Overview & Outlook
The first quarter of 2010 was one of extremes and started things out with a bang. The S&P 500 began the year at 1116 and quickly rose to 1150 before undergoing a 9.2% selloff (the steepest since the recovery began in March of 2009) down to 1044. Investors (such as myself) took advantage of the “sale” on stocks during the selloff and used it as an opportunity to add to positions. The ensuing buying pressure caused a 12% rally and the S&P 500 ended the quarter up at 1169.
Optimism abounded during the first quarter as corporate earnings continued to meet or beat expectations; auto sales maintained their upward trend and 4th quarter U.S. Gross Domestic Product (GDP) registered growth at an annual rate of 5.6% (the strongest growth since 2004). The jobs picture also improved in the first quarter with a drop in the unemployment rate down to 9.7% from 10% in December. March was especially strong as the economy added 162,000 jobs, the biggest monthly gain in over three years. Unfortunately, over 40,000 of those jobs were temporary Government hires for the Census and, after dropping to 9.7% in January, the unemployment rate has not fallen any further.
The signing of the health care reform bill by President Obama eliminated some uncertainty in the markets; influencing performance positively. Although the long term effects of this legislation are not yet clear, companies can now move forward with a solid understanding of what the rules of the game will be. Economists had been arguing that until the bill was either signed (or killed) it would be very difficult for companies to hire new employees because they wouldn’t know the true cost of employment.
Credit markets also continued to improve with the spread between corporate and government bond yields falling back to historically normal levels. Inflation was beginning to be a concern for investors towards the end of 2009 but the Consumer Price Index (CPI) data from the first quarter of 2010 allayed those fears by showing very muted gains. This maintains the foundation that the Federal Reserve needs to maintain its “exceptionally low levels of the federal funds rate for an extended period” while also providing financially strapped consumers with lower prices for their everyday items.
Despite the good news, there continue to be significant caveats and reasons for caution:
- Unsustainable GDP Growth
The blistering 5.6% GDP growth rate from the fourth quarter is not likely to be repeated because it was primarily driven by companies stocking up their inventories for the holiday season. Inventory stocking is typical in the fourth quarter but its effects were magnified in this case because companies were being cautious last year and maintained especially low inventories during 2009. To provide some context, we would need three more quarters of 5%+ GDP growth to drive unemployment down just 1%.
- Weak Jobs Market
Although the unemployment rate has fallen from its peak, it is still at historically elevated levels. U-6 Unemployment (a broader and more complete picture of unemployment) had been slowly declining but has now been ticking upward since February and registered at 16.9% in March. The picture gets even worse when you look at the details. Out of all the unemployed Americans, 44.1% have been unemployed for more than six months (almost double the worst level seen in our last recession). Also, many people who have been unemployed for more than a year are no longer being counted in the official statistics. This trend has only been getting worse and could mean that a lot of the jobs that have been lost are not coming back (particularly in construction, manufacturing and financial services). Unemployment rose in 24 states, while California, Florida, Nevada and Georgia all set new records for joblessness in March.
- Rising Oil and Commodities Prices
Over the past couple of years, oil companies have drastically cut their capital expenditure budgets for building new capacity because global demand had significantly slowed. Following strong stimulus programs from around the world – most notably China’s – demand for commodities and oil has been rising and global demand for oil is expected to set all time records in 2011. This strong demand combined with a diminished supply of oil could cause another sustained run-up in oil prices, which would severely dampen the economic recovery taking place.
- Interest Rate Policy and Bank Lending
A key driver of this recovery has been the strength of banks and their ability to keep credit flowing throughout the economy so that consumers can spend (even when they shouldn’t) and companies can expand. The more money banks make, the more credit they can provide. With the Federal Reserve holding their overnight lending rate at effectively zero, it has been extremely easy for banks to make money by borrowing from the Fed (AKA U.S. taxpayers) at a rate of 0% and then lending it out to companies at a rate of 5% or more; essentially providing the banks with windfall profits. Eventually the Fed will need to raise rates to stave off inflation, which will severely crimp the margins of banks, limiting their ability to continue contributing to growth.
- Continued Uncertainty Around Financial Regulation
Now that health care legislation has been passed, the administration and congress can turn their attention toward regulating of the financial services industry There is strong political and popular will to ensure that a financial crises of the magnitude that we saw in 2008 does not repeat but it is still unclear whether it will be done in a way that would impair the ability of banks to provide credit. Major banks made themselves easy targets by taking taxpayer money (whether they claimed to need it or not) and then spent lavishly on employee compensation stoking outrage that continues to smolder.
