Amazon soars, Apple splits, plus positive news on July Chicago PMI
WASHINGTON – Stocks continue to wallow in their own Slough of Despond on the last trading day of July and of the current week as well. As of approximately 11:30 a.m. ET, the Dow Jones Industrials seem determined to continue this week’s lousy performance. That average is currently off 0.58%. The S&P 500 echoes the Dow’s un-performance, although with less conviction. It’s currently off by 0.25%. But the tech-heavy NASDAQ is up 0.52% Friday, mainly on the wings of Apple (trading symbol: (AAPL) and Amazon (AMZN).
The latter company coined money in Q2 – coincidentally the first full quarter of our ongoing coronavirus panic. Given that many of us are still under house arrest, most of you have probably noticed that your neighborhoods constantly play host to Amazon’s distinctive delivery trucks. (Although FedEx [FDX] and UPS [UPS] have boasted a notable presence as well.) The virtual Capitol Hill grilling of big tech execs yesterday caused little to no damage to Amazon, Apple or Facebook shares, although GOOGL shares are getting whacked this mornig. But for other reasons.
Amazon continues to conquer the world
Amazon shares – already way-costly per share – took off like a rocket after the company reported its whopping Q2 earnings. Shares currently stand at approximately $3,200, give or take, as we write this column. That’s a roughly $150 per share gain thus far on the day. So volatile are these shares that they could be $10-15 above or below our quoted price as we add the period that concludes this sentence.
Apple reports surprisingly robust results
Apple’s no shrinking violet today, either. With its shares at a considerably cheaper – but not cheap – current price of $411 per share, Apple’s soaring on the wings of eagles as well, up ~ $26 per share at the moment. Not only were Apple’s earnings surprisingly robust during Q2. What it lost on iPhone revenue, it actually gained back by selling laptop and desktop Macs. Amazing, since we’ve been told by the always reliable major media newsreaders that personal computers are now obsolete.
Both companies can attribute their stellar performance in the first full quarter of the Plague Year to what history will regard as America’s overzealous “lockdown” fixation. This bungled overreaction to the coronavirus by the CDC and other lazy, left-leaning government health agencies (like WHO) has ultimately forced mass quantities of tech and financial workers to telecommute from home. Which in turn, likely forced many new telecommuters to upgrade their old computers to much faster and newer models. And maybe buy one or two more for the kids, who’ll need personal computers to ZOOM into virtual classrooms this fall. Including Apple Macs, which remain quite popular among younger users.
Helping out in this regard: students, ranging from K-12 through grad school have more or less been forced to do the same thing in order to complete at least one or two segments of their
indoctrination education this fall.
BTW, icing on the cake for Apple fans and investors: Apple will soon be splitting its shares 4 for 1. That makes purchasing 100 share lots (round lots) much easier for at-home investors, and open for more flexible strategies. One big example: you need 100 shares of a given stock in your portfolio in order to write covered calls — a useful income strategy. Kudos, Apple!
More on Amazon and other tech giants
Meanwhile, much of America is still forced to wear virtual ankle monitors and mostly stay at home, meaning that Amazon stuff remains their only link to outside civilization. (Or what’s left of it in cities like Seattle and Portland.) So Amazon and Apple coined money in Q2. Who knew?
Tagging along just behind these two giants, Facebook (FB) is also doing well Friday, although, after a rocky market week, they’re not doing quite as impressively as the aforementioned pair of Big A stocks. But its somewhat cheaper shares ($252.84 at the moment) are still up $18.41 per share for a gain of 7.83% thus far.
Only somewhat ad-challenged Alphabet / Google shares (GOOGL) are stumbling this morning. At $1,472.57 per share, GOOGL is off a nasty $43.00 per share on the day for a -$2.82% loss thus far. They won’t stay down for long.
Tech stocks are volatile: Investors beware, but not afraid
I avoided major tech stocks for the longest time over the years, unwilling to confront their gi-normous daily price swings. But these days, for good reasons or bad (like millennial / Gen Z “genius” daytraders), the most prominent tech stocks are the only place we seem to make money. But if you indulge in this bad but sometimes lucrative habit, it helps to have a big bottle of liquid Maalox by your side. It helps when you try to follow the crazy gyrations of these stocks.
The stunning July PMI report. Is America’s economic already underway?
For all the bogus scare headlines we read in the business, financial and political reports of the “mainstream media,” everyone except the Twin Tylers of ZeroHedge seems to have missed the irrationally exuberant economic stats just reported via the carefully followed Chicago PMI (Purchasing Managers Index). These are the guys largely responsible for ordering mass quantities of stuff for manufacturers located in and around Chi-town. That city remains a large industrial center despite that city’s confiscatory taxing regime. The index is regarded as a national barometer of rising or declining business activity across the US.
Notes ZH, before you commit coronavirus lockdown-influenced suicide, you should always look on the bright side of life when it comes to the media’s 24/7 doom machine.
“While ‘hard’ data continues to disappoint, ‘soft’ survey data is still chock full of hope as MNI’s Chicago Business Barometer surged to 51.9 from 36.6, smashing expectations of 44.0.”
What this actually means is that Chicago’s purchasing managers are mostly still buying a lot of stuff, indicating that customers must still be buying a lot of finished product. As noted in the Bloomberg chart the Tylers offer, as reproduced below.
The good news seemingly hiding in the July PMI stats
The ZH verdict: “Under the hood, everything is awesome with 6 subcomponents rising…”
As proof, the Tylers offer the following bullet points.
- Prices paid rose at a faster pace; signaling expansion
- New orders rose and the direction reversed; signaling expansion
- Employment fell at a slower pace; signaling contraction
- Inventories fell at a slower pace; signaling contraction
- Supplier deliveries rose at a slower pace; signaling expansion
- Production rose and the direction reversed; signaling expansion
- Order backlogs fell at a slower pace; signaling contraction
“This is the highest reading for Chicago PMI since May… what lockdown?”
Yep. As the old cliché-meister used to say, it’s always darkest before the dawn.
If President Trump can head off the Antifa-BLM-led destruction of American cities and business communities, we might soon find cause to regain our irrational exuberance. Re: a recovering US economy once again, circa August. Right? Right?
Have a good weekend.