have taken a beating as well – the adjustment period for rapidly falling commodities prices has been tough. 

Finance and Technology earnings have been soft, but better than the street’s expectations. Q4 earnings in the Technology sector are expected to be down -1.2% on -2.0% lower revenues with strength in the software/internet spaces offset by negatives in the hardware and semi-conductor industries. For the Telecom space, which is part of the Zacks Tech sector, we see strong double-digit earnings growth among the service providers (AT&T and Verizon) and weak growth among the equipment makers. 

Margins are Still Good 

Margins follow a cyclical pattern - they expand as the economy emerges from a recession and companies use existing resources in labor and capital to drive business. But, eventually, capacity constraints kick in forcing companies to spend more for incremental business. At that stage, margins start to contract. We may not be at the contraction stage yet – as you can see margins have stayed level for about a year now – but the optimistic assumptions about productivity improvements have to pan out for current consensus margin expansion expectations to stick. Something to watch. 

Bottom Line for Investors 

Soft, disappointing earnings reports gave investors one more reason to fear the correction might be a bear market. While this is a possibility, I just don’t see this as a likely. The selling pressures have reset many strong companies with solid earnings into lower multiples and, I think in many cases, investors have priced-in the possibility of flat earnings all year without a back half recovery. This is also evident in rapidly declining expectations where consensus saw 8% earnings growth at the beginning of the year and that number has now dropped to 2%. The best thing we can hope for is an earnings surprise in the back half of the year, and I think we’ll get one. 

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This is good information for both evaluating and allocating your investments. I encourage you to check it out right now.

Here is the Chinese dilemma..

The danger is that to meet the leadership’s objective, which for 2016 is an expansion of 6.5 percent to 7 percent, Zhou will need to loosen monetary policy faster and further. That could intensify depreciation pressures on the yuan, which has benefited in recent weeks from a drop in the dollar. Looming Leverage Looser monetary policy, along with the expanded fiscal deficit pledged by Premier Li Keqiang’s cabinet, would quicken a buildup of debt that already amounts to almost 2.5 times gross domestic product.

China's Growth Target Is the Next Test for Its Central Bank - Bloomberg Business

They need to try something else..

It still is far from all plain sailing.. from Zacks:

The Retail Sales report was so bad that the GDP Now indicator from the Atlanta Fed chopped off a full 0.3% from GDP growth on this one bit of news alone. Yes, that bad. 

To be clear, the February Retail Sales numbers came in as expected at -0.1% (which is not good by the way). But even worse, the original +0.2% reading from January was revised all the way down to -0.4%. Ouch! 

The bullish assumption is that we can't be headed to a recession anytime soon because unemployment is strong, which bolsters consumer spending. In theory that seems quite reasonable. However, the consumer is not spending all their loot like in the past leading to poor results as found in this report. And in recent consumer sentiment and confidence readings you can see a touch more caution in their outlooks as well.

We're buying 500 CTRP at $40

Let's first talk about our future growth potential. We mentioned in the past that Ctrip's annual GMV could reach RMB700 billion by 2020. After recent investments we made in travel-related companies, we have updated our long-term GMV target. In 2015, Ctrip, along with its invested companies, generated more than RMB350 billion in GMV. With favorable secular industry trends and solid execution, the annual GMV is expected to reach between RMB1.2 trillion to RMB1.4 trillion by 2020. There are several favorable factors that drive the GMV growth.

Ctrip.com International's (CTRP) CEO James Liang on Q4 2015 Results - Earnings Call Transcript | Seeking Alpha

First, China's travel industry will continue to grow faster than the overall economy due to the country's economic transition from an investment-driven economy to a consumption-driven economy.

Second, online travel booking only account for a small fraction of China's overall travel industry. More and more travelers will book their hotel rooms, flights and tour online, especially through mobile devices.

Third, as industry leader, we have the scale, well-known brand, high-quality service, leading technology, and comprehensive product offerings, which will position us as the key beneficiary of these favorable industry trends.

Fourth, new travel products such as those offered by our new business units will further contribute to the overall GMV growth. More travel offerings will also increase cross-selling opportunities and the customer stickiness.

And lastly, with rising personal income, more and more Chinese are looking to explore attractions further away from home. Outbound travel will be an important growth driver for the industry and Ctrip for the years to come.

Ctrip.com International's (CTRP) CEO James Liang on Q4 2015 Results - Earnings Call Transcript | Seeking Alpha