Archive for the ‘Politics’ Category

We’re honoring heroes today. Which is well and good and proper.

But why aren’t we following in their footsteps… and trying to become heroes, too?

Most of us don’t have to go to war. But we’re still in a war today. Rampant, choking inflation. Climbing interest rates. Pollution. Dependency on the Middle East.

Brave men and women gave their lives for us to have a better world. And when it comes to our big moment to contribute… to be counted on…

… what the hell are we doing?

Squat.

Here’s something you can do to be a hero TODAY: Drive less. Ride a bike. If you have to drive, drive 55.

We ALL can do that. Right now. This very minute. We can reduce our oil consumption by 10-15%.

Let’s throw out the lead foot (i.e., fast starts/stops) and we save another 10-15%.

Why does this make you a hero?

Because we lessen our dependency on oil politics… whether that’s Middle East or in our own backyard.

Because less oil consumption means less pollution.

Because less oil consumption means less demand and therefore falling oil prices. And — CRITICALLY — there is a one-to-one correspondence between oil prices and inflation. Higher oil, higher inflation.

But LOWER oil, LOWER inflation. Everyone has more money in their pockets. Interest rates are lower. Less pollution so everyone is breathing a bit easier, including the Planet Earth.

And just like that… without government intervention… without having to watch the market painfully spiral downward… without really anything more dangerous than a slight change of bad habits… YOU’RE A HERO.

Just like that.

Btw, if you’re someone who’s saying, “forget that, my freedom is the ability to burn as much gas as I please!” … then you’re someone that doesn’t deserve the sacrifice made by our fathers and mothers… because acting irresponsibly does NOT equate to personal freedom… it equates to you being a selfish, unappreciative jerk.

We’re at war… no one is asking you to risk your life… just sacrifice a little bit of speed for a whole lot of good.

Be a hero. Drive 55.

Will Smith’s son, Jaden, tweeted this after his dad’s despicable behavior at the Oscars:

And That’s How We Do It.

There were about a dozen different ways Will Smith could have protected his wife’s honor in an honorable way.

But this is what he’s dishonorably taught his son: Violence Matters.

I’ve always loved Will Smith movies. He’s always been such a positive role model. He now needs to voluntarily give up his Oscar so that he can teach his son — and all the other sons out there — that violence is never the answer.

Doing so would convince me that he is truly sorry for the way he handled this situation — and I think second chances are important in life… most especially now with this dangerous and damning “cancel culture” that has infested modern society.

However, if he chooses not to, I’m not sure I’ll ever watch another Will Smith movie again.

To paraphrase Hollywood and Spider-man: “With great fame comes great responsibility.”

P.S. Btw, I was never a big Chris Rock fan… but he just zoomed to the top of my list.

I think every American was heartened at the speed that the U.S., and the free world, levied sanctions on the totalitarian regime of Russia.

A few weeks ago, many said we couldn’t turn off Russia’s access to Swift, that would be the equivalent of an economic nuclear strike.

Then BAM! The EU said, “we’re doing this NOW, please join us.”

Many said we couldn’t stop buying Russian oil, because that would hurt the world, including the EU, way too much.

Then BAM! We stopped buying Russian oil.

Just a few weeks ago, who would have thought so many company would join the battle? Google. Facebook. Twitter. Visa. MasterCard. American Express. PayPal. Nike. Adidas. McDonald’s. Starbucks. Coke. Pepsi. Hundreds and hundreds more… all flipping the middle finger to Putin. In fact, if you haven’t stop doing business with Russia yet, something is wrong with you.

China’s reaction to all of this? Silence in the beginning. A lot of folks say that’s just their way, “to observe.”

I think it’s something different. That they originally thought what Putin thought: “No way the U.S. and the EU can ever get their stuff together to act in concert… and certainly whatever they do won’t have teeth.”

But both Putin and China were oh so wrong. The outpouring of support for Ukraine? STUNNING. BLINDING.

UNANIMOUS.

So China went from quiet cockiness to silent terror… now knowing that the free world has a NEW weapon against oppressors: We’ll just turn you off.

It couldn’t have happened 20 years ago… maybe not even 10… but now the world is really so interconnected, that it really is possible to, say, strangle Russia-the-dictatorship-that-oppresses-people to economic death.

With all this momentum, China realized it had to do something.

Of course they didn’t do what would have been truly helpful to peace… and that is whisper in Putin’s ear, “wtf, it didn’t work, stop acting like a madman!”

