Hearty congratulations to every elected official in Congress for joining forces and ensuring the U.S. government didn't have to ask Warren Buffett and Berkshire Hathaway (BRK.A) for financial backing. Eons ago, my mom advised, "If you don't have anything nice to say, don't say it at all." Sorry mom, but I wish to say the following.
To all those robotic, inhuman politicians in Washington: You are an absolute disgrace who, regardless of affiliation, are in no way emotionally connected to the real folks who hop on city buses and in rickety cars and drive miles to cast ballots. You continue weakening our position in the global economy, and that places our long-term security in jeopardy.
I didn't see one politician recently reply to a well-thought-out Tweet from, say, an economically challenged single mother of four. (Why even bother having a Twitter account then if you are refusing to interact with constituents?) I didn't see one town hall event for constituents and adversaries to explain what the shutdown was doing to their everyday lives. All I heard was "me," "I" and "no" -- a bunch of selfishness that does not represent the fabric of this great land. Or maybe it is, and I am being too Pollyannaish.
Let me tell you, the above sentiments don't come from a financial-services pro who recommended short ideas and then got burned after the shutdown ended. In fact, I even reiterated a buy rating on Best Buy (BBY) last week -- after which it ripped through our $41 price target on Wednesday.
No, I speak the truth, and due to that truth, asset selection will be particularly challenging in the months ahead. Washington hasn't fundamentally addressed anything, and we're looking at another possible default date on Feb. 8, 2014. So could you honestly look me in the grill and pontificate that there is no material risk to, oh, my first-quarter earnings assumptions on the high-multiple name Starbucks (SBUX)? Come on. But this uncertainty keeps things fun, right?
All that aside, earnings reports are stinking up the joint, and ditto on guidance. This theme is well worn by now -- I can recall penning statements like these back in July and earlier in the year. As I look at the comments and financial statements from IBM (IBM), Grainger (GWW), and Stanley Black & Decker (SWK) I am pleasantly surprised at how demand in Europe is trending in hard-hit regions, and am not shocked to see emerging markets struggling after their respective currency routs.
I've also been wondering whether "solid" North American demand may be a flash in the pan following the absurdity of the past two months. After all, this demand is a function of volume -- pricing power is virtually nonexistent. The reads are so confusing that I am currently paralyzed in terms of what to chase and what to avoid. In the meantime, I want to highlight a couple of things.
Chart of the AM: eBay
Two months ago I downgraded my rating on eBay (EBAY) from Buy to Hold. One month ago I received inquiries as to whether that call was still intact. It was, and the "Chart of the AM" explains a small part why: Growth is leveling out at eBay, and over the past eight quarters, non-GAAP operating margins have supported the current rationale priced into eBay shares.
Paypal registere accoutns
Three Phrases from Stanley Black & Decker That Bothered Me
The below statements were troubling, and you should be on the lookout for similar commentary from the company's direct and indirect peers -- that is, global industrials). If a company does not issue statements like these, you may have a winning investment staring at you in the face.
- "as a result of a slower-than-expected margin rate recovery"
- "lower than previously anticipated organic growth related to macro issues affecting emerging markets and the U.S. government budget impasse"
- "lower organic growth expectations within certain businesses and geographies"