This weekend I read a host of negative articles assailing this market and the earnings reports from individual companies. The suggestion: The numbers are all hiding something and even companies like Amazon (AMZN) and Apple (AAPL) simply reported figures that exceeded lowball analyst estimates that were meant to generate upside. This is an outrageously bullish sign. You now have the most important arbiters of stock prices fully skeptical of anything positive. And yet the stocks themselves not only tell you otherwise, but make you feel like you are being left out of a big run. What gives? Let’s start with nine months of reducing projections and price targets with no sign of a letup. It is the exact flip side of what was happening when stocks were going higher when we had endless price target bumps. The analysts, I believe, have finally turned negative and we’re seeing a bottom. Maybe not the bottom, but low enough to buy the beaten downs — the Honeywells (HON) and the Carriers (CARR), the Otis Worldwides (OTIS) and ServiceNows (NOW). We aren’t in a position to call a real bottom, mostly because we don’t know how the market will react to a less than 75-basis-point increase in September. We know that the bears think that nothing is enough, but they have gotten a little outrageous. Historically, back-to-back 75-point hikes is enough to get even the late Paul Volcker, former chair of the Federal Reserve, nervous, given how so many of the raw costs are coming down and spending is being reined in by all but the wealthiest. I figure the Fed will signal something in a month that might lead to a sell-off. Otherwise I can see the market doing well through earnings season and then coming to a halt near the next Fed meeting in late September. At that point we will have not only the Fed to deal with but also the midterm elections. Current predictions have the Republicans winning thirty seats in the House, which would give them a majority in both houses and pretty much end anything President Joe Biden wants to do. That could make his agencies lean even more to the left as the possibility of a Republican presidential candidate who could win certainly seems plausible. His agencies so far have a left bias, but they can really go bonkers against the banks, the oils, and the drug companies. It’s unfortunate but that and the Fed could cause a rocky moment in September. All that aside, this past week showed the power of bigger companies. Let’s spend a second on Tim Cook and Apple. That was a most impressive quarter, yet I have read a number of negative pieces about how the numbers augur badly for Apple. How in heck could they bode badly? Did they speak to Tim Cook and he gave them a negative read? To be sure, it wasn’t the most impressive of quarters. There were ways to look at it with some worry. For one, I wanted higher service revenues. But $19 billion is certainly better than satisfactory. Having talked with Cook after Apple reported earnings last week. I was most enamored of the real opening of India, Brazil and Indonesia, three of the largest markets in the world. The company is luring people there into the Apple world through the trade-on market, and then hooking them on the superior performance. I also liked that the company seems to be acceding to my endless pleas to figure out the lifetime value of an Apple customer. This is key, given that the company now has 1.8 billon active devices, and 98% of users say they’re satisfied so they aren’t switching to another maker. Looking at the current spate of Apple offerings makes you feel there could be a pot of gold here among each customer. However, I think that there needs to be more. That’s why it so intrigued me when Cook said “buy now pay later” may be the beginning of a bigger financial vertical. Can you imagine if Apple had a financial app that allowed you to do everything on it? No matter what, gaining another “must have” seems great. The fact that Cook punted on the question of getting the NFL ticket may be seen as something already well into the mix. Does American football play well overseas? That might be dispositive. But so might the fact that Cook likes how baseball is going. No matter: the fact is that Apple is in an enviable position with the world’s most dominate phone. Amazon: What can I say? Amazon can grow with fewer people and it will do so. The pull is from the customer who stayed with the company and is now becoming more in use as a trade down that delivers. I think Amazon must be crushing Walmart (WMT). Shares of Walmart are all the way back to where it disappointed and the company hasn’t reported yet. It wasn’t just big tech that did well. We also saw terrific numbers from oils — Chevron (CVX) and Exxon Mobil (XOM) — and anything aerospace and auto. Club holding Ford (F) put on a real show even as, once again, the doubters were all over it. The drug companies and healthcare names reported good numbers, but they are being sacrificed for political concerns which I expect to run its course in a couple of weeks. Of course, there were disappointments. I intend to talk about some of them when we do our Monthly Meeting this Thursday. But I think the naysayers doth protest too much. So far they are losing to the bulls, they just don’t want to admit it. They do have the S & P 500 Short Range Oscillator on their side — plus 7.9 drives us to sell some shares, not buy them. But I have learned long ago that good is good when it comes to stocks and the good-is-actually-bad-news rap is the stuff of idealists on the wrong side of the trade. (Jim Cramer’s Charitable Trust is long APPL, AMZN, CVX, WMT. See here for a full list of the stocks.) 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This weekend I read a host of negative articles assailing this market and the earnings reports from individual companies. The suggestion: The numbers are all hiding something and even companies like Amazon (AMZN) and Apple (AAPL) simply reported figures that exceeded lowball analyst estimates that were meant to generate upside.
