You Became a Pig and Will Now Get Slaughtered
Be honest with yourself ahead of the weekend: You got complacent in January when it came to investing discipline. You chased Netflix (NFLX) at each open of the trading session (with success, but with no valuation sanity check). You yucked it up about Apple's (AAPL) new $1,000 iPhone via about text messages with your broker, who promised another 50% on the S&P 500 this year. You went out and bought that new Mercedes with driverless technology because hey, why not -- stock prices only go up. In hindsight, weren't all of these actions just a little bit too presumptuous, sport? Markets have had a terrible, yet eye-opening week. Massive down day for the Dow on Tuesday out of the blue. What looks to be another plunge in stocks on Friday. In short, the market is telling you the next six months may be different than the last six months. No, don't expect a U.S. recession, but respect how things happening now could shape future corporate results. Here are three things taking this market down at the moment: (1) rising bond yields are a major problem BEFORE the Federal Reserve even begins to raise rates further AND pare its balance sheet; (2) there is no new positive catalyst for stocks in the near-term seeing as tax reform is out of the way and we must wait for bottom-line impacts for companies; (3) earnings calls this season are not revealing the news investors had hoped for with respect to potential M&A activity and share buybacks. The bottom line is that news flow has turned negative, so buckle up this month big spender.
Some rapid-fire thoughts after a week of tech earnings. Out of all the major reports, Action Alerts Plus holding Microsoft (MSFT) impressed the most. Strong cloud numbers, strong outlook and a ton of cash that is likely to be deployed on a big acquisition within the next 18 months. Alphabet (GOOGL) , also an Action Alerts Plus holding, had the weakest quarter from big tech. Lots of structural costs creeping into the business. The stock could easily pull back 10% this month in a broader market downdraft .. unless Waymo begins testing flying cars. The quarter from Action Alerts Plus holding Facebook (FB) looks better than it initially did at the time it crossed the wires. Instagram is a juggernaut that's destroying Snap Inc. (SNAP) and the news feed changes may not be so doom and gloom. As for Amazon (AMZN) , the thesis that it is destroying bricks-and-mortar retail is alive and well. But the stock could also pull back 10% this month with concerns over expense growth ratcheting up. Also, Whole Foods performance continues to be a major letdown. On a side note, shame on Amazon management for these continued shams they think are earnings calls. Investors deserve more information.
- Receive the free Morning Jolt newsletter by heading here.
Speaking of Snap
Readers of Morning Jolt should be no stranger to my harsh words for Snap Inc. co-founder Evan Spiegel. All in all, he has been a failure as a public company CEO. Hopefully with age he will start getting it. Who knows? But what we do now know is that Spiegel is probably ready to shop his struggling disappearing social media app. Spiegel, who gives terrible earnings calls and rarely does interviews, will make a rare appearance at the Goldman Sachs tech conference on Feb. 15. There is only one reason if you are Spiegel to show up here: to gauge interest in exploring options for a company that has lost considerable value since a summer 2017 IPO. So get that slim-fit suit ready Evan, it's time to go out there and sell.
Rough week for bitcoin.
Bitcoin has been broken. pic.twitter.com/YaK1cLA3C1— Brian Sozzi (@BrianSozzi) February 2, 2018
Why have you been missing Morning Jolt's new webshow? More from the Morning Jolt Archives:
More of What's Trending on TheStreet: