The Abuse of The New Normal Is...October 22, 2012 @ 10:37 AM EST
Google’s very untimely and mistaken early release of its earnings filing on Thursday, especially since it contained a -15.3% EPS miss, turned the markets around from what was looking to certainly be a 2%+ weekly gain on the S&P.
Instead, the week’s highs were put in almost exactly before the erroneous posting on the SEC website, a mistake for which financial printer RR Donnelley accepted full responsibility.
The quote of the week had to come from the incomplete press release which was supposed to accompany the filing, which was marked, “PENDING LARRY QUOTE” , and obviously referring to an awaited remark which did not make it in from Google CEO Larry Page. (Financial Times).
GOOG’s slide of about 10% to $676, before a trading halt for several hours, was seemingly the canary in the coal mine for Friday’s action, and the continuation of disappointment from the tech sector and some other non-tech big names this earnings season. (FT added that GOOG’s move down “wiped out half the price gain for the year to date and took the group’s market capitalization below that of Microsoft, which it had surpassed earlier in the year). There were also a number of analyst downgrades, but the average analyst price target only moved from $815 to $810, not too shabby considering the Friday close at $681.79.
MCD, MSFT, GE, KO, IBM, INTC, CMG, and AMD were just some of the names not treated particularly well this week after earnings reporting.
And we think “traders might be more obsessed with results from the remainder of the earnings season than Alfred Hitchcock was with actress Tippi Hedren”.
In any event, Thursday’s reversal led to the mini-route on Friday, with the market going down faster than the Yankees to the Detroit Tigers.
But the strong gains early in the week were enough to offset Friday and the S&P actually ended up +0.3%, the Dow + 0.1%, but the Nasdaq off -1.3% from those tech declines.
Politics of course was also in the limelight this week, with polling data all over the place and both the second Presidential debate and the famous Al Smith Dinner being held, both in the New York City area.
“Can you say that a bit louder Candy?” --Pres. Obama speaking to moderator Candy Crowley, who we think was a bit out of line in injecting her comment on Obama’s Rose Garden remarks concerning whether or not he had referred to the tragic U.S. Consulate attack in Benghazi, Libya as an “act of terror”. (In our opinion, the total politicization of the incident and deaths has been an embarrassment to both sides. But if one is keeping political score, it was truly amazing how Romney bungled it and immediately turned a “winning campaign point” into a losing debate moment).
“They brought us binders full of women”. –Gov. Romney, in a remark which went into full tweet and blogging viral ridicule for its awkward weirdness, but was actually a fairly innocuous claim on searching out female cabinet appointment candidates in Massachusetts.
Bill Maher as usual loaded up on consistently funny (and biased) tweets during the debate but one post-debate tweet this week got our attention:
“@BillMaher Feel relief Octomom has decided, and it's Obama - she can influence thousands if voters. Or make them.”
And Obama and Romney traded quips at the traditional Alfred E. Smith dinner, a charity event for the Archdiocese of New York and usually good-humored event. According to the Washington Post:
“Earlier today, I went shopping at some stores in Midtown. I understand Governor Romney went shopping for some stores in Midtown.” --Pres. Obama
“I was actually hoping the President would bring Joe Biden along this evening, because he’ll laugh at anything.” --Gov. Romney
Ok, besides Google and politics, what else was out there this week?
The “surprise” resignation of Citi’s CEO Vikram Pandit briefly dominated headlines, with one tweeter saying, “Well at least Vikram learned that you have to stop dancing before the music stops”, in an obvious reference to Pandit predecessor Chuck Prince’s famous 2007 quote, “When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”
Rumors and speculation flooded the Street about the resignation, with questions being was it strictly a “force-out” by Citi’s board, rooted in Pandit issues over his compensation, or some deep dark mystery foreshadowing some other shoe dropping at Citi? Consensus seemed to fall to “disagreements over direction and performance with the Board”. According to the WSJ, “The action raises questions about whether the sprawling Citigroup empire ultimately will be dramatically pared back or broken up.”
“Is McDonald's Stock Still on the Value Menu?” --CNBC, after MCD reported earnings and dropped 4% on the week, adding, ”sales at existing restaurants grew at the slowest pace since 2003.”
“There was plenty of hoopla and pandemonium as Apple opened its third store in Beijing Saturday.” --Fortune. AAPL was also in the news for the reported iPad Mini launch announcement which is widely expected at an event in San Jose on October 23. Despite that news, AAPL had a rough week along with other big tech names, down to levels last seen in early August and off 3% on the week, with Friday particularly ugly with a close at $609.84.
But not all stock news was dismal, as “Capital One Financial profit vaulted 47 percent,” leading the stock to a new 52-week high and CBS reporting, “The Virginia-based bank said Thursday that it recorded gains across all of its businesses in the July-to-September period, generating annual increases in loans held for investment, domestic card loans, average loan balances and total deposits.”
“This just in... chronic abuse of the term ‘The New Normal’… is ‘The New Normal’”. King Features comic strip “Mallard Fillmore”, with a sentiment we have to echo. This week China’s reporting on GDP and economic growth figures brought out another epidemic of the phrase, which is generally credited to PIMCO in its current context.
“There's no jobs plan; just a plan for a snow job on the American people.” --NY Times columnist Paul Krugman in an editorial piece getting a lot of publicity. Krugman said many things, including, “that Romney's campaign is telling lies: claiming that its numbers add up when they don't, claiming that independent studies support its position when those studies do no such thing.
“Soon my dentist’s waiting room will just have a sign on the table in place of magazines, saying ‘Look at your phone’.” --Quote in USA Today referring to the report that Newsweek will be ending its print edition shortly. Tina Brown said, “We are transitioning Newsweek, not saying goodbye to it.” (from what we gather there will be a thing called Newsweek Global online, with ‘premium subscription content’…but that begs the question why anyone would pay for something they did not read for free?…sorry).
“Goldman Sachs is fighting back against