Citi On Q3 Earnings: Beats The Result Of One-Time Factors, Not Growth

Citi Research analysts Tobias M Levkovich, Lorraine M Schmitt and Christina Wood look at stock prices in the context of the real quality of recently reported earnings, earnings guidance and a liquidity-based rally, and sound worried in their report “Unsettling Disconnects” of October 25.

LMNOP = “Liquidity, Momentum, Not Operating Performance”

Citi observes that with the ‘tapering’ threat now in cold storage, and the debt ceiling issues kicked down the road, investors are trading markets higher based on momentum and liquidity factors. Short covering and year-end alpha/benchmark targets may also be adding fuel to the fire. The acronym ‘LMNOP’, according to Citi, aptly describes the current state of the markets.

Earnings –...

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