WASHINGTON, July 23, 2015 – Wall Street is still climbing out of the rubble of Wednesday’s brutal stock market crunch. There have been worse down days as such things go, but pretty much every sector got sucker punched yesterday, and both companies and traders are still shaking it off, with trust in advice, indicators, charts, fundamental analysis—whatever—at an all-time low.
Part of the problem, of course, has been a weird though not unexpected earnings season, with some companies still reporting nice numbers but with widely owned stocks either not impressing or looking sick.
Yesterday, Apple (symbol: AAPL) looked, to analysts at least, unimpressive even though it scored great numbers and even though its allegedly weak Q3 numbers—showing a great profit as always—always reflect Apple’s weakest quarter which occurs prior to its usual Q4 product introductions.
Microsoft (MSFT), however, was another story, with its numbers disappointing as investors wait and see what will happen when Windows 10 comes on line.
Anything could be an improvement over Windows 8 and 8.x, the suckiest (that’s a technical term) major OS rev ever, so Windows 10 ought to do well. Except that for the first time, Mister Softy (the traders’ acronym for the company), the new OS will be available free to customers with the most recent OS revs. Ergo, Windows 10 won’t add to the bottom line, at least indirectly.
In other news, the Obamacare dream of single-payer coverage seems to be inching closer to reality via the private sector, at least. As most traders already know, Aetna (AET) and Humana (HUM) plan to waltz down the aisle at some point, with Aetna in the acquirer’s seat. Thursday, Blue Cross/Blue Shield giant Anthem (ANTM) says it will announce a deal Friday to acquire Cigna (CI) for about $187 per share in another health mega-deal.
Both these deals have “anti-trust” written all over them. Except, of course, they are being submitted under a uniquely lawless U.S. Administration that’s happy with healthcare monopolies that the Federal government will effectively nationalize. So expect these deals to go through, meaning at this point that from a choice of five major health insurance carriers, that number will probably be three by the time the next hapless politician steps into a damaged presidency.
In other news, pressure is on longtime chip bigwig Qualcomm (QCOM) to break itself up to “enhance shareholder value,” meaning that some rich guy or hedge fund—in this case, Jana Partners—wants to conduct a backdoor greenmail of the company to mostly enrich itself while claiming to be doing it for “the little guy.” It’s all a crock, but Qualcomm has announced they may very well have a bust-up party anyway.
Underneath the surface, traders still worry about Greece, whose story is not yet over even though the country’s Communist government is, atypically, capitulating to TPTB (The Powers That Be) just a couple of weeks after they flipped a single digit at the Eurozone. Looks like the Euro-statists have won this round. But as we all know, it ain’t over ‘til the fat lady sings.
More problematic is lingering international investor suspicion surrounding the Chinese government’s recent, thuggish intervention in its chaotic markets where, at one point, less than 10 percent of that country’s stocks were allowed to trade. The rest were summarily shut down so they wouldn’t continue to bleed in China’s recent margin call selling panic, during which the Chi-coms also actually ordered many large companies to only buy—not sell—their shares. Ditto their CEOs.
This series of actions demonstrates beyond a reasonable doubt that Chinese markets are not free markets, so returning buyers should beware. But since those Chinese markets are now such a huge financial playpen, the recent actions over there are putting a damper on trading elsewhere. Even Western investors have begun to realize that even their allegedly democratic governments are fully capable of going Chinese if they feel that their interests and those of their rich friends are being threatened by the plebes.
No trading tips today. Indicators we follow are a mess and in some cases have become misleading. That’s not a good omen for putting more money into this market. We’re peeling off weaker positions and are not too enthusiastic about replacing them at the moment. Maybe it’s just time to take our vacations like all those rich dudes do.