- The U.S. Budget Deficit and Tax Increases
In combating the recession and reforming the healthcare industry, the U.S. budget deficit has grown to unprecedented levels. This has been exacerbated by falling tax revenues due to lower corporate profits and consumer income. President Obama has already said that taxes will need to be raised for upper class Americans but it is not unreasonable to assume that lower income levels could also see higher taxes. Of particular concern for the stock market is that taxes on capital gains and dividends may also be raised, which would most likely be perceived negatively by the market.The elephant in the room however is looming social security and Medicare expenses that will continue to balloon as the baby boomers retire. Any reform will most likely require a mixture or higher taxes, reduced benefits and tougher eligibility requirements. Faced with the prospect of higher tax rates and decreased social benefits, investor sentiment is likely to wane.
Despite my caution, I am hopeful and optimistic that economic data will continue to improve. I would like to believe the market cheerleaders on CNBC who say that we are in a new long-term bull market but unfortunately, the facts of the situation do not yet support that assertion. After selling off a large portion of my portfolio in December and early January, I have been gradually increasing my exposure to certain areas of the market with a defensive posturing.
During times like this when hope and optimism outweigh the raw data, it’s important to maintain perspective and discipline. Warren Buffett said it best in a letter he wrote to his investors during the stock market frenzy of 1969:
It is possible for and old, overweight ball player, whose legs and batting eye are gone, to tag a fast ball on the nose for a pinch-hit home run, but you don’t change your line-up because of it.
Although very volatile, the S&P 500 continued its upward march, gaining 5.39% in the first quarter of 2010 and bringing its return for the trailing twelve months to 49.76%. However, it is still down more almost 19% from the October 2007 market highs.
The MSCI EAFE (European, Asian & Far East) index continued to underperform U.S. equity markets with a gain of only 0.94% in the first quarter, bringing its’ total return for the past year to 55.19%, slightly above the S&P 500. We feel that the MSCI EAFE is still being held back by a strengthening U.S. Dollar as well as concerns over sovereign debt in countries such as Greece, Ireland and Portugal. Despite these concerns, we maintain a favorable view on foreign/emerging markets as a whole because of their stronger fundamental growth prospects and lower consumer debt to income ratios.
The Barclays Capital U.S. Aggregate Bond Index underperformed equities during the first quarter of 2010 with a gain of 1.78%. The index is now up 7.70% over the past year and yields approximately 3.8% as of the close on March 31. The recent underperformance of bonds is likely due to investors shifting money from bonds (which are relatively safe) into riskier assets such as stocks (which offer greater returns). Another downward force on the price of bonds is speculation regarding when the Federal Reserve will begin to raise interest rates (higher rates tend to depress the price of bonds) and by how much.
We are either at the end of a Great Depression style “fools” rally or entering the second stage of a longer term bull market but it is very difficult to tell which it will be. The market is longer “cheap” by almost any definition with the P/S ratio now solidly over 1.0 and the dividend yield of the S&P 500 back to normal levels below 2%. However, with a forward P/E ratio of 16.95 (as of market close on 4/23/10) the market is not exactly overpriced either. We are now in a valuation limbo of sorts.
The main reason for this is that there is currently an unprecedentedly large divergence in the corporate earnings estimates of top down macroeconomic analysts and bottom up security analysts. Historically, bottom up security analysts have predicted operating earnings 19.25% higher than those predicted by top down macroeconomic analysts. For 2010 and 2011, the difference has widened to over 28%.
It the optimistic bottom up analysts are correct and the S&P 500 has operating earnings of ~$95 in 2011 (up from ~$57 in 2009), then the market is certainly undervalued and could easily run up into the 1,400’s assuming a modest P/E ratio of 16. However, if the top down analysts are closer to the mark and the S&P 500 earns only $70, then using the same P/E of 16 would imply a market correction down into the low 1,100’s.
