- Friday's unusual stock market activity; and
- what F5 Networks' blowup means.
The Market Fooled Everyone Today Posted at 4:05 p.m. EDT on Friday, April 5 You can tell for certain what "they" like on days like today. "They" (meaning the collective wisdom of the market) love real estate investment trusts and the utilities, both of which "they" regard as yield equivalents backed by hard assets. We may think this is all Ben Bernanke's doing, but I think that's so wrong. In fact, rates are where they are now because they are the world's safe haven -- except the rich people around the world who want a little extra yield. Plus, remember that this week President Obama moved on making foreign pension plans exempt from U.S. taxes on real estate trades, meaning they no longer pay taxes when they take profits on REITs. So the money's going there aggressively.
We are also witnessing an astonishing rally in the financials that makes little sense other than they have been down a lot. They don't have the yield, they don't do well in this yield environment and they are most likely going to disappoint when they start reporting, which is as soon as next Friday when we hear from JPMorgan Chase ( JPM) and Wells Fargo ( WFC). The only explanation I can see is that there's a (nascent) return to the housing trade, perhaps because we know rates are going to stay low and refinancings are going to be remain easy. If you believe this, go buy Radian ( RDN) and Toll Brothers ( TOL) as they have the most upside. The transports and materials companies? They were hammered hard ahead of the number, so you can see people saying, "Ah-hah, now we know why they were down. So we can go buy them." I get the first. The second? I don't know. I fear the earnings.
Does F5 Blowup Tell Us Much? Posted at 6:46 a.m. EDT on Friday, April 5 F5 Networks ( FFIV), on-ramp to the Internet, blows up in a spectacular fashion. The government business, a mainstay, is terrible. The telco business is awful. I have to ask, is this really revelatory? This stock has been headed down for months because it is not a cloud play. It is a play on your own internal hardware. And the world is going away from it. How do I know this? Because Facebook ( FB) used to be a big client of FFIV, and now Facebook is going virtual. You don't need F5's piping if you go virtual. Now, I know on the call F5 took a real shot at Cisco ( CSCO), and Stephanie Link and I will suss that out in an Action Alerts PLUS bulletin because Cisco is a name we are building. You never want to hear anyone lose business to anyone, and we know that F5 took some away from Cisco. The company was mentioned by name on the call. But right now I am saying this is F5-specific. I doubt a soul believes that. But that's the only way I can read it. Action Alerts PLUS, which Cramer co-manages as a charitable trust, is long FB.