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Counterpunch like Satya

Feb 01, 2022

Good morning!

Markets are up ever so slightly after UPS and Exxon numbers but that’s on the heels of a rough January.

Here’s my playbook.

1 – January stunk … whoa, that’s normal??!!

Yes. There have been 33 corrections of at least 10% since 1950 with the median correction lasting approximately 5 months. The bigger picture is still much stronger than people think. 172 S&P 500 companies have reported and 78.2% of those have beaten estimates according to FactSet. (Read)

Stay long where you can and let trailing stops help protect you if the markets have other ideas. The markets will sort themselves out soon enough.

Meanwhile, the best companies will fall less, stabilize fastest, and recover first. You do own ‘em … right?

2 – Exxon pumps it up, but I’ll be buying more of another

ExxonMobil beat estimates reporting profits of $2.05 and revenue of $89 million. Then, promptly announced it will be moving HQ from Irving, Texas to Houston to save money and streamline operations. And, a $10 billion stock buyback. (Read)

I think another oil company has better earnings potential, especially in light of a 6% dividend increase and a stronger breakthrough energy portfolio that includes nuclear fusion. I hope I’m smart enough to buy more.

3 - Bored Ape Yacht Club now worth as much as Harley Davidson

Makes ya think … The Bored Ape Yacht Club (a series limited edition digital cartoons/avatar NFTs) is now apparently worth $5 billion according to the Digiterotti which means the online collection has a market capitalization roughly in line with Harley Davidson. Not “a” Harley Davidson … the entire company, Harley Davidson.

Before you rush out to buy a Bored Ape of your own, consider the biggest weakness. Anybody can “right-click” an image, save it and – voila – have their own copy for free. (Watch Keanu Reeves shut ‘em down)

4 – Before you get excited about the Sony/Bungie deal

Sony announced yesterday that they’re buying Bungie, a video game maker for $3.6 billion hot on the heels of Microsoft’s $69 billion Activision purchase. Before you get excited, remember that Sony invented the Betamax and we all know how that story ended. (Read)

Stick with Team Nadella. Microsoft’s Activision purchase knocked $20 billion off Sony’s market value almost instantly. (Read)

Chances are we won’t have to wait long for a knockout.

5 – How much how fast?

People thought I’d lost my mind when I said at least 4 but more likely 5-6 rate hikes last year. My, how the narrative has changed. Now the world’s biggest investment banks are pricing in considerably more than the “three” they saw last year.

Key thought to keep in mind … the markets will do the Fed’s job without a hike if the Fed doesn’t regain control.