Cash is still King
Last week I said that this week would probably not be pretty and that it made no sense going long.
I said:
Housing - My Prediction: not good. Verdict: not good. We had new starts drop 5.3%. This was a triple whammy: a large drop, slightly larger than expected, and June is prime building time. As if to underline the point, D R Horton came out and said: we are really facing tough times in the housing market.
Tech - My prediction: mixed. Verdict: mixed. I said PCs and Cell phones were particularly vulnerable. Apple missed sales. Dell missed sales and earnings. BRCM said cell phone product inventories are up. Chip companies got nailed.
Oil - My prediction: strong earnings. Verdict: strong earnings.
The reason I am staying on the sidelines is that I am distinguishing between market sentiment and company performance. It absolutely does not matter how well a company is doing. Google doubled earnings. ISIL doubled earnings. The market doesn't care.
The market is not looking for signs to be positive. They are looking for signs to be negative.
Consider DO and ESV. Drilling for oil is massively profitable right now. And it will continue to be profitable as long as oil is valuable. So it is axiomatic that when oil prices surge, these companies benefit. Instead, they dropped like a rock when oil went up. Then they dropped when oil went down. The market is not in the mood to buy stocks. I also don't think that it is buying bonds. The money is drying up.
I do not think that these are symptoms of a recession.
The cell phone slowdown, for example, is a sign of a mature device that hasn't had new features in over a year. Cell phone companies should have rolled out strong mp3 capabilities and strong mobile entertainment capabilities. The slowdown in sales will turnaround as soon as new features are added.
I will continue to wait on the sidelines. I am convinced that we are in the middle of over-selling, but until it turns, why buy?
I said:
Housing - My Prediction: not good. Verdict: not good. We had new starts drop 5.3%. This was a triple whammy: a large drop, slightly larger than expected, and June is prime building time. As if to underline the point, D R Horton came out and said: we are really facing tough times in the housing market.
Tech - My prediction: mixed. Verdict: mixed. I said PCs and Cell phones were particularly vulnerable. Apple missed sales. Dell missed sales and earnings. BRCM said cell phone product inventories are up. Chip companies got nailed.
Oil - My prediction: strong earnings. Verdict: strong earnings.
The reason I am staying on the sidelines is that I am distinguishing between market sentiment and company performance. It absolutely does not matter how well a company is doing. Google doubled earnings. ISIL doubled earnings. The market doesn't care.
The market is not looking for signs to be positive. They are looking for signs to be negative.
Consider DO and ESV. Drilling for oil is massively profitable right now. And it will continue to be profitable as long as oil is valuable. So it is axiomatic that when oil prices surge, these companies benefit. Instead, they dropped like a rock when oil went up. Then they dropped when oil went down. The market is not in the mood to buy stocks. I also don't think that it is buying bonds. The money is drying up.
I do not think that these are symptoms of a recession.
The cell phone slowdown, for example, is a sign of a mature device that hasn't had new features in over a year. Cell phone companies should have rolled out strong mp3 capabilities and strong mobile entertainment capabilities. The slowdown in sales will turnaround as soon as new features are added.
I will continue to wait on the sidelines. I am convinced that we are in the middle of over-selling, but until it turns, why buy?
posted by Andrew at
9:05 AM
1 Comments:
any views on TRID... I have october options for this and they are reporting on wednesday.
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