Instead it’s s-l-o-w-l-y been rolling out support for Russia over the last week or so. Essentially “reminding” everyone we need to de-escalate because it will further mess up global supply chains and such.

Boy, did Xi miscalculate on that one, too.

Talk turned today of “secondary sanctions” against China. If they’re still doing business with a murderous dictator that wants to take away others’ freedom, then maybe we’ll just turn China off, too.

My reaction?

YES! LET’S DO THAT! NOW!!

Then I got to thinking, why wouldn’t we do this? China is mostly a one-way relationship: They economically abuse us. And every time we ask them to play fair, they cry about it.

Then I got to thinking some more: Which American companies would get hurt by this?

And then it hit me: Apple. The world’s most valuable company. The company that derives 19% of its revenue from China. The company that makes almost HALF of their iPhones in China.

This would be an economic disaster of epic proportions for Apple stock.

And since virtually EVERY person on the planet either has money directly in Apple… or their mutual fund does… or their 401K does… or their bank does where they save their money… and so on…

… hurting Apple stock is akin to hurting every person on the planet.

I kid you not.

Remember the dotcom crash? It started (imho) because Microsoft and Intel, the two companies that used to financially represent everyone in the world, missed earnings numbers and sent shock waves through the financial markets. A history-making crash.

So it’s happened before.

We survived… but remember it was awfully rough for a while… and Microsoft stock price, literally, flat-lined for about the next decade.

If sanctions move to China — whether it’s for their support of Russia — or they start moving on Taiwan — I know every American will feel the way I do: YES! LET’S DO THAT! F*ck China. You sell to your oppressed people… and we’ll sell to the FREE world.

If that happens, I’m not sure Apple wouldn’t get caught in an awfully bloody crossfire.

Oil prices are going through the roof.

Certainly all the uncertainty in the world isn’t helping.

But gas prices have skyrocketed. Which means inflation is skyrocketing, since the price of a unit of energy affects everything we purchase.

It’s killing me that all the DRILL DRILL DRILL folks are coming out of the woodwork and screaming, “we told you so!”

It’s killing me because, lest we forget, climate change is absolutely an existential threat to our very existence, too.

Seriously. Next time we get back-to-back “once in a century” storms, you’ll remember how much climate change sucks.

Or, just look at pictures of Beijing at noon to remember just how disgusting pollution is.

Now, we’re contemplating banning the import of Russian oil. And for some reason, this has spooked the oil market even higher.

Really? They supply about 5% of the world’s oil. Only about 1/2 million barrels a day to us. Why the hell do we need to drill more? We’re already exporting 17 TIMES that amount every day!

Maybe we should ask our national oil producers to keep U.S. oil in the U.S.? Or maybe they should just know to do that, as in, knowing the right thing to do in this situation?

AND… maybe the entire world doesn’t have to freak out about a lousy 5% of oil… how about we all just use 5% less energy? Walk to the store? Ride a bike to school? Use public transportation? Carpool? Take one car to a restaurant rather than two?

Seriously, simply combining weekly errands into just one or two trips a week would probably do it.

C’mon, America. We can tell Putin where to shove it AND help clean up the environment with so little effort… it will hardly feel like the WARTIME we’re in.

I’m not suggesting we go into lock down, but there certainly were a few unintended yet welcomed consequences from the early days of Covid.

We learned that we could work remotely, at least those in corporate America.

We learned that we could hold meetings — work or personal — quite reasonably on Zoom.

We learned that even a month of reduced driving made a big impact on our environment. CO2 levels started coming down. You could see fish in the Venetian waters again. And all kinds of other miraculous things, too.

Most importantly, we learned that even a month of reduced driving made a big impact on oil supplies and gas prices…

… and since the price of a unit of energy affects the price of everything else in our world, we were reminded that the price of everything in the world comes down as oil prices come down.

So if I were the President of the United States, here’s what I’d do:

(1) I’d gather the top 50 employers in the country to an emergency meeting at the White House… hey, I can do that, I’m POTUS! :) I’d remind everyone that we’re in a time of extraordinary crisis… whether it’s Ukraine, Russia, China, inflation, deficits, interest rates, supply shortages, pandemics, whatever. I’d ask the CEO’s of all of these companies if they would consider voluntarily having their workforces work at home, just like they did during the early days of Covid. I’d suggest 90 days, to correspond during the spring, where temperatures would not be too cold nor too hot, so easy on home heating and/or cooling needs.