This being said, I remain long the market and do not see any strong technical resistance other than 1,229 (the 61.8% Fibonacci retracement from 2007 highs to 2009 lows). However, until we break above that line, I am keeping my mind very open to the idea of a deep decline for two reasons. 1.) Selloffs bring lower prices and opportunities to buy great companies that might have been missed earlier during the rally and 2.) The public and political will for strong financial reform (which I feel is absolutely necessary in some areas) has been dwindling with each new month that the market continues to rally. The impetus for reform would be greatly strengthened if the market begins another dramatic selloff and stories continue coming out about issues similar to what went on between Goldman Sachs & Co. (GS) and Paulson & Co.
Bottom Line: Don’t short a market that wants to rally. I’m staying net long until technical long setups start breaking down and if short setups start working before we break above 1,229 then I’ll have to reevaluate and strongly consider going short.
Palm Inc. reported earnings after the close today, and what they reported wasn’t pretty. Expectations were for a loss of $.42 per share on revenue of $316.19 mm. Reported numbers were $366 mm, which was actually higher than expectation, and a loss of $.61 per share, which was not. After being up by about 5% during the day on a lot of short covering, the stock tumbled on the news in after hours by over 13%.
Adding to the woes are increasing inventories at the carriers. This is an issue because Palm records sales when the products are shipped to the carriers, not when they are actually sold to consumers. Thus, large stocks of unsold inventory will prevent Palm from recording much in the way of sales until that backlog is cleared. Thus, Palm issued revenue guidance for the upcoming quarter that is half of the $305.77 mm that analysts were expecting.
My Palm article in September hypothesized that the stock (then at 17.40) would drop as consumer adoption of the new operating system would lag. Back then, Palm was shipping over 800,000 units per quarter, that number has since increased to over 900,000 but sell through to customers has decreased to 400,000 units. The stock in after hours dropped to below $5 as the long term survivability of Palm remains in doubt while they try to compete against the mighty Apple, Google and RIMM.
Disclosure: Long GOOG, no position in any other stock mentioned
Here comes another big day!
Before Market Hours:
3M Company (MMM): 3M Company is a diversified conglomerate like General Electric (GE), but without the added risk of a capital arm that almost fells the company. 3M seems well managed but it is still hard to get a clear picture of the company because of all the different business segments. Wall St. Analysts are looking for Q3 earnings of $1.17 per share on $5.75 billion in revenues and $1.06 EPS on $5.55 billion in revenue for Q4.
YTD: +33% One Month: +3%
AT&T (T): The Telecommunications giant is expected to post EPS of $0.5 on revenues of $30.88 bn, a decrease of about a percent over the year ago quarter. There are a couple things at play here, but traders will be looking closely at the top line as a proxy for consumer and business spending. Decline in the land-line sector is well-documented, but analysts will be looking for continued signs the company is reducing its exposure, and in the wireless sphere AAPL’s earnings have created high hopes that iPhone revenue will contribute strongly to the bottom line. The expectations are reasonable for this reporting period, so traders and investors alike will be looking for the company to beat EPS and especially Revenue estimates.
YTD: -9% One Month:- 3.5%
McDonalds (MCD): The world biggest fast food chain is expected to post earnings of $1.11 EPS on $6.1 billion of revenue according to consensus estimates by Thompson Reuters. Q4 estimates are pegged at $.99 EPS on $5.89 billion. Key items for investors to watch will be 1.) same store sales growth which slightly dissapointed last quarter, 2.) Growth trends for McCafe and 3.) currency impacts. Effective corporate tax rate could also be interesting to watch. McDonalds has so far lagged the market over much of the year along with other defensive stocks but I think investors may begin to warm to them as the market continues its high-wire balancing act.
YTD: -6% One Month: +4%
Merck (MRK): Merck is the last big pharma/drug stock to report. I don’t feel that the bar has been set particularly low or high in this sector by previous reports so this should be good to watch, especially after the cautious tone that Pfizer (PFE) was echoing in their report. Thompson Reuters estimates for Q3 are currently for $0.82 EPS on $6 billion in revenues with Q4 estimates coming in at $0.84 EPS on $6.16 billion in revenues. Fiscal 2009 ending in December is expected to be $3.23 EPS and $23.44 billion in revenues.
YTD: +8.5% One Month: +3.5%
After Market Hours
American Express (AXP): The banking giant is expected to produce EPS of $0.37 on Revenue of $5.91 bn, a $17.5% decline from a year ago. Probably the most important earnings of the day, at least for the overall market, traders will be looking for, and hoping that, AXP blows out its earnings. Enough at least to justify the strong recovery the stock has put on so far this year. Recent rumblings have suggested that the company will post strong numbers on the back of a recovery in spending from higher-net-worth individuals, but the street will look at the numbers across American Express’ clientele to try to gauge the mood of the average shopper before this important holiday season. Management’s discussion of the new CARD law, and its effects on industry profitability, will be interesting although my guess is that it is already priced in to the stock.
