Apple (AAPL), Research In Motion (RIMM), Google (GOOG) and Amazon.com (AMZN) (Read: The so called four horsemen) were all strongly positive today and each simultaneously pegging fresh new 52-week highs. Actually, with the exception of Amazon, all of them set new all-time highs. Is business simultaneously this good for all four of these names? Or is this "coincidence" a function of absurd copious amounts of liquidity and all the same computers programmed to chase these same respective chart patterns? This would be about the time Munder rolls out their “Four Horsemen Fund.” In spite of a continued drift of bad “real” news, the Quant’s among other momentum-based hedge funds now in charge of roughly half of the daily volume on any single day, continue to operate on some kind of “higher” imaginary plane deluded by the belief (or programmed) that these names are mostly immune from any slowdown in GDP. What if, just perhaps, even if just a 20 to 30-percent chance, that we are either in or on the cusp of recession? You don’t think this impacts the number of business people that think they need to check their e-mail on a Blackberry every 10-minutes? Or what about a company that is essentially a pure retailer, albeit an online version, Amazon.com? And what about online advertising and its impact on Google? We saw in 2000 thru 2003 how leveraged companies like Yahoo (YHOO) were to economic activity vis-à-vis online advertising. Mortgage and real estate brokers were among the biggest advertisers up until about six months ago. Doesn’t this evisceration of a major client eventually impact the “pay for click” model? And of course, as folks continue to struggle with meeting rent payments or paying for food and gas, how important on the margin will discretionary things like Apple iPods and iPhones become? From the lows on August 16th, Apple’s market-cap has rebounded from $94-billion to $140-billion. Research In Motion’s market-cap has nearly doubled from the lows on August 16th from $32-billion to $65-billion. Google’s market-cap has risen from $150-billion at its August 16th low to $188-billion at today’s close—an addition of $33-billion in market-cap in roughly 54-days. In doing so, it has also eclipsed the market-cap of Wal-Mart (WMT) as of today and is now the 11th largest company in the world. Just those three companies by themselves have appreciated a combined $112-billion in market-cap during this span. Amazon’s 54-day rebound is less impressive. But for it to be within spitting distance of its all-time year 2000 high is something I never would have envisioned. It, a retailer, now trades at 132-time trailing 12-month earnings and 50+ times expected forward earnings. It also trades at 4-times revenues---a retailer!!! But while beta was being chased after mindlessly (quite literally, via the quant's computers), oblivious to the world, Ryder System (R), a component within the Dow Transportation and a proxy for the real health of the economy, was forced to cut its profit forecast. Most ominously, it said that softness in the U.S. economy has spread beyond the housing sector. The company issued a statement saying that, "Economic conditions have softened considerably in more industries beyond those related to housing and construction." The Dow Transports, already far from confirming the recent highs in the S&P 500 and Dow Industrials traded down nearly 1.5 percent on the day. Also worth noting, copper was down roughly 4-percent today. Copper is a metal that will go down even as gold goes up due to its intimacy with real economic activity. The dire tone from Ryder showed up as tepid cautiousness across nearly every sector except for the ones impenetrable by human thought (read: The Quant’s computers) as the supposed GDP-immune beta stuff traded within its own little bubble (quite literally). The day was a near identical page from the final days of the tech and dot-com playbook when breadth was downright shabby except for the ones that ended with a “dot” and “com.” Finally, after the close of trading today, Microchip Technologies (MCHP), a specialized semiconductor products manufacturer, warned that of 2Q earnings of 35-cents versus a Wall Street consensus of 37-cents. It’s also warned that revenues would fall between $258 million to $259 million versus an expected $267-million. Remember, these companies essentially set their own guidance usually with room to spare. The company also revealed that its September quarter book-to-bill ratio was less than 1.00, or 0.94. They also said that it expects that December net sales will be down sequentially. The warnings and lowering of guidance within the semiconductor space is running at a high enough rate that I believe we are fast approaching an illuminating moment for those foolish enough to have followed Wall Street analysts into this latest brier patch.
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