(2) I’d address the nation… and remind all Americans that we’re in facing multiple, life-changing crises… and just like great Americans have done through difficult times, we all can make a contribution. Nothing is locked down. But walk to a local restaurant or shop. Ride your bike to school. Take public transportation. If you have multiple cars and have to drive, take the one that gets the best gas mileage. Plan trips better, do all your errands in one trip rather than three. Get together with your friends and neighbors and carpool when possible. Want to show solidarity with the Ukrainians? Want to stop run-away inflation and pay less money for everything? Want to put a lid on pollution? Want to sock it to Russia (and the Middle East while we’re at it) where it hurts, in their oil pocketbook? For the next 90 days, let’s make a wartime-effort to reduce or eliminate driving if we can.

(3) I’d met with the leaders of other countries, talk about what we’re doing in the United States, and ask each and every country if they would join the battle.

Here’s what I love about this plan: It literally has a huge impact ON DAY ONE.

And it shows that we control our situation… our situation does NOT control us.

I don’t like politicians. They don’t really ever get anything done.

The biggest politician we have today is our Vice President Kamala Harris. She’s accomplished nothing professionally… all she’s ever done is run for office… never even doing the work she was elected to do… always just running for the next office.

Unfortunately this is what Harris knows… and people focus on what they know… so my fear is the swamp just gets deeper with her in office. Ugh.

Another polarizing politician is Alexandria Ocasio-Cortez (“AOC”).

The press loves to paint her as some extremely far left radical socialist. Maybe she is, maybe she isn’t, she represents New York so I don’t know enough about her except the press paints her as some extremely far left radical socialist.

A headline jumped out at me this morning… Kamala Harris and AOC squaring off over a border issue.

My mind raced… it was like two heavyweight politicians in some kind of weird political octagon brawl… which politician could be more worthless?!

AOC opened with a splattering of, well, common sense:

“First, seeking asylum at any US border is a 100% legal method of arrival. Second, the US spent decades contributing to regime change and destabilization in Latin America. We can’t help set someone’s house on fire and then blame them for fleeing.”

But then she just couldn’t help herself and had to go kitchen sink:

“It would be helpful if the US would finally acknowledge its contributions to destabilization and regime change in the region. Doing so can help us change US foreign policy, trade policy, climate policy, & carceral border policy to address causes of mass displacement & migration.”

What does trade and climate policy have to do with border stuff? Way to convolute the conversation, AOC!

But, not to disappoint, hammerin’ Harris came back swinging with something even more inane:

“I’m really clear: we have to deal with the root causes, and that is my focus,” the VP said, then added, “Period.”

So the winner is…

…Harris! Spoken like the master politician she is. In other words, if it’s possible, she said even less than AOC… Harris actually said absolutely nothing.

Nobody likes Trump. He acts like an idiot. He’s divisive and an awful communicator. He doesn’t inspire trust. He’s arrogant, bombastic, and narcissistic. About as un-presidential as you can get. He’s embarrassing.

I, literally, can’t stand the guy.

He, literally, chased me out of the republican party.

However, here’s what I’ve learned from the last four years: No matter how bad Trump was — and he was awful — he still ran circles around all the other politicians.

Why? Because he got things done. As opposed to politicians, who are too busy, well, being political… i.e., doing and saying whatever they need to to get elected. Because that’s their profession… running for office.

And, once elected, politicians don’t do anything… they just work on getting elected to their next post. Or re-elected to their current post. Because they’re not trained to do anything but run for office.

Those are — in general — the folks we have running the biggest country in the world.

It turns my stomach that career politicians — democrat or republican — are the best we can do.

Trump was different, though (queue the giant “understatement” look). He wasn’t a politician. In fact, he was a political idiot. But he got things done. China has been ABUSING us for decades. Clear as day. Yet there wasn’t a single politician — like ever — that did what Trump did: Call them out on their bullshit. Because, if you’ll recall, that was really politically unpopular when he first started pushing. “Oh, a trade war will cause the stock market to crash! Oh, everything will be more expensive! Oh, how can we be so insensitive to a developing nation?” Bullshit.

And he called a spade-a-spade with China and Covid… and about WHO bias… both resulting in an unbelievable outcry… but both positions proving to have merit. As did closing the airports to China travelers… hugely unpopular… until the whole world followed suit weeks later. Ironically, after getting blasted for being “jingoistic,” Trump then got blasted for “not doing enough soon enough.”

I hated that he trashed the Paris Accord… and I still do… but Trump was right to point out that the agreement was unfair, that everyone else had to start their hard work, but China and India — the two TOP emitters in the world — could actually increase emissions under the agreement?