YTD: 93.5% One Month: 6.5%
-Lucid Markets Team
Disclosure: Collectively long T, MCD, GE, ABT and JNJ
So far this earnings season, 77% of companies have posted EPS numbers in excess of their estimates. This is extremely high from a historical perspective, and shows just how much the street analysts have underestimated the recovery in the market.
As we have said before, however, this earnings season is all about revenue. It is much easier for a company to post good EPS numbers as they slash costs by cutting staff and capital expenditure. Much harder to manufacture is revenue numbers, and this earnings season is separating the former from the latter. This helps explain why, despite the high percentage of EPS beats, the average stock has actually declined 0.72% on its reporting day (Source: The Bespoke Investment Group, found here).
I noticed this trend during last quarters reporting season. The companies that reported first all benefited from EPS expectations that had not been adjusted up enough to match the cost cutting that was being implemented. During first few weeks, the majority of companies beat expectations, and their stocks took large leaps on those days that they posted. The euphoria spread to their respective industry peers, and by the midway point the market was feeling pretty good. However, while formal expectations didn’t increase drastically, whisper numbers for the later-reporting companies did until finally they were too high. So when those companies actually reported, they fell short and the stock dropped.
I have no insight as to whether this will happen this earnings season, but I would say it is a definite possibility, especially in industries like health care and technology where the vast majority of companies have seen large jumps in share price as they handily beat expectations.
Disclosure: Long T and MSFT.
They say that good investing shouldn’t feel good when you do it….
By that logic, Andrew and myself must have made an absolutely amazing investing decision when we wrote our post last week explaining our reasoning behind him selling all of his Apple and me selling 66% of my position. Not only did we get contacted by Apple’s lawyers about that story, but they decided to rub it in by posting record profitability and having their stock rocket up in after-hours.
Analysts were expecting EPS of $1.42 on average with the whisper number closer to $1.70. Apple destroyed both numbers with earnings of $1.82. They also trounced the sales numbers across the board; beating on Mac’s, iPhones and even the iPod. Their gross margins actually expanded during the quarter thanks to people upgrading to Leopard (Microsoft might be able to surprise next quarter for similar reasons related to Windows 7).
The one caveat to Apple’s earnings is that their guidance for next quarter was below consensus estimates, however, Apple is known for sandbagging.
This amazing quarter was in line with our thinking that Apple is an exceptional company with impeccable execution. However, I still feel that there is very little or no negativity priced in to the stock and it is reminiscent of Akamai (AKAM) a couple years ago when everyone “knew” how great of an investment it was (it fell ~30% following an earnings report was only “very good”).
I think 2010 earnings will be between $6-8 and the stock should be fetching a P/E of 20-30. These estimates would imply a price of $120 to $240 with the average being $175. I’d love to make another 20% on Apple but even my average estimate would put me at a 12.5% loss while the low end would represent a 40% drop. The risk/reward ratio is nowhere near as appealing as when Apple was trading below $100 where I was buying and I still feel there are other investments with better ROI at current levels.
I will add to my position if we get to ~$180 and I will be selling the rest of my shares if we approach $225.
Disclosure: Long AAPL, RIMM, MSFT
Some big names, including 5 of the 30 Dow components, will be reporting earnings tomorrow. What follows here is a rundown of what to expect:
Before Market Open:
United Technologies Corp (UTX): Analysts are expecting EPS of $1.12 on revenue of $13.31B, which would be a 10% decline from the year ago quarter. EPS estimates have remained stable over the last 90 days, so I doubt the market is expecting any less than a beat of those numbers. GE’s numbers did not paint a great picture for conglomerates, but unlike the General, United Technologies is not burdened by a dismally performing capital arm so there is probably little comparison there.
YTD: +22% One Month: +4%
Coca-Cola (KO): Analysts are expecting EPS of $0.82 on revenue of $8.12 bn, equating to a 3.2% decline compared to the year ago quarter. EPS estimates have risen slightly, compared to 60 days ago, so it is hard to know what the street expects. Closely watched will be the revenue numbers to see if the company can grow out of the recession, and provide investors with good numbers made without resorting to drastic cost cutting. A wildcard here is the declining dollar; since Coca-Cola has a strong presence abroad their numbers could be helped by favorable currency conversion rates relative to previous quarters.
