Without the element of uncertainty, the bringing off of even, the greatest business triumph would be dull, routine, and eminently unsatisfying.
As the stream of earnings reports came rolling in this week, the center of attention, as always, is what came in from the largest companies. The whales, the 800 pound gorillas, the elephants in the room, the biggest and the ones everyone knows and loves (or hates, if you are Bernie Sanders, Elizabeth Warren and those who believe every big corporation will never be any good).
In technology, Tim Cook and Apple (NASDAQ:AAPL) reported a solid quarter and again sold over 50 million units of product, but because of it’s reliance on iPhone sales and questions about innovation and lack of strategy, investors were unimpressed.
Google (NASDAQ:GOOGL) had a strong quarter as some of it’s ‘moonshots’, more professionally known as greenfield opportunities, are starting to gain traction and narrow their losses, or heaven forbid, bring in profits.
Twitter Inc (NYSE:TWTR) showed nice growth and announced layoffs, yet again. Mr. Dorsey might want to address the little issue of option grants as 5% a year dilution makes it awfully hard to grow the bottom line.
Amazon (NASDAQ:AMZN) showed good top line growth and told the world they are investing in all of the right areas, like web services, India, artificial intelligence, and more warehouses. Amazon always gets the benefit of the doubt as 125 billion in sales can solve the pesky problem of dubious investment analysts.
In the consumer area, Coca-Cola Company (NYSE:KO) showed better volume growth, while Chipotle (NYSE:CMG) continued to struggle and decided to make major changes by adding products, advertising, and increased quality control, as if that was possible. Chipotle is also preparing to fight off activist Bill Ackman, who owns nearly 10% of the stock.
Under Armour (NYSE:UA) is a well run, nicely growing company in the possession of a rich stock where it is very difficult to justify the price based on the current size of the business. It is a company, like many, where you would love to own it, but you cannot because the multiple is just too high. Maybe in time.
VF Corp (NYSE:VFC), also an attractive company, suffered from a tough retail sector, as consumer spending on apparel remains sluggish. Add that one to the list, too. In the oil patch, Exxon (NYSE:XOM) and Chevron (NYSE:CVX) reported billions in profits, as they have for the last fifty years. It seems when oil prices are at least somewhat normal, the integrated majors make their money. Who knew?
In the banking sector, overseas banks like Barclays (NYSE:BCS) and Deutsche Bank (NYSE:DB) reported decent numbers on the strength of the Fixed Income, Currencies, and Corporate line. With the pretty good performance from large US banks and a crecord setting month of October in the merger and acquisition area, it is a good sign for the economy the largest banks seem to be in great shape (don’t tell Elizabeth and Bernie).
In macroeconomic news, third quarter GDP growth came in at 2.9 percent but consumer spending was just a touch light. Janet Yellen and the hard working group at the Federal Reserve Board will meet this week to tell us to wait until December, when the Fed will raise interest rates 25 basis points. It is about the only thing in markets we can now count on as uncertainty about the global and domestic economy, earnings, and the election, rule the day.
The World Series is a nice distraction as having two teams like the Cubs and Indians, who have not been in fall classic for such a long time, is a great story. The rebuilding of the Cubs in a short four year time frame, from worst to first (best record in MLB), shows you what can be done with good leadership.
Conversely, in the sorry state of affairs of our national election, with just over a week to go, our national disgrace continues unabated. It would only be right if the ultimate outcome was that the loser was mandated to be the Vice president.
Congress would then declare under new rules, every week the President and Vice President would change roles so each side would get a chance to see how bad it was to work for the other person. I would imagine most U.S. voters would vote yes on my proposal, although the result would lead to massive uncertainty. What else is new?
Y H & C Investments, Yale Bock, and the family of Yale Bock own positions in securities mentioned in the blog post. Investing in stocks can lead to the complete loss of your capital. As always, on any company mentioned here, past performance is not a guarantee of future returns. Investing involves risk of losses on invested capital. One should research any investment and make sure it is suitable with your objectives, risk tolerance, risk profile liquidity considerations, tax situation, and anything else pertinent to your financial situation. Also, the CFA credential in no way implies investment returns will be superior for any charter holder.