Huh? That only isn’t fair, it’s dangerous.

But that’s what most politicians do — head-scratching things — because they’ve never really run anything… because all they know how to do is run for office.

Trump was the first president in modern memory to propose that government employees not get automatic raises, but rather, get compensated based on performance. That was really unpopular, too. But smart, when is rewarding mediocrity a good thing?

Trump bypassed normal and ineffective bureaucracy and directly tweeted to China and Russia that military spending was “crazy!”… something that a politician would never do… but in one bold stroke, moved the reduction of military spending to the top of the agenda. Because military spending is insane.

And speaking of military spending, what about NATO? Trump was the first president to have the audacity to hold every nation accountable for the commitments they made… to pay their fair share.

Trump was an idiot on the whole wall thing, but he was right that we have a problem with illegal immigration.

In fact, that was so much of Trump’s problem… that he simply acted like an idiot… that his behavior simply got in the way. I absolutely stopped reading – – caring — about anything he said or wrote unless it was a topic of substance… because about 98% of what he said was narcissistic, immature gibberish.

But… he wasn’t a politician… and, for me, it was eye-opening what a non-politician could do in government.

You would think we could find a few candidates with both real management AND diplomacy skills — and the desire for public service — among 330 million Americans. Instead we’re stuck choosing between embarrassing or ineffective. Unfortunately, as difficult as it is to stomach — AND IT IS — embarrassing trumps ineffective.

So, on this inauguration day where two more politicians will get sworn into office, I fear, yet again, that we’re going to be led by people who are non-doers.

And that’s what’s wrong with government… electing officials that know how to kiss babies… but don’t have the skill set to manage big things.

And one other thing: We knew exactly what Trump was when he got elected… warts and all. That’s why seemingly reasonable and rational people backed a political idiot… because they knew what they were getting… as opposed to yet another politician simply telling them what they wanted to hear.

Anything to get elected, right?

Apparently China has punitively banned 35% of beef imports from Australia… because the Australians haven’t backed down on their questions to China about the origins of Covid-19.

And this just days after China floated plans to do an 80% tariff on Australian barley… which apparently completely derailed the trade.

China must be so proud of its Communist Party.

This is the kind of thing that could — should — blow up in their faces.

All I can say is:  GO AUSSIES!

Anyone that reads this blog knows I root for oil to go down, down, down… because, while that doesn’t benefit an outdated oil industry, it does benefit every other person on the planet… and, oh by the way, it benefits the planet, too.

The facts all virtually guarantee oil will keep driving lower… because of lack of demand (remember the world has shut down!)… because of geopolitical bickering… and because — go figure — the world is really, truly almost out of oil storage.

Ha, those are some pretty great facts!

So why would anyone take a flyer on oil going up now, with oil trading in the low teens?

Because that’s what contrarians do… the opposite from what everyone else thinks.

Case in point:  After oil getting absolutely crushed over the last few days, it had a rather big pop today.

So oil can go up, if no other reason than a dead-cat bounce.

Or, let’s say there’s a threat of war… like what may have happened this morning given Trump told the military to shoot at any harassing Iranian gunboats they want.  Military disruption like that tends to spike oil prices.

Or, let’s say Trump just can’t help himself and he starts levying tariffs on foreign oil.  The U.S. is (sadly) the world’s biggest consumer — by a wide margin — so tariffs would mean the price of oil would be artificially raised in a rather meaningful way.

Or, let’s say that the world gets unbelievably creative and somehow finds a lot more storage space… like old train storage containers… or old storage silos or such… because it’s the lack of storage space that caused the extreme oil pricing mania yesterday.  (“What do you mean I have to keep all the oil in my swimming pool?!”)

Or, let’s say of the 70 vaccines in testing right now, one of them makes it to the finish line relatively soon.  The real possibility of the world reopening for business would also cause oil to spike.

Or, let’s say OPEC decides that their 9.7m barrels a day cut from a week or two ago was completely and utterly insufficient… and so they call another “emergency” session and cut oil by 30, no, 40 MILLION barrels a day… way more than anyone would expect… because they know the time for horse-shitting around is over.  That would send oil prices skyrocketing.

And, let’s say Trump can’t stand being out of the spotlight for more than 12 seconds and he politically forces the Saudis and Russians to cut supply… by offering guaranteed cuts from U.S. producers (something that was left off the table the last time OPEC got together).  With oil at perceived negative prices, he just might have the go-ahead to make that type of commitment.

