This weekend I read a host of negative articles assailing this market and individual company earnings reports. The suggestion: The numbers are all hiding something and even companies like Amazon (AMZN) and Apple (AAPL) simply reported numbers that exceeded low analyst estimates that were supposed to drive upside. This is an outrageously bullish sign. You now have the most important arbiters of stock prices who are utterly skeptical of anything positive. And yet, the actions themselves not only tell you otherwise, but make you feel like you’ve been left out of a great race. Which give? Let’s start with nine months of lower price projections and targets with no signs of slowing down. This is exactly the flip side of what happened when stocks were going up when we had endless price target increases. Analysts, I believe, have finally turned negative and we see a bottom. Maybe not the lowest, but low enough to buy the best – Honeywells (HON) and Carriers (CARR), Otis Worldwides (OTIS) and ServiceNows (NOW). We’re not in a position to call a true bottom, mainly because we don’t know how the market will react to a rise of less than 75 basis points in September. We know bears think nothing is enough, but they’ve gotten a little outrageous. Historically, back-to-back increases of 75 points are enough to make even the late Paul Volcker, former Federal Reserve Chairman, nervous, given falling raw costs and limiting spending by all but the wealthiest. I think the Fed will signal something in a month that could lead to a selloff. Otherwise, I can see the market doing well through earnings season and then stalling near the next Fed meeting in late September. At that time, we will not only have to manage the Fed, but also the midterm elections. The current forecast is for the Republicans to win 30 seats in the House, which would give them a majority in both houses and virtually end everything President Joe Biden wants to do. That could tilt his agencies even further to the left, as the possibility that a Republican presidential candidate could win certainly seems plausible. So far, his agencies have a leftist bias, but they can really go crazy against banks, oil and pharmaceutical companies. It’s unfortunate, but that and the Fed could cause a tough time in September. All that aside, the past week has shown the power of big business. Let’s spend a second on Tim Cook and Apple. It was a most impressive quarter, but I’ve read a number of negative articles about how the numbers bode badly for Apple. How the hell could they be a bad omen? Did they talk to Tim Cook and he gave them a negative reading? Granted, it wasn’t the most impressive of neighborhoods. There were ways of looking at him with some trepidation. On the one hand, I wanted higher service revenue. But $19 billion is certainly more than enough. After speaking with Cook after Apple announced its earnings last week. I was particularly seduced by the real openness of India, Brazil and Indonesia, three of the largest markets in the world. The company lures people in there to the Apple world through the exchange market and then hooks them to higher performance. I also liked that the company seemed to access my endless calls to determine the lifetime value of an Apple customer. This is essential, given that the company now has 1.8 billion active devices and 98% of users say they are satisfied and therefore do not switch to another manufacturer. Looking at the current flurry of Apple deals, you get the feeling there might be a pot of gold here among every customer. However, I think more is needed. That’s why it intrigued me so much when Cook said “buy now, pay later” could be the start of a bigger financial vertical. Can you imagine if Apple had a financial app that let you do everything on it? Either way, winning another “must have” sounds great. The fact that Cook popped the question of getting the NFL ticket can be seen as something already well advanced. Does American football play well abroad? It could be decisive. But so does the fact that Cook loves the way baseball plays out. Regardless: the fact is that Apple is in an enviable position with the most dominant phone in the world. Amazon: What can I say? Amazon can and will grow with fewer people. The attraction comes from the customer who has stayed with the business and is now increasingly used as a business that delivers. I think Amazon needs to crush Walmart (WMT). Walmart shares are back where they disappointed and the company has yet to report. It’s not just big tech that has done well. We also saw great numbers for Oils – Chevron (CVX) and Exxon Mobil (XOM) – and everything related to aerospace and automotive. The club holding Ford (F) put on a real show even as, once again, skeptics were everywhere. Pharmaceutical companies and health names have reported good numbers, but they are being sacrificed for political concerns which I expect to run their course in a few weeks. Of course, there were disappointments. I plan to talk about some of them at our monthly meeting this Thursday. But I think the opponents protest too much. So far they are losing to the bulls, they just don’t want to admit it. They have the S&P 500 short-range oscillator on their side – plus 7.9 is pushing us to sell stocks, not buy them. But I learned long ago that good is good when it comes to stocks and that rapping that says good is actually bad is the business of idealists on the wrong side of trade. (Jim Cramer’s Charitable Trust is long APPL, AMZN, CVX, WMT. See here for a full stock list.) As a CNBC Investing Club subscriber with Jim Cramer, you’ll receive a trade alert before Jim makes a transaction. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, AS WELL AS OUR DISCLAIMER. NO OBLIGATION OR FIDUCIARY DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR PROFITS ARE GUARANTEED.
Apple CEO Tim Cook speaks during Apple’s annual Worldwide Developers Conference in San Jose, California on June 6, 2022.
Pierre Dasilva | Reuters
This weekend I read a host of negative articles assailing this market and individual company earnings reports. The suggestion: The numbers are all hiding something and even companies like Amazon (AMZN) and Apple (AAPL) simply reported numbers that exceeded low analyst estimates that were supposed to drive upside.
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