'Dodging a Bullet' - tends to be the popular interpretation of earnings at the moment; in the face of a strong Dollar (we've been support of), regardless of the conventional wisdom that it suppresses earnings. To the contrary it, that Dollar strength along with 'relatively' higher interest rates, have tended to sustain the U.S. equity market, and attract foreign capital to our shores.  

The bulk of the 'heavy lifting' (or holding) by the S&P and Nasdaq related to strength in the FANG stocks; those are the subjects (not necessarily targets) of the 'DOJ inquiry' announced late today (more on that below). But first, the Fed, 'trade', and other action during regular market activity. 

The Fed does not need to cut rates, but will likely anyway; because we've seen not only 'green shoots' of recovery coming in certain areas; but also as it dovetails quite well with our view of 2019 as a transition year for lots of technology (and ancillary companies) to migrate into the new (and partially a 5G) era; along with generalized and industrial recovery that's feasible with a China trade deal, which is much bandied-about as essential. Of course if the DOJ 'review' breaks the recovery; then I suppose they can justify 'ease' for an economy that might not be retreating, but the stock market could be.   

For some time I've suggested the only way we could 'really tank' would be if we don't get a China deal. Well, let's modify that a bit for now; and not solely by including the DOJ tech platform review. Given how long 'trade' has taken, many companies have re-sourced or shifted production in a more-diversified way. Some started round-trips to in-source production and services back to the Continental USA, or at least to the Americas (not just Canada but largely Mexico). Lots of call centers and so on in Central America; some garment businesses shifted from China to Vietnam or Brazil; all of which really is a decent way to help underdeveloped economies sadly often fostering not just criminality, but migration issues with respect to the Central American area.   

So now, because China apparently stalled the Agreement, and now wishes to mend their deviation from the original deal (as President Trump had said it was 90% done), they have only hurt themselves, contrary to the common view given that it hurts only us. While that does contribute to the 'tech cold war' (happening anyway for various reasons) the delay also mitigates what could be heavy impacts of a grander 'falling-out' of negotiations, should that happen; because frustrated companies gave-up waiting and moved-forward with supply-chain adjustments. Seeing this, China probably wants to plug this leakage as quickly as they can. So if a 'deal great'; if no deal we get a drop of course; but again not a calamity that might have been conceivable earlier. However, now we have to gauge implications of the DOJ move. 

Texas Instruments (one of our regularly followed stocks for many years) did blow-out their numbers; and responded superbly. It's not a bargain aside of course multiple expansion wishes; but big participant in new electronics, including AI and all sorts of devices; plus a huge role in Defense. Also VISA beat on their numbers (it was one I thought 'essential' for the bulls today); at the same time it was already rather pricey; so minimal market response. A minimal response is o.k.; it's missing numbers that's seriously problematic. VISA extended their solid relationship with JP Morgan for another 10 years; that's a plus but of course they did (who would imagine otherwise). They've worked on innovative solutions (payment processes) up there with the best; and probably overwhelm anything Square or others have done. Growth for sure can 'proportionately' be better with small players; but none are cheap.  

Fast rather than steady results are fine; and in the case of 'credit cards', it's sort of the backbone (along with MasterCard) of most new payment system cards (the Apple Card with Goldman Sachs is actually a MasterCard). And we have Snap, which a beat, and gave higher Q3 guidance. Chipotle also had a slight beat, both 'digital' and conventional sales did better; margins on the high side; with guidance also raised for the full year. 

These are trends that are 'lifted' for the reasons I've outlined 'sniffing out' a bit of improvement in prospects, being dented less by trade issues than so many feared. Most companies were 'conservative' with guidance so they've beat and also can comfortably raise forward expectations just a bit. 

It figures that after-the-close the DOA announced they'll open a 'broad antitrust review' of big techs.. all of them... not just Google, Facebook or Amazon. 

Included too Apple; the reference is to what they're calling anti-competitive 'dominant online platforms' (not so much Apple, but the others I suspect). Anyway this is separate from the existing probe of Google. These stocks are all off 1-2% in aftermarket trading. Amazon is the one that should be most concerning; with a couple analysts just today trying to evoke buyers by calling for 30-40% additional gains. Hardly!  

One day sure; perhaps. But for now this is how they try to get people to buy at highs. May work for awhile, but drives right into the 'Bigger Fool Theory' of investing. That's the idea of buying high, hoping there's someone willing to pay even more; and he or she of course looks for another buyer to take them out at a gain. Someone ultimately is at the end of the line. 

In a sense I don't see the sense in tearing-down our biggest companies at a time when the U.S. is in the 'cold war' of technology battles. However, there is no doubt we've had 'antitrust' on the menu of events to be concerned of; and who knows.. maybe (besides being in the DOJ's cross-hairs for varying reasons that are valid to explore) .. just maybe this is the concept of politics coming-up. Difficult to change these companies or set-up ease for entry by others; but it is sobering.

'Privacy' is a big part of it.. consumers better-off is the argument; but it's not necessarily true if a 'solution' later causes higher fees or other obstacles to gain information. What it may do is deter some of the monetization efforts of those like Facebook; as they try to do more with What'sApp or Instagram, or delays in Libre.

It's likely not to be everything first-blush scares people of; but it will initiate at least clouds over most of them: Facebook, Google and Amazon at the top of the list of companies facing challenges (we could dissect 'why' such as the privacy, marketing, and deconstruction of industries ... which relates to not all but in that order might be the trio of concerns). Facebook should feel the brunt of this process I suspect (won't know for quite some time); Apple the least. It's part of headline risk; but for stiffling competition and politics; of course you have to think of Amazon. 

Here's a quote I just found from DOJ: "The Justice Department will examine issues including how the most dominant tech firms have grown in size and might--and expanded their reach into additional businesses. The Justice Department also is interested in how Big Tech has leveraged the powers that come with having very large networks of users." 

In any event; depending how this is 'defined' by DOJ tomorrow (if they do in the midst of the focus on Mueller); welcome to the late July correction. It's due and this is out of the blue (somewhat as we've talked antitrust); but it's not something Wall Street was focused-on. Hence cautiously having a few firms reducing multiple valuations would do the trick of shaking things out; or at least starting the process.  

Wednesday: be wary that if they sell-off early on this, then a slew of buyers will come in and run the shorts; even if it's defensive later.