Note that nothing above is, “when aliens invade the planet” crazy.

So, call it contrarian or whatever, but I just don’t trust that something, ANYTHING won’t happen to interrupt the greatest “fuck oil!” party ever.

Sadly.

Dow is a hair away from 24,000 as I write this.  Nasdaq a shade over 8,500.  We’re back to being closer to the top than the recent bottom.

Today’s action felt like it’s really, truly going to be a V-shaped recovery… that we should be back at our old highs in no time at all.

But… b-e-w-a-r-e.

Because it was just a few weeks ago that it felt like the crashing would really, truly never end.

And that’s what happens during a crisis… the mania swings in both directions.

Don’t get me wrong:  We have a lot going for us in this crash.  Oil is really low… and that’s my #1 requirement for an advancing economy.  Companies headed into this crisis with a lot more going for them, too (i.e., real growth, real revenues, and real profits).  And lots of technology companies are going to absolutely thrive in this crisis, for example, Amazon, Netflix, DoorDash… anything to do with the cloud… and so on.

And, critically, the government has backstopped everything with TRILLIONS in bailout money.  (“Oh, yeah, that.”)

But let’s call a few spades spades here:  THE ENTIRE WORLD JUST STOPPED!  That’s going to affect many, many more companies than will benefit.  Stocks ran up waaay too much before the crash, too, so even without a crash, they needed a 10-20% correction just to whack them back in line.  And — most significantly — no one really knows when we go back to normal.

This last point is the key.

This V-shaped rally — where stocks go straight down, then go straight back up, forming a “V” pattern — is almost entirely predicated on us getting back to normal soon.

As in, investors already know this quarter is going to be a disaster, but they think they might have the next one in the bag.

But what about the next quarter?

If I’m the CEO or CFO responsible for offering public company forward guidance… in this environment… there’s no way I’m touching that with a 10-foot pole.  That’s a guaranteed lawsuit just waiting to happen.

So, unless I’m one of the handful of companies that are crushing it during this crisis, there’s no way I’m going to be even the slightest bit optimistic about the future.  Because everything is uncertain.  How long this will last.  What the 2nd wave looks like.  Or the 3rd.  Or if people really are developing immunity.  And so on.

So I either give the biggest low-ball guidance in history — or what is happening more and more — I simply refuse to offer any forward guidance.

That’s when the next shoe drops.

When analysts and investors see this negativity… then try to understand this negativity… then realize they’re now really, truly flying blind… that’s when the rug gets pulled out from under them…

… and the market, too.

Because that’s not going to feel like “soon.”  That will, for a period, feel just like FUD (Fear, Uncertainty, and Doubt).

It’s inevitable.

Because mania is inevitable.

Oil — really the cost of a unit of energy — affects the cost of EVERYTHING on the planet.

Which means that when oil prices go up, that FINANCIALLY HURTS everyone on the planet…

… including EVERY AMERICAN.

So why is Trump actively trying to drive oil prices higher?  In fact, why do all American presidents feel the need to do this?

I know people will say, “to protect America’s oil producers” … and so that we’re not strategically dependent on foreign oil.

Hogwash.

The way to do this is NOT to artificially raise set prices.  It’s to innovate.

Either we figure out a way to extract oil less expensively…

… or we figure out economically viable energy alternatives…

… say a conversion to natural gas, where we have a 100-year supply… or, electric cars… or solar-driven residential and commercial buildings.

And so on.

Anything but charging Americans MORE, which means we just end up FUNDING THE VERY PEOPLE THAT WANT TO DO US HARM MORE.

Sorry, energy industry.  Innovate or die.  Just like every other industry has had to do.  But don’t drag the rest of the country down with you.

Unless you’re short — and other than the great St. Patrick’s Day holiday where we all get to be green — not many silverlinings these days.

Except one big one:  The planet Earth is happier.

Maybe shutting down everything will give the planet a chance to breathe again?

After all, in terms of our stewardship of Earth, we’ve all acting like kindergarteners…

… so it’s fitting that the solution to climate change might very well be a global time out! 

Everyone is weighing in on Coronavirus prognostications.

I will try to keep mine to just the ones I feel are fairly unique.

My theme?  We couldn’t be better prepared for exactly the crisis we’re going to be going through.

*  This isn’t like the last two great crashes.

The 2001 “Dotcom Crash” was based on massive valuations with zero profits — and in many cases, zero revenues.

