Seeking Alpha
Long/short equity, growth at reasonable price, research analyst
Profile| Send Message|
( followers)  

Editor’s Note: This post was written about an hour before the President’s speech at 6 pm Pacific. Turns out, there appears to be at least one grown-up at the table. The take-away from his message? “This is no way to run the greatest country on Earth,” and he went on to urge us to write our representatives in Congress, which David echos below.

I don’t know about you, but I’m mad as hell and I’m not going to take it anymore. Who ARE these people we elected to Congress? They’ve taken us to the absolute brink of disaster and then have the gall to produce debt proposals so partisan that it’s inconceivable either side would pass the opposition’s bill. This doesn’t affect just the markets, it affects each and every one of us.

Much of the blame appears to lie on the newly elected members of Congress from 2010, so one thing we can do is send the “kiddies” home. They’re playing with our NATION as if it were a game of Monopoly, while the rest of the world watches and snickers, if not LOL.

Just a month ago it was unthinkable that those we elected to run our government would get to this point with no solution in sight. The debt ceiling has been raised NUMEROUS times in every presidency, and yes, at some point we have to worry about balancing the budget, but NOT when it will send our fragile economy over the cliff.

The market had a fairly good week last week, and you know why? Because the European Union not only bailed out Greece, they worked together to build a better liquidity environment for all EU members. Mind you, these are different countries working together, with different cultures, speaking different languages, who have been deadly rivals over the centuries. Yet they were able to sit down together and design something that might work.

But not the so-called leaders of the good ol’ U.S.A.

They continue to throw mud balls over the fence at each other; they continue to waggle their hands and shout “na na na na na na” and turn deaf ears to the people who elected them. Hopefully, President Obama will use his bully pulpit tonight to spur Congress into action, and if not, we should throw them all out—IF we survive the crisis their inaction plunges us into.

If ever there was a time to write your Senator or House representative, THIS IS IT. Call, email, text, fax, or march, drive, or hop a plane to Washington and sit in front of their doors until they come to their senses. If you have a blog, tell them what you think and keep telling them until they get their heads out of their partisans and take care of our country.

Okay. Back to the market.

Not only did it respond well to the European solution, it gave a roaring round of applause to last week’s earnings releases. Apple (AAPL) blew everyone else away and, for the first time ever, reported more net income than Microsoft (MSFT), despite the fact that Microsoft also beat estimates.

IBM, Johnson & Johnson (JNJ), AT&T (T), and Coca Cola (KO) joined the fun of beating the Street. Even Caterpillar (CAT), one of the few big names to miss estimates, still had surging profits.

The dollar fell 1.2% last week, but it’s a miracle it didn’t fall ten times that. Oil went up 2.6%, so there goes some more of our money.

Market stats. With Apple being the shiniest of several knights in high-tech armor, it’s no surprise that the leading sector was Technology, up 3.4%. Finance, for no apparent reason, and Energy were close behind, both up more than 3%, followed by Public Utilities and Basic Industries, both gaining more than 2%. If there were surprises, they were Capital Goods, falling to next-to-last spot, up +1%, and Health Care, gaining only +0.9%. Transportation reflected rising oil costs to capture last place but still gained nearly +1%.

Something unusual happened with our SectorCast rankings this week. Consumer Durables charged to the No.4 position from last place, based on a remarkable score in one of our filters called “net revisors.” This filter measures the number of analysts raising or lowering earnings estimates. Consumer Durables had one of the highest net revisor scores in recent memory. That means, on a net basis, more of all the analysts following the stocks in that sector raised, rather than lowered, their earnings estimates for the current year.

Technology’s net revisors score was almost as good, in contrast to Energy, Basic Industries, and Public Utilities, whose negative scores mean that more analysts lowered estimates than raised them.

Granted, Consumer Durables’ net revisor score didn’t lift it all the way to the top, mainly because near-term earnings make the stocks in the sector a bit expensive, but with such an unexpected and sudden rash of positive earnings revision, the sector bears watching.

Energy gained the #1 spot in SectorCast due to its current robust earnings at a modest price, while Basic Industries and Technology ranked No. 2 and No. 3.

The surprise on the downside of SectorCast was the fall of Capital Goods from #4 last week to #3 this week, which was due to a relatively high forward valuation and modest rankings on virtually other sector filters, such as return on sales, return on equity, and next quarter growth.

We can only hope that the President can light a fire under Congress–if not, we’ll have to outshout them all the rest of the week. So call, write, visit . . .

Upcoming economic reports. Here are the upcoming economic reports, none of which will matter much if the children of the corn push the nation into default.

Upcoming Economic Reports

Tuesday, 7/26 S&P Case Shiller HPI (home price index)

Consumer Confidence

New Home Sales

Wednesday, 7/27 Durable Goods Orders

Beige Book

Thursday, 7/28 Weekly Jobless Claims

Pending Home Sales Index

Friday, 7/29 Employment Cost Index

GDP

Chicago PMI

Consumer Sentiment (Univ. of Michigan)

Monday, August 1 ISM Manufacturing Index

Construction Spending

4 Stock Ideas for this Market

It’s so uncertain out there that I don’t want to present any stock ideas for the week. But for those intrepid souls who care to take the risk, my staff acted on its own to run the search and offer the 4 stocks below.

They tell me they used a High Growth preset search in MyStockFinder and included Buys (in addition to Strong Buys), limiting it to Large-Caps only, and slightly upweighting Value and Technicals. Here are four intriguing stock ideas:

Halliburton Company (NYSE:HAL) – Energy
Perrigo Co. (NYSE:PRGO) – Healthcare
Cummins Inc. (NYSE:CMI) – Capital Goods
Microsoft Corp (NASDAQ:MSFT) – Technology

Source: We Need to Grow Up and Get Our Act Together