It was only about time until the bears found a “new” “crisis” to make us worry about. This time around it was Portugal’s banking system that sent shivers through the global equity markets. So, the Pavlovian response by traders resulted in markets taking a dive at the open, bottoming in the first hour and then regained ground ever thereafter for the rest of the session. Of course, helping to feed the selling frenzy, no doubt, was Marc “Doom & Gloom” Farber who is calling for a 30% drop in the S&P 500 (SPX).
The Portugal stories seem to be nothing more than the usual summertime European worries. It is really getting predicable like an old I Love Lucy repeat. As for Faber, I cannot understand why he gets any media attention given his poor predictive track record.
I spent the day in Philadelphia, part of which was at the Perelman Center for Advanced Medicine at the University of Pennsylvania. It is a magnificent medical facility and a testament to the good that people in corporate America and Wall Street do.
Can Microsoft Reinvent Itself?
Microsoft’s (MSFT) new CEO, Satya Nadella sent out a memo to employees setting out his vision for the company. On Wednesday, I received a brand new Windows 8.1 Lenovo Yoga Laptop from the university where I teach. Well, Mr Nadella, Windows 8.1 is the worst operating system that I have ever used. The Yoga is the Yugo of laptops. Take this from someone who learned to program in FORTRAN and use computers going back to the old IBM 1130. At least I had the common sense to buy my old Think Pad that ran on Windows 7 which I will continue to operate. I expect to limit the use of the Yoga with Windows 8.1 to web browsing in the bathroom or as a coaster for drinks.
Wells Fargo Set to Report Earnings
Today we get the first money center bank earnings report from Wells Fargo (WFC). There are two metrics that need you need to be focused in on. The first is net interest margins or NIM. This tells us, on average how much of an interest spread, that the bank is earning on loans. Second are mortgage originations. We would like to see positive growth in this metric with the growth being generated from new home sales rather than refinancing activity. For the record, Wells Fargo is expected to earn $1.01.
I still believe that a more significant pullback is in the cards but I am also seeing several stocks begin to trade down to levels where I would be adding to or starting new positions. One of those stocks is Marathon Petroleum (MPC). On the other hand, Gilead Sciences (GILD) is trading at or near and all-time high. I would like to add to the stock but am reticent about doing so at these levels.
It is highly likely that by the time the markets have been able to absorb and react to the Well Fargo results that the early Friday slide will begin as market participants try to get a jump on the Friday summer traffic. As it turns out, I am staying put and for a change will likely work from my terminals the entire trading day.
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Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long GILD & MPC — although positions can change at any time.
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