This weekend I read a series of negative articles attacking this market and the earnings reports of individual companies. The tip: All the numbers hide something, and even companies like Amazon (AMZN) and Apple (AAPL) simply reported numbers that exceeded analysts’ low estimates that were meant to build an advantage. This is an outrageously bullish sign. Now he has the biggest arbiters of stock prices totally skeptical of anything positive. And yet, the actions themselves not only tell him otherwise, but also make him feel like he’s missing out on a big streak. What gives? Let’s start with nine months of lowering projections and price targets with no sign of a truce. It is the exact flip side of what happened when stocks went up when we had endless price target hikes. Analysts, I think, have finally turned negative and we are seeing a bottom. Maybe not the bottom, but low enough to buy the hits: Honeywells (HON) and Carriers (CARR), Otis Worldwides (OTIS) and ServiceNows (NOW). We are not in a position to announce a real bottom, mainly because we don’t know how the market will react to a rise of less than 75 basis points in September. We know bears think nothing is ever good enough, but they’ve gotten a little rowdy. Historically, consecutive 75-point increases are enough to make even the late Paul Volcker, former Federal Reserve chairman, nervous, given that many gross costs are going down and spending is being controlled by all but the richest. I imagine the Fed will signal something in a month that could lead to a sell-off. Otherwise I can see the market doing well through earnings season and then stalling close to the next Fed meeting in late September. At that point, we will not only have to deal with the Federal Reserve, but also with the midterm elections. Current predictions have Republicans winning thirty House seats, which would give them a majority in both chambers and pretty much end everything President Joe Biden wants to do. That could cause his agencies to lean even further to the left, since the possibility of a Republican presidential candidate winning certainly seems plausible. Their agencies so far have a left bias, but they can really run amok against the banks, oil and pharmaceutical companies. It’s unfortunate, but that and the Fed could cause a tough time in September. All that aside, last week showed the power of the biggest companies. Let’s take a second to Tim Cook and Apple. That was an impressive quarter, however I have read a number of negative articles about how the numbers bode badly for Apple. How the hell could they be a bad omen? You talked to Tim Cook and he gave you a negative reading? It certainly wasn’t the most impressive of quarters. There were ways to view it with some concern. On the one hand, he wanted higher revenue from services. But $19 billion is certainly better than satisfactory. Having spoken to Cook after Apple reported earnings last week. What I fell in love with the most was the actual opening of India, Brazil and Indonesia, three of the largest markets in the world. The company is attracting people to the world of Apple through the exchange market and then hooking them with superior performance. I also liked that the company seems to be acceding to my endless pleas to find out the lifetime value of an Apple customer. This is key, given that the company now has 1.8 billion active devices and 98% of users say they are satisfied, so they will not switch to another manufacturer. Looking at the current rush of Apple deals makes you feel like there could be a pot of gold here among every customer. However, I think there has to be more. That’s why I was so intrigued when Cook said “buy now, pay later” may be the start of a larger financial vertical. Can you imagine if Apple had a financial app that let you do everything in it? No matter what, winning another “must have” sounds great. The fact that Cook dropped the issue of getting the NFL ticket can be seen as something that’s already in the mix. Is football played well abroad? That could be device. But also the fact that Cook likes how baseball is going. Never mind: the fact is that Apple is in an enviable position with the most dominant phone in the world. Amazon: What can I say? Amazon can and will grow with fewer people. The attraction comes from the customer who stayed with the company and is now used more and more as an exchange that delivers. I think Amazon must be crushing Walmart (WMT). Walmart shares have returned to where they disappointed and the company has yet to report. It wasn’t just big tech that got it right. We also saw fantastic numbers from oils, Chevron (CVX) and Exxon Mobil (XOM), and anything aerospace and automotive. Club Holding Ford (F) put on a real show even when, once again, skeptics were everywhere. Pharmaceutical companies and health care names reported good numbers, but they are being sacrificed by political concerns that I expect to run their course in a couple of weeks. Of course, there were disappointments. I intend to talk about some of them when we have our Monthly Meeting this Thursday. But I think the detractors protest too much. So far they are losing to the bulls, they just don’t want to admit it. They have the S&P 500 Short Range Oscillator on their side, plus 7.9 prompts us to sell some stocks, not buy them. But I learned a long time ago that good is good when it comes to stocks and that rapping good news is really bad news is the stuff of idealists on the wrong side of the business. (Jim Cramer’s Charitable Trust is long APPL, AMZN, CVX, WMT. See here for a full list of shares.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable foundation’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE FOREGOING INFORMATION ON THE INVESTMENT CLUB IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY DUTY OR OBLIGATION EXISTS, OR IS CREATED, BASED ON YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULTS OR BENEFITS ARE GUARANTEED.
Apple CEO Tim Cook speaks during Apple’s annual Worldwide Developers Conference in San Jose, California on June 6, 2022.
Pedro Dasilva | Reuters
This weekend I read a series of negative articles attacking this market and the earnings reports of individual companies. The suggestion: all numbers hide something and even companies like Amazon (AMZN) and Apple (AAPL) simply reported numbers that exceeded analysts’ low estimates that were meant to build an advantage.