The contortions of negativity are painful and they are everywhere. It doesn't matter if you are on a first-class blow-out call like that of McCormick & Company (MKC) , the spice company, or the shockingly strong report by furniture maker Herman Miller Inc (MLHR) , or the colossal surprise by KB Home (KBH) , the questions are the same: When is it going to end, when are things going to rollover, when is it all going to come to a screeching horrendous halt.
I pick these three companies but I could pick many others. The nihilistic negativity on the GE (GE) break-up call -- replete with multiple questions about how there is simply no way the debt is going to go down the way CEO John Flannery says. It's like the guy just fell off of a turnip truck or something. The endless prosecution of Arnold Donald for his soft guide down for Carnival (CCL) -- one that made all the sense in the world when you consider the eruption of fuel and the random wildness of the greenback.
Nah, it doesn't really matter. It's all shadow boxing against an element that can't be seen or felt or understood, but has taken control of the hearts and minds of the analysts on Wall Street and their acolytes in the media: The idea that "there must be something going very wrong or the market would be going higher."
Some of the analysts' musings on these calls are breathtakingly pessimistic. In the midst of an on-the-fly wholesale revaluation of McCormick in large part because of a much-derided acquisition of Franks and French's that is now panning out in stupendous fashion, the analysts hector the bold CEO Lawrence Kurzius about the firm's seemingly tenuous relations with number one client Walmart (WMT) or its share loss at Kroger (KR) , a share loss, by the way, that isn't even true. The $4.2 billion acquisition of the Reckitt Benckiser food group has been stellar -- but is almost ignored.
To some degree, I get it. I was openly critical about the deal, too. So much for so little, I decried. Classic overpay.
But then Kurzius came to Englewood Cliffs and walked me through how French's just needed better management to regain control of the "yellow" part of the mustard aisle and Frank's? Well, Frank's is the hottest subcategory out there because the millennials really do put that stuff on anything.
But the analysts? They aren't buying it. They are far more worried about early signs of disruption in the spice business. The canary in the coal mine thing again. Thank heavens the analysts can hear the other analysts' questions. Or they would do nothing but ask "Is this the proverbial canary in the coal mine?" They stopped using canaries thirty years ago... except on conference calls.
Or how about the inanity of the KB Homes call? Here's a homebuilder with an outrageously large $2.2 billing backlog, the best quarter in a decade, lots of margin expansion and price increases that stick everywhere.
It didn't matter. The litany of negativity was everywhere in a bizarre volley-for-serve Q&A.
Aren't wages skyrocketing?
No, they are a little higher than last year, but price increases are offsetting them handily.
But if you are putting through price increases, isn't demand softening? Actually, no, if anything it is accelerating because we didn't have enough homes to meet demand.
How about the big commodity increases? They may have peaked already.
Higher mortgage rates? No pushback yet from buyers. Flagging California pricing? Where, tell us where? We aren't seeing any anywhere. We just wish we had more land to build.
Aggressive lending, sign of a peak? Actually loan to value's pretty low historically.
Finally, in what seemed like a fit of pique, CEO Jeffrey Mezger just blurted out what I know so many of us must have been thinking: "I can't think of a single market today where I would say there are signs that the consumer can't afford it, or that pricing has hit the wall." I'll take that as a positive.
You know who put it best? The CEO of Herman Miller after a truly legendary quarter for the maker of the iconic Aeron office chair. He speaks for all of Main Street -- not Wall Street but Main Street -- when he says: "While we are nervous about all of the political things going on around the globe and the tariffs... all those things that certainly make you cautious." But, he adds, "we have no signs that the business is backing up at all in the face of those things. Business continues to look quite strong today."
Again, though, it doesn't matter. The only dictum that works right now? If it isn't negative it isn't true. That defines the moment, and it is a discouraging moment indeed.
