The Real Excitement Was After Hours

We’ve had an interesting evening – on top another failed rally at the end of the market day, We had:
  • More companies disappointing
  • Cisco saying Europe looks tough and IT Spend Trend Weak
  • European leaders clashing over “austerity”

We do this every year. Analysts talking how big the second half was going to be. Then we get smacked in May. Sorry learned that lesson a while ago. And more recently when last year I held some deep value ideas and some money printing ideas that nonetheless got slapped too.

We’ve had many (I think too many) well-known investment people saying that this was NOT going to be the year to sell in May and go away.” However, I had a sneaking suspicion that they were trying to dump their stocks into the hands of eager buyers, not into a strong May correction! Or they wanted a few more percent in gains to make up for past losses. Sorry but the market right now doesn’t look like it wants to help. That could change at any moment, but right now it’s not.

Cisco Offers a Poor Outlook

The market could go either way but mediocre to bad news is pouring out now. I just read 3 disappointing company earnings releases (all leading to big drops in the stock price after hours) and I am getting snippets from the Cisco earnings call on the news wires. Normally, from what a couple of experienced tech investors tell me, John Chambers (Cisco CEO) is a chipper guy. If Cisco is saying Europe looks tough and that guidance is weaker, then other companies could be seeing much bigger slowdowns.

Austerity? What Austerity?

Personally I’m in favor of defaulting on the bonds like Iceland did. However, since most of those bonds are owned by European (German) banks, that might not work. But cutting everyone’s “bennies” is not going to do much good for social unrest either. But have we tried austerity? This author says no.┬áNo matter what, Europe might have reached its “endgame” – see Nigel Farage speech for what that could mean:

Volcker Says Big Banks Are Too Big

On unrelated news, Paul Volcker (former Fed Chairman) said that big banks might be too big – but offered no way to deal with it. Now I like Volcker but I have some news for him – we had a way to deal with banks that were too big – it was called 2008/bankruptcy. Unfortunately, the Buffet Put prevented that. This is just my personal feeling but since Buffet’s portfolio is full of financial companies (Amex, Wells Fargo, Geico, Goldman) that no way was he not going to get bailed out and risk his 50 year track record losing out to CD’s in one month.

for yesterday’s summary, click HERE

At the time of this writing, My clients and/or I own or control the following securities mentioned in this article: NONE