The