YTD: +21% One Month: +1%
Caterpillar (CAT): The provider of heavy-machinery is expected to report EPS of $0.06 on revenue of $7.49 bn, a drastic 42% decline from the year ago quarter. The standard deviation of EPS estimates is high, so clearly the street has no coherent strategy in mind for these earnings. Caterpillar has obviously been hit hard by the decline in construction spending, both residential and commercial, and their earnings will give some indication whether the tangible economy is actually improving. It is my belief that Caterpillar is one of the key stocks to watch tomorrow for market direction.
YTD: +29% One Month: +8%
EI DuPont de Nemours & Co. (DD): Analysts are expecting EPS of $0.33 on revenue of $6.14 bn, which would be a 15% decline from a year ago. Wall Street has published cautious earnings for the chemical giant, following the company’s own reserved guidance. Revenue will be the keenly watch figure, as investors will look to see if the decreased fear about the construction sector is well founded. DuPont will also provide some clarity over DOW’s earnings later in the week, and as both stocks have performed admirably this year, these numbers will be watched intensely. On the docket will be the dividend, and traders will be interested if there is to be any cut, because their dividend of $0.41 per quarter will not be covered by earnings should they come in at expectations.
YTD: +37% One Month: +2.5%
BlackRock (BLK): Analysts expect earnings of $1.90, on revenue of $1.12 bn which is nearly 15% below last year. BlackRock has had a stellar year, and is currently pushing new 52 week highs. Tomorrow will be the test to see whether they deserved it. Certainly, the relentless rebound from market lows will have benefited the company, although traders will be interested in whether funds under management have increased and where those funds are flowing too. The conference call should be of great interest to the street, to hear first hand what the company is seeing from the people who invest through it. Estimates have increased dramatically over the last year as the market rose, however, investors will still be looking for the company to beat those estimates to justify the approximately 150% gain since market lows.
YTD: +72% One Month: +11%
Coach, Inc. (COH): Analysts expect EPS of $0.39 on $748.73 mm of revenue, equating to a small drop compared to the year ago quarter. For this company, closely watched will be same store sales and ASPs as traders try to get a handle on retail sales. Certainly the street expects the company to beat these estimates, as expectations have not risen in the past 90 days, and the dollar decline should help this company which gets a large portion of its sales from its strong international presence.
YTD: +66% One Month: +2.5%
UAL Corporation (UAUA): The holding company for United Airlines is expected to report a loss of $0.94 per share on revenue of $4.34 bn, or a 22% decline from the year ago quarter. Analysts will be looking for the company to beat those numbers, and will be interested in fuel hedging strategies as the price of crude inches up again.
YTD: -34% One Month: -15%
During Market Hours:
Pfizer (PFE): The pharmaceutical giant is expected to post earnings of $0.48 on $11.42 bn of revenue, a decline of 6% compared to last year. Now that the Wyeth deal has been closed, investors will be interested to see the effects on the bottom line, and to hear management’s report of how things are going with the integration and how any cost savings are panning out. Earnings estimates have been flat for the past 90 days, and traders will expect earnings to come in above expectations.
YTD: +1.5% One Month: +9%
After Market Close:
Canadian National Railway (CNI): The railroad company is expected to post EPS of $0.82 on revenues of $1.86 bn, a decline of 14% over last years equivalent quarter. These earnings will show people whether consumer and business spending is picking up, as the railroad traffic will increase if the economy is improving. An interesting point is whether energy transportation will increase, given the increased price of oil, CNI will give another data point showing whether or not the oil sands mining operations have picked back up. The declining dollar may hurt CNI as 19% of their revenue comes from U.S. domestic traffic.
YTD: +44.5% One Month: +4%
Intuitive Surgical (ISRG): This once high-flying manufacturer of surgical instrument has produced some schizophrenic earnings in the past, but is expected to post an EPS of $1.46 on revenue of $256.44 mm. Analysts have increased their EPS expectations drastically over the past 90 days, and the stock has responded by rising dramatically. With such a highly valued PE, traders are always looking for the company to beat earnings, but probably never before as much as now. The street has widely missed the company’s earnings the past two quarters, and will be looking for some more stability this time around.
