Every time I try to get bullish, they pull me back in!

We have struggled for two weeks trying to get more bullish but even at yesterday’s exciting close we remained 55% bearish and decided to hold that stance into the weekend.  As I updated our $100K Portfolio last night, I was surprised and disappointed that I could find no justification to raise my targets on AMZN, BAC, C, GE, UYG or XLF, sticking with our generally bearish positions, even though they burned us this week.  While both GE and BAC beat on earnings this morning, both companies missed on revenues and what’s surprising is how sharply the markets reacted to such small misses

We’ve been saying for quite some time that revenue projections are in fantasy land.  Overall wages may be up 0.2% for the year but the average workweek is down 7% and 10% of our population isn’t taking home a paycheck at all – of course revenues are going to be down, how is that even surprising?  For the week, revenues of reporting companies are down about 18% so I consider a wnnier anyone who’s ahead of the curve (not counting financials, who were given special gifts this year).  Even with that gift, it was the financial unit that dragged GE down, with GE Capital’s profits down 87% for the quarter, dragging corporate earnings down to just 23 cents a share, but better than the .20 expected by analysts (see my weekend rant against low expectations). 

We also have low expectations for today’s Industrial Production and Capacity Utilization Report. Pretty much anything better than terrible is likely to be celebrated after looking at this chart:

The bounce we got in last month’s report was due to an increase in the production of foods and beverages (up 1.6%) as well as chemicals (up 0.7%) and utility production (up 1.9%) and, of course, the Auto Sector, where Cash for Clunkers ramped up motor vehicle assemblies 12.1% overall.  Outside of motor vehicles, production was up just 0.4%, which is what is expected for this month.  As expected by the unemployment numbers, Cap Utilization is hovering around 69%, 11% lower than “normal,” a strong indication that you do still need people to run those machines despite decades of robotics advancement

Hey, there’s an idea – let’s create an army of robot shoppers and equip them with American Express Black Cards and program them to go out and BUYBUYBUY.  They’ve been programming the American people to be shopping…
continue reading