A Tale Of Two Markets: Perception And Expectation

What in tarnation is going on with this market?  Are we irrationally exuberant again or are earnings so good that equities just had to keep rallying? On the topic of earnings season, some stocks fared better than others.  In the case of Apple (AAPL) and Netflix (NFLX) you have a darling-to-dog scenario which creates a provocative portrait of contrasts.  



The irony here of course is that NFLX surprised with a modest quarterly profit of $0.13 per share (vs an estimated -$0.13 loss) while AAPL posted earnings that were below consensus views.  The company with the paltry $8 million in profits (guess who) saw its stock pop 12% for the week (79% Y-T-D) while the company who earned $13 billion received a 12% haircut!  That's pretty wacky.  It's all about perception, and apparently, expectations do matter in this market.

We still think the real fireworks will occur later this year as debt ceiling, budget and all other "deferred" political issues get put back on the table.  One of the most discouraging aspects of US politics is our lawmakers innate ability to put their political careers before the needs of the constituents that have elected them.  This applies to both sides of the aisle.

Boxing Comes to CNBC:  Anybody who caught the Ackman/Icahn fight last Friday (live) on CNBC probably had a drink or two after work.  CNBC's Scott Wapner found himself ring-side with these two hedge fund titans as they exchanged unpleasantness towards each other.  It was a ballsy move for CNBC to air the exchange on a live broadcast, but I give kudos to Wapner for his handling of the situation.

However, it also revealed a rancor between two men who obviously do not like each other.  I see pundits yelping amongst themselves all the time, but to hear these two "activist" guys go at it was wild!!!  From a human nature and sentiment perspective, could this be anecdotal evidence of a weary bull market?

Crop Prices:  Commodities broker Allendale forecasts higher than expected yields for wheat and corn harvests.  Keep an eye on cereal stocks such as Kellogg (K) and General Mills (GIS).

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