Rarely has it been easier to be more negative. Let me play it out, the bear way:
- China is anemic, worst growth in ages, be careful, at this pace we could have a hard landing.
- Europe is back in total crisis mode, and given the bond market meltdown in Spain and Italy, you know that the situation has gotten much worse. Can Santander (STD) make it?
- Our earnings aren't as good as we thought. Google (GOOG) blew the revenue and is going to have a hard time monetizing mobile. JPMorgan (JPM) and Wells Fargo (WFC) could be in trouble with these mortgage claims for bad loans, and they aren't making nearly as much money as we thought possible.
In other words, there are no kings in the card game of the markets. Just twos and threes and fours.
Now, if you don't mind, let me give you what I was looking for and why I am not upset by what we see. A lot of it has to do with issues that I have mentally dealt with in the past and refuse to reopen just because the stock market is in the red.
- I want China to get out of the range of 7%-9%, with the former being where many people now think we will go. I need to see numbers that indicate that we will get a soft landing, not a hard one, and allow the Chinese to stop keeping money tight. I needed to see, well, this number. So did the Chinese. That's why their stock market was up. That's a positive, not a negative.
- I just don't want any Lehmans in Europe. I can handle and expect any slowdown. We have seen the Europeans deal with their crises in an exemplary way this winter. I think they can do it again.
- My biggest worry with the banks has been revenue growth. We just haven't had any. Suddenly we have it. Wells Fargo and JPMorgan had terrific revenue growth, actually stellar. They are lending. They are making money. They are transcending the nation's weakness. And they are cheap.
Yes, Google had issues. We don't want to see its cost per click, a very important metric, go down 12%. We can't dismiss that. We like to see more robust revenue growth. We don't like the new stock issuance, even if it is a split, because it is a tell that a giant acquisition could be on the horizon. We don't like the lack of clarity on the Motorola acquisition. But the darned thing sells for 11.5x earnings. It is cheap.
All in all, we've been up two days, and it is a terrific time to take a profit. I get that. But if recent stock history has taught us one thing, it is to never confuse a stock decline with what might occur in the future, especially if stocks have run ahead of the numbers.
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