We wanted to send a few short notes on some very important things we are seeing.
Socialism sucks. That has been our motto forever. It produces nothing. It creates nothing. Socialism cannot even turn on the lights without the money from capitalism. Since the calls for this scam, this con, this moronic thought process is getting louder, we are going to dust off the cobwebs of our “socialism sucks” report of a couple of years ago…with a few additions and send to you over the weekend. We will counter the endless kissing of the a–es by the media and Hollywood of these con artists. Actually, we really shouldn’t have to counter it. Just check out the video of that bastion of democracy, Venezuela.
The ECB announced continued printing of money and continued negative rates this morning. For years, they have been threatening to cut this ridiculous easy money off. So 10 years into their “economic recovery,” nothing doing. The main question is what ammo is left? This must be asked especially with the recent recessionary numbers coming from this region. This on top of China doing the Bernanke shuffle by easing every week culminating with the recent gargantuan $83 billion injection of more debt into their system. This on top of Powell blinking and doing a complete 180. IT REMAINS ALL ABOUT THE EASY MONEY.
First and foremost, easily the most important part of the equation is that all major indexes are back above the 50 day moving average and on this small pull back, have all held. We cannot begin to tell you how vital this is as we move forward. This morning, the semiconductors are ramping even though numbers for many names are suspect. The bet is that we have seen the bottom of the cycle even though we have not seen one company say we have seen the bottom of the cycle. But as a believer in price first, they continue to hold above the 50 day moving average and will help parts of the market  on this morning’s open.
We are not as thrilled as others that are reporting on earnings. Yes…our number one motto is “it’s not the news, it’s how markets react to the news.” But when IBM posts an earnings drop of 5% and a sales drop of 3%, we are not so sure they should get a standing ovation.
When Lam Research reports a drop in earnings and sales but is up nine dollars this morning, you may want to read the fine print. The company announced a $5 billion buyback even though they do not have $5 billion in cash. This $5 billion represents more than 20% of their market cap. Of course, the stock will move higher on this news
Waters Corporation did the same, announcing a gigantic $4 billion buyback, which is a whopping 20% of the market cap. We don’t mind the buybacks. The fact is it takes stock off the market and raises earnings per share. But we like organic better. We expect more of this going forward.
But again, this minor pullback has so far, been controlled and rotational…and continues to hold important support. The SEMIS could go a long way in helping the cause today. This is one of the two most vital areas we follow as they have led markets up and down for ages.
2 replies
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    Butch says:

    “Socialism is the philosophy of failure, the creed of ignorance and the gospel of envy.”


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