Which market will be right this morning? The one we got at the opening yesterday that was weighed down by exactly what it should have been buoyed by: a stronger yen and a weakening dollar? The one mid-morning, Stage Two, that took into account all of the upside surprises like Ford (F), PayPal (PYPL), Bristol-Myers (BMY) and, of course, Facebook (FB), while lapping up all the M&A from Comcast (CMCSA), Abbott (ABT) and AbbVie (ABBV)? Or could it be Stage Three, the one that brought almost everything plummeting back to Earth when Carl Icahn lowered the boom on the market in general and Apple (AAPL) specifically with his stunning announcement on CNBC that he's out of the no-brainer stock? (PayPal, Facebook and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
Or Stage Four after the bell where Amazon (AMZN), LinkedIn (LNKD) and Expedia put up such incredible numbers that you have to wonder if we don't revert right to stage two in the a.m. (Amazon is part of TheStreet's Growth Seeker portfolio.)
Or will it be the one controlled by oil, which is going higher this morning and always trumps everything else anyway. Oil, the over-arching, all-knowing commodity that overrides everything unless Carl Icahn calls in to CNBC again today and trashes everything.
Welcome to the wackiest earnings season I have ever seen, a veritable shotgun of companies sprayed at you where the market's mood changes on a dime and every day we reassess what's working and what's not and then overlay the direction of oil on top of everything. .
Barring a turn in oil, which is up, which is the real stage? I can see cases made for every one of them.
The first stage, the world chaos stage, has the least credibility in my mind. When you have Ford report a fantastic quarter with the only flies in the ointment being South America and the huge numbers of heavily subsidized cars from Japan Inc. you can only marvel what would happen if the yen continues its now-soaring trajectory. You could take numbers up even more dramatically. If someone puts pen to paper they are liable to gun Caterpillar's (CAT) numbers up right here, right now, as they've been losing share Japanese companies with product that gets such a competitive advantage from the their central bank's desire to keep that yen weak. Now the desire seems to have run its course and you are going to see both multiple expansion and higher estimates.
Stage One was wrong.
How about Stage Two? Between the massive M&A and the dramatic number of upside surprises, I think Stage Two gives you a more honest footing than Stage One.
But Stage Two was undone by a one-two punch of lower oil, which sent a lot of the oil and bank stocks down and then by Scott Wapner's scoop about Carl Icahn.
Jeez, Stage Three took your breath away. The market was already weak because oil had fallen a couple of pennies, but Icahn just torched the darned thing. He went after a gasoline-soaked stock with Apple, a company drenched with petrol that seemed to be waiting for the match to strike.
Now Icahn, for the record, has been too negative about the market of late. So I discount his view somewhat. But what I didn't like was how easy it was to push this market over. It was almost as if everything that didn't go down when Apple rolled over this time did go down. Does that underlying weakness really lurk everywhere? Or was it just a burst of futures selling that was unnecessary given that what went wrong at Apple tends to stay with Apple unless the Cupertino giant is too big a part of your business.
Regardless, we know the holders of the stocks of companies that disappointed this earnings season, especially the tech companies, are still very weak. I think some of them bolted without a moment's thought when technical levels were breached and fear resonated of something big and bad after the close.
But then we got to after the close and we had three amazing quarters. Three companies that had disappointed last time out of the gate, three companies where people figured there had to be more disappointment lurking -- Expedia, LinkedIn and Amazon -- gave you numbers to beat the band.
It is amazing when you think that three months ago LinkedIn took this entire market apart when it and Tableau Software (DATA) reported horrendous earnings. Now it's the equivalent of a do-over.
Oh my, did people figure that Expedia would guide down again? Why not? Online travel was supposed to be soft, no? Looks like that was wrong. You got terrific acceleration and I think that the HomeAway acquisition is already paying off.
And then we got the biggest surprise of the earnings season: the billion-dollar revenue beat by Amazon replete with an earnings per share number almost double what people were looking for. It came from all directions: Amazon Web services, quick turn delivery and Prime all played a role in the beat. You can see why everyone in retail is so frightened about Amazon. It's gunning for everyone and this quarter sure made it seem like Amazon crushed them all. As good as the quarter was, the conference call last night was even better. Just nothing but Prime net.
Nothing's ever perfect. We also got a quarter from Skyworks (SWKS) that has too much Apple exposure and, unlike Broadcom (AVGO) and NXP Semi (NXPI), it got whacked badly from that dependency. Stage Two revenge?
To me, the real takeaway is this earnings period is pronouncing judgment on groups that shouldn't be judged. Is Expedia tech? Sure, online travel's all about tech. How about LinkedIn? Cloud personified. Amazon's the A in FANG for heaven's sake. No tech wreck here, just the slamming of old tech and cellphone tech and not much more.
Which leads me to believe that we are going to have a return to Base Camp Two today, barring another overseas nightmare, of course.