YTD: +108% One Month: +6.5%
Yahoo! Inc. (YHOO) – The internet giant is expected to post $0.07 EPS on revenues of $1.12 bn, a decline of 15% from a year ago. Believe it or not, rumors are still swirling about a more formal tie-up with Microsoft, especially in light of Microsoft’s Bing which got off to a great start but has tapered since then. Look for questions about this in the conference call, and my guess is that the response will be a sharp negative. Carol Bartz has had a few quarters at the helm of Yahoo, and the company isn’t looking as weak as it did during the crazy Jerry Yang-playing-CEO period, but eventually the company will have to produce some good numbers to back up the tough talk.
YTD: +41% One Month: -1%
Disclosure: Long Microsoft
What a week… We saw saw the Dow break above the 10,000 barrier and some of the biggest and most influential names in the market have reported a mixed bag of earnings that have been interpreted in an equally mixed way.
Intel (INTC) posted great numbers and although they rocketed up on the news, they have since given back all of the gain and then some. Buying on the good news would have hurt and they also set the earnings bar high for other reporting companies.
Johnson & Johnson (JNJ) in my opinion posted ‘Good’ or ‘Very Good earnings’. Unfortunately the street was looking for ‘Great’ and the shares received a 2.5% slap on the wrist. I recently purchased JNJ towards the end of September at $61.38 because I have been trying to take a more defensive posture as we continue at these high levels on the S&P 500. I still stand by these convictions although I wouldn’t pull the trigger to buy more unless it fell into the mid 50’s.
Abbott Labs (ABT) is another diversified healthcare company we own that has a nice healthy dividend of % but has been lagging the market since the bottom in March. Their earnings were well received after the lowered bar from JNJ, who stated that consumer defection to generic drugs were a big contributor to the disappointing sales numbers.
J.P. Morgan & Chase (JPM) posted fantastic earnings across the board, setting the bar high for its competitors as earnings season plays out. Revenue leaped to $26.62 billion from $14.74 billion, and their Tier 1 capital ratio jumped to 10.2%, up from 8.9% in the year ago quarter. The bank has expressed some misgivings about the future, and has increased its consumer lending loss provisions by over 60%, and non-performing assets have more than doubled since Q3 2008.
International Business Machines (IBM) reported what I felt were good numbers but not enough to justify the bidding up of their shares leading into earnings. IBM still looks very strong fundamentally and I think this bad reaction to their earnings can be used as an opportunity to accumulate (more on this in a later post).
Google (GOOG) reported fantastic earnings, beating the street in both profitability and revenue. Customer paid “clicks” increased both sequentially and year-over-year, but the average price paid per click by advertisers fell. CEO Eric Schmidt said the worst of the recession is behind them, and that the company could make one or two “big acquisitions” per year from here on out. Their revenues grew substantially and their Traffic Acquisition Costs (TAC) fell during the quarter.
Goldman Sachs (GS) posted fantastic profitability, but revenue levels were enough to concern the street. Nearly all sector revenues were down sequentially, except for trading and asset management which benefited greatly from the 15% rise in the markets during the quarter. Going forward, GS will benefit greatly from being the strongest Investment Bank due to greatly diminished competition, but will be hurt in its strongest business if the markets go south again.
Bank of America (BAC) posted poor earnings, slipping to a loss of $.26 per share compared to a profit of $.15 in the year ago quarter. This highlights the ongoing struggle of consumer banking, as it deals with high unemployment and increasing amounts of non-performing assets. In this light, the company announced it has increased its loan loss provision account to $11.7 bn, up from $6.45 bn a year ago.
General Electric (GE) reported great profitability, but poor revenues causing traders to drive the stock down 5%. GE Capital was the main anchor on the company, with its profit declining 87%, but surprisingly NBC Universal was a bright spot with a 13% rise. Jeff Immelt talked of a tough environment (he noticed!), but that he saw signs of stabilization in GE Cap.
Overall, it looks like the previously strong companies are getting stronger (GS, JPM, GOOG, INTC), while the environment remains troubled for companies who have underlying issues (BAC, GE). IBM dropped after reporting but we view the results positively.
Lucid Markets Team
Disclosure: Long: TSM, JNJ, ABT, IBM, GOOG, GS, BAC, GE, IBKR, JPM