201410.20
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Maybe IBM Should’ve Bought The Whole ‘Cloud’ Rather Than Itself

IBM blames the cloud for its dismal results, but the fact is that IBM should own the cloud outright (figuratively, of course). If the business has changed so much in the past few years due to customer shifting, then why wasn’t IBM leading that process? Why are they now actually admitting what amounts to a…

201410.02
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What’s With Russell?

There are a great many difference between small cap companies (and their stocks) and large cap companies, especially mega cap (and their stocks). That in mind, investors predisposed toward the S&P 500 are rightfully watchful of the Russell 2000. While factors displacing the latter into a technical “correction” may be idiosyncratic, no one can deny…

201409.26
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Further Measures of Market Risk

Continuing on with the valuation theme, there are a couple of additional “market” indicators that are also at or above dot-com levels. While not strictly a valuation technique, the level of margin debt and really customer net worth gives us an insight into one aspect of multiple expansion. Margin debt for FINRA accounts (which includes…

201409.17
2
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The Business of Movies Without Customers

The biggest thorn in the recovery narrative, or whatever it is that the FOMC claims is guiding its hand, is that consumers are not spending as they “should” under such circumstances. Retail sales not only have disappointed this year, bookended by “unexpected” weather on one and an as-yet excused position for the other, they are…

201406.05
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Bubbles and Skepticism Split By Earnings and Sales

Nearly all (97.5%) of the S&P 500 companies have reported for the first quarter. EPS for the index companies stumbled rather spectacularly, though weather is being blamed for nearly all of it. Back on January 23, index EPS in Q1 was expected at around $29.40 (as reported). As of the latest update, EPS is only…

201404.22
4
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McDonald’s Again

McDonald’s latest results confirm that something is very much amiss on the consumer side. Total global revenue grew only 1% Y/Y, including new store launches and acquisitions. However, as has been the pattern since 2012, US comparable store sales lagged markedly. The rate of contraction in Q1 was actually the worst in more than a…

201404.17
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Cash Does Not Mean Capex, IBM Edition

Related to yesterday’s observations about corporate cash, the broken record of IBM revenue continues to demonstrate the unwillingness of American businesses to freely spend on capex. While attention continues to focus on China and Asian results, not without good reason, the domestic and larger “Americas” segment continues to drag. Revenue in China is down 20%…

201403.06
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Staples Disaster Offers At Least The Potential For Competing Explanations

There is undoubtedly a high degree of resistance to the idea that the economy is slowing, or, much worse, has already slowed considerably. For the most part, counter explanations (more narratives than evidence) revolve around the silly to absurd – snow, cold, government shutdown, etc. Office retailer Staples’ latest announcement of a sales disaster, however,…

201402.28
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Shrinking Is The Basis For Recovery Expectations

There is a growing incongruence in the mainstream narrative as it relates to the rather sunny and sanguine dispositions of current economic expectations. By now you have heard that 2014 is set to be “the year”, for once finally breaking free of all those mysterious “headwinds” that have cast asunder all the best laid plans…

201402.13
2
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Where Have All The Bellwethers Gone?

The term “bellwether” is derived from Middle English and the practice of placing a bell on a castrated ram (wether) as he led his flock from place to place. That way, no matter the weather or topography, a shepherd would have a good idea where the flock was located and where they were going by…