The 2008 “Great Recession” crash was based on artificially pumped up real estate prices, not real productivity gains.  (It was also exacerbated by skyrocketing oil prices, due to political, not fundamental, issues… and had twice the unemployment we have now.)

Whatever we’re calling 2020 — The Corona Crash? — we’re starting with real businesses, with real revenue growth, making real profits, involved in real productivity gains, historically low unemployment, and extraordinarily low oil prices.

In other words, we’re already starting with a much stronger hand.

*  Ironically, many of the productivity gains of the last decade involve remote technologies, i.e., letting employees work from home, ordering pretty much anything online, and, as important, socializing from a far.

So, in many ways, the last decade or two has been great practice for this exact situation:  Remote working, remote living, and social distancing.

*  Not only are the remote technologies in place, but the entire millennial generation prefers to socially distance.

Half the time millennials have their heads buried in their phones — even when they’re sitting right next to each other.  So do you really think they care whether they’re in the same room or a different state?  Not at all.

*  While older generations panic about bailouts and handouts and such, the entire millennial generation knows nothing but bailouts and handouts.

So do millennials think we’re in a crisis?  Absolutely not.  Feels pretty normal to them, like it’s just something we go through every once in a while.  What’s the fuss?

*  And finally:  The market needed to be popped.  Markets aren’t supposed to go straight up, like they did almost the entire month of February.

So we’re down 20%?  I can easily make the case we were 30% overvalued.  Because markets aren’t supposed to go straight up.

I’m not saying it’s not going to be rough, but I am saying we seem to be particularly prepared for this crisis.  It’s like a lot of what we need to do is already done.

We’ll see.

I’m fascinated by the events unfolding between China and the NBA.

Yesterday CNBC ran this headline:

China Silver Will Face Retribution

… and then inside the article this quote:

What Does This Even Mean China

Ha!  China really doesn’t get it:  THAT’S WHAT FREEDOM OF SPEECH IS ALL ABOUT!

My respect for the NBA — and Mark Cuban who has also been chiming in — just went through the roof.

Trump has threatened to declare a national emergency to get the rest of his wall built.

The democrats warned if the republicans want to play that game, they could declare gun violence a national emergency, too, when a democrat gets elected next.

Do both parties think these are threats? 

I say this is AWESOME, let’s get them both fixed!

I love more ways to bypass the Washington D.C. political swamp.

(Well, uhm, until we actually have a dictator.)

There is a lot I don’t like about our president.

However, his tweet this morning reveals one of the things I love about the guy… that with new data, he can bypass a bunch of time-wasting politics and thrust a critical issue into the limelight in a moment’s notice:

I am certain that, at some time in the future, President Xi and I, together with President Putin of Russia, will start talking about a meaningful halt to what has become a major and uncontrollable Arms Race. The U.S. spent 716 Billion Dollars this year. Crazy!

What’s the new data?  Maybe someone told Trump the deficit projections… driven in large part by almost $6 TRILLION in military spending since 2001?

I’ve long thought we spend a ridiculous, INSANE amount of money on the military.

We can pretty much bury the entire planet knee deep in nukes… do we really need to spend some 20% of budget on more superfluous weaponry?

Spending half as much… even a third as much… would still make us the biggest military spender in the world.

Good for Trump to bring this issue front & center…

… which is sure to confound both his greatest skeptics AND supporters!  :)

Apple announced earnings today… they beat on top and bottom lines… and even though iPhone unit sales missed by a tad, average sales price crushed expectations.

Sounds good, right?

Not so fast.  Apple is DOWN almost 6.5% in the after market.

Yikes!

Turns out guidance came in a bit light.

And, Apple said it was going to stop reporting on unit sales, which — supposedly — signals to analysts less volume going forward.

Here’s what I think:

WHAT IS EVERYONE CRAZY?!

Apple just reported 40% earnings growth.  That’s right — 40%.  That’s spectacular for any company… but a company Apple’s size?  That’s p-h-e-n-o-m-e-n-a-l.

To put valuation in perspective:  Usually your P/E matches your earnings growth.  So if you are growing at 10%, you have a 10 P/E.  So if you’ve grown earnings by 40%, you should have a P/E of 40.

But that’s not the case for AAPL.  Apple has a trailing 20 P/E… or, even more amazing, just a forward 14 P/E.  Which means there is a case to be made that AAPL is undervalued… it could be trading 100% higher… or even 200% higher in some circles.

Further, with a company like Apple — that is, consistent… steady… predictable — is light guidance really an issue?  Especially given that Apple usually gives lighter guidance… and has been doing so since the days Steve ran the company?

