You cannot keep growth down. You cannot bet against progress. Every time it happens, whether it's in the midst of a depression or in the trauma that is an election, you must, must, must go with growth.
I know, at a time when the whole republic seems to hinge on the markings of a couple of pieces of paper out of a handful of states, how can I not talk about the ballot-counting in Pennsylvania, or the 20,000-vote margin for Biden in Wisconsin.
Simple, we are having one of the greatest rallies I have ever seen, and it begs to be explained, if only because it must not be forgotten what happens when you worry more about a thesis than the facts.
How did it happen? We got one of the biggest headfakes: Like it or not, the people have spoken and the people want lower taxes more than anything else in the world. They want the status quo. They appear to be sick of the histrionics, the arbitrary and capricious, they want a calm government not in our faces, and they don't want the extremes anymore. In fact, I regarded last night as a gigantic defeat for the hardcore lefties in the Democratic party.
It's big. I know that I was shaken about what could happen to stocks if the Democrats took over everything. It would be very difficult to make money, and, it might be taken away -- so why bother with owning stocks?
What are the consequences of the defeat of the blue wave, even as the election of the standard bearer seems more and more likely as the count comes in?
Let's go tick 'em down.
First, the possibility of an instant blue wave stimulus is now off the table. With that goes that whole bogus thesis I told you about, which JPMorgan (JPM) rolled out the other day, remember the one that said, growth was tired and spent and it was time to anticipate a better economy?
What can I say other than I told you so: Those out of growth into value narratives cost you a fortune. The banks, the oils, the industrials -- like Caterpillar (CAT) which is down 10 -- just crushed you. What made you the most money? The growth stocks that were unfairly dumped last week as this thesis originally germinated.
The stocks I highlighted -- the ones that I thought had the best quarters -- got the moves that they should have picked up last week.
Amazon (AMZN) , with that massive earnings surprise that I though was worth a huge number of points, tacked on $182 big ones and it's still more than 200 points from its high. It's now made up for that whole loss. It's the biggest beneficiary of the Covid tragedy, especially after it is spending $4 billion for safety and supply chain security. Now we like the spend for safety.
Microsoft (MSFT) , which delivered an extraordinary set of numbers -- especially its Azure cloud segment but also LinkedIn, gaming, and regular Windows -- saw its stock obliterated despite a beat and raise. It was insane. I think it might have been Microsoft's best and most balanced quarter ever. But you could not give it away. I found myself shadow boxing with the bears and Jimmy Chill got pounced on in Twitter for liking Microsoft. Wednesday the growth hounds took it way up above where it collapsed.
I was heartsick that I could have read Facebook (FB) so wrong. I saw the strength in what it was doing with small business through Instagram shops. Great growth rate for What's App. Decent numbers from stalwart Facebook. A dazzling dazzling quarter. But it got pummeled and with these other stocks, I heard talk of a negative forecast and some margin pressure. I pored through it and pored through it again. These naysayers were either lying or disingenuous.
When Advanced Micro Devices (AMD) reported I was ecstatic. Then numbers were so perfect that even the fact that the company was bidding at the same time for Xilinx (XLNX) shouldn't hurt it. Instead people abandoned it like rats on sinking ship. Dirty rats.
Maybe the worst was Apple (AAPL) . I was on the phone with Tim Cook as he released the numbers and I was joyous that he could have such a terrific quarter without a new phone. I was stunned that the service revenue stream and the wearables sales were so bountiful. I articulated my amazement at the record earnings on the call.
Wednesday night, Qualcomm just reported a monster number, again, fantastic for Apple.
Ten minutes later, I felt like a total bozo, as the stock collapsed in front of me for reasons no one knew -- but all were willing to make up. Now it is putting them back and then some, and I think it's just one more buying opportunity, especially after we heard from top supplier Skyworks (SWKS) , which intimated that a large client was buying a huge number of parts for their 5G phones. Wednesday night, Qualcomm (QCOM) just reported a monster number, again, fantastic for Apple, and, of course, amazing for Qualcomm owners given that its up 19 points. Next stop, all time high for Apple.
What do these tell you? I think speaks to the power of the micro over the macro people. Or in English: The people who told you to switch into the banks and the industrials and the oils once again made you trade the great ones to buy the losers. Sell the bad ones.
Why, after a 4% move by the Nasdaq do I still think there is more to come and the shareholders aren't done being rewarded.
First, I used to write obituaries for the Tallahassee Democrat and the L.A. Herald Examiner. Every bit of the commentary I heard last week was that these stocks and their cloud acolytes were finished, just like my obituaries. The funeral home: The new, hard-left U.S Congress, which was going to draw and quarter them and confiscate their wealth while hobbling them worse than Kathy Bates rendering James Caan's legs useless. You could expect endless hearings about how to limited the power of the Zuckerbergs and the Cooks and the Pichais and Bezos. Those are off the table. There will be some poorly attended show trials. But the success of the ballot initiative to let the gig economy survive, the one that boosted Uber (UBER) and Lyft (LYFT) , is more in keeping in this market's zeitgeist.
Second, we are going to get a stimulus, but not enough to make up for the lost jobs that are coming from the hospitality industry as the virus takes its told. Against that, though will be an increase in immigration as the draconian immigration policies of Trump could be history. Great for housing and I predict still one more surge, considering the low mortgage rates.
Third, the drug stocks and health insurers no longer have much to fear from a divided Congress with a president who actually favors Obamacare. I think that there will be money showered at the United Healths (UNH) and the Humana (HUM) and Cignas (CI) to get them to write quality insurance anywhere. I think you will see subsidies to them and to you.
Now, again, we aren't sure who wins. It's not been called. But I think the electorate has spoken: They are thrilled that no matter who wins, it looks like there's no lunacy, no craziness, no White House bunker with a huddled harried American style junta that refuses the verdict. There are plenty of challenges coming, but they are of the legal kind and nothing else, no insurrection -- nothing that needs the 101st Airborne or the 82nd for that matter to patrol our cities' streets.
Instead, there are just companies to talk about again, and what we know now is that a red Senate, a blue House, and a blue White House, may be nirvana for growth. Value? You are on your own.