I think not sharing iPhone unit totals is the real issue… and it’s not with investors… but with analysts that are tasked to create projection models.

Fair enough, it will make their job harder.

But, seriously, Apple is consistent… steady… predictable… AND growing earnings at 40%… and, btw, growing revenues at a whopping 20%, too… their job is already pretty straightforward.

So here’s what I also think:  AAPL may initially go lower… but at some point the investment community is going to say, “It’s the #1 product in the world, produced by the #1 brand in the world.  40% earnings growth means they continue to knock the cover off the ball.  Most of the macro economic indicators are still intact.  Uhm, are we daft?!”

That’s when the momentum will shift… and we’ll see AAPL move higher.

And, despite what will seem like a stock-crushing open, I think it could happen sometime tomorrow.

UPDATE:  Well, uhm, maybe next week.  :)

There’s a lot of noise in the market.

But there’s usually a lot of noise.

By definition — at any point in time — 50% of people think there’s enough bad in the market to sell their shares to the other 50% who thinks there’s good.

Can’t have a market otherwise.  That’s why I always scoff when someone refers to “easy” trading periods.  It’s never easy.

What helps guide you through the noise is whether your fundamental investment thesis is still intact.

Is mine?  I think the two biggest drivers of corporate profits — which drive the market — are the price of oil and interest rates.  Let’s see where they stand:

* While oil took a little run to the upside, I wouldn’t call it misbehaving.  In fact, it’s shed much of its 2018 gain

* Interest rates are spooking everyone… but 10-year is sneaking back down… and Trump’s on fire about the Fed messing things up — so much so that a few Fed governors have had to reiterate that they won’t, uhm, mess things up (i.e., “will still be accommodative for quite a while”)

* Sentiment is negative.  While that’s not comfortable, as a contrarian I prefer this

So, for me, at least right now, the noise is… just noise… and what we’re seeing is some healthy “letting some air out of the balloon”… which we like… so it doesn’t pop.

 

P.S.  A great example of “noise” was Caterpillar earnings.  They beat top & bottom line.  But everyone was fretting about China and tariffs… and the stock got pounded… even though if you read their commentary, you find CAT itself wasn’t so worried about the effect of China or tariffs on its business.  Here’s some commentary from their 10/23/18 earnings call:

* CATERPILLAR SAYS FEEL GOOD ABOUT EQUIPMENT DEMAND IN CHINA NEXT YEAR

* CATERPILLAR SAYS EXPECT BUSINESS TO CONTINUE TO IMPROVE IN 2019 VERSUS 2018

* CATERPILLAR SAYS CONTINUE TO EXPECT INDUSTRY SALES IN CHINA FOR 10-TON-AND-ABOVE EXCAVATORS TO BE UP ABOUT 40 PERCENT FOR THE FULL YEAR

* CATERPILLAR SAYS EXPECT IMPACT OF 25 PERCENT IMPORT TARIFF ON ADDITIONAL $200 BILLION CHINESE GOODS TO BE ‘QUITE MINOR’

These are all good things, right?!

I was OVERJOYED by this headline:

Trump says each Cabinet secretary should slash 5% of their budgets after he pledges to cut spending

Remarkably, even one of the slipperiest* figures in politics, Kellyanne Conway, said something COMPLETELY INTELLIGENT:

“He’s asking them to cut the fraud, the waste, the abuse,” White House senior advisor Kellyanne Conway said on Fox Business Network. “Cut the fat, not the essentials.”

I think Trump should have asked for 10% — in business that’s considering an easy and smart cut as it forces you to really examine all of your projects and cut the worst performing one — but 5% is fine to get this party started.

 

*  Sorry for tongue-tying word but that describes her perfectly.

This shouldn’t be news.  On CNBC, no less.  It’s an embarrassment.  Grow up and be presidential, Donnie.

Trump-Stormy News

A few years ago a proposition went on the ballot to add a $1 tax per pack of cigarettes… with 100% of the tax going to support medical research for smokers.

The logic was simple:  If you choose to smoke, you should also be responsible for the health care costs you will inevitably have.

The tobacco industry fought this by creating an ad that had nothing to do with the issue at hand.  It was like an ad that read, “aw, but don’t we all like puppies and kittens?”

It’s happening again.

The California Teachers Association — one of the largest lobbyist groups in California — has created a shell organization called “Kids Not Profits”… in order to disguise their efforts to torpedo anyone that challenges their dominance…

… a dominance that corresponds with California schools going from one of the top systems in the country to one of the worst.

The ads the Teachers Association are running make it sound like the non-union people trying to fix our school problem are all “greedy billionaires who want to kill puppies and kittens!”

P-l-e-a-s-e!  Come on, people… let’s use some common sense… the last thing anyone interested in making a profit would want to do is get into the education business, especially at the grade school and high school levels.  It’s just not a good money investment.

It is, however, a great people investment… which ultimate corresponds with a great community investment… which is why it’s called philanthropy:

the desire to promote the welfare of others, expressed especially by the generous donation of money to good causes.

On the other hand, let’s call a spade a spade:  The Teachers Association DOESN’T protect teachers… it protects the massive layer of administrative bureaucracy above teachers… those same administrators that now control one of the largest educational budgets in the United States… and those same administrators that have — literally — DESTROYED public education in California.

The California Teachers Association should call their new organization “Administrators NOT Teachers or Kids”…

… because all the money goes to the incompetent administrators, leaving bare nothings for kids and teachers.

Apparently California is using tax dollars to advertise against a proposition on the California ballot to repeal a gas tax.

Yes, that’s right:  Using more tax money to make sure we can tax more.

Sorry but that just doesn’t sound right.

Politics.  UGH!  Just fix the problem instead of throwing more money at it!

Dear President Trump–

I may be the only guy in American that loves what you are doing with tariffs.  (Please see here and here and here.)

And I love that you’re turning up the heat.

But, if you want to win this in our lifetimes OR until another president takes office (whichever comes first), you need to enlist the support of the rest of the commercialized world.

This might be difficult since you’re trying to create a level playing field with them, too…

… or, said another way, you’re hammering the rest of the world into submission as well.

But maybe you can pitch a win here.  Something like, “look at what we’re doing to China… so you know we can easily do that to you, too.  Net-net is you’re going to lose a little to us, it’s inevitable.  But opening up China isn’t… unless we go to China together… and if we do go together, we’ll both really, truly gain a huge new market, second largest in the world!”

To make this work, though, it has to be China vs. THE ENTIRE WORLD.

That’s because China is too proud to be “defeated” by just the U.S… and going it alone only forces them to act more defiantly… which includes them dragging things out in hopes of a political regime change… regardless of how long that takes.

So the only way to get this done in a reasonable time frame is to turn up the heat on the rest of the world… THEN, as a group, approach China.  This will allow China to compromise with dignity… because it won’t be perceived as a fight, rather, that “everyone” came together and “mutually” agreed to change, uhm, all the rules.

No loss of face for the Chinese.  100% victory for the world (and the U.S.).  Wrapped up before the next presidential election.

Tough timing but that’s what you have to do to bring this home.

Break a leg–

–Royal.

I read a business headline that almost made me cry with happiness:

“Federal workers’ raises canceled.  Trump says pay should be based on performance.”

(Source:  Palo Alto Daily Post, August 31, 2018)

I read some more on this and I almost cried in agony with the statistics that were cited:

When salaries and benefits are combined and averaged, public-sector workers earned $129,200 in 2016 while private-sector employees earned only a combined $70,700.

(Source:  AMI Newswire, September 12, 2018)

That’s a lot of crying!

Federal workers earn almost TWICE as much as private counterparts… and don’t even get me started on the productivity of the public sector vs. the private sector.  

And people wonder why our country is in such debt.  Jeez.

I also read where Trump may be reconsidering this wage freeze — because of the upcoming elections — for political considerations.

DON’T BACK DOWN, DONALD!  Automatic pay raises… that have nothing to do with job performance… that have been going on for year after year after year… while our national debt continues to spiral out-of-control… IS INSANE!

Future raises absolutely, positively should be earned, jut like they are for the rest of us in the real world.  I am now officially pissed that my tax dollars are going to fund such an idiotic compensation plan.

DON’T BACK DOWN, DONALD!

I like guns.  But I don’t like the NRA… in the same way I don’t like most lobbyist groups.

I also like the military.  But I don’t like military spending… by some estimates a whopping 20% of our deficit-growing American budget.

To put that in perspective, we have enough nukes to bury the world many times over.

To put that in more practical terms, we spend more money on the military than the next SEVEN countries COMBINED.

So the last thing we need is more hawks in government.

Yet, Jeff Bezos just donated $10 million to a relatively new organization called “With Honor,” dedicated to electing military vets to office.

As our budget spirals out-of-control, I can’t think of a worse time to elect a more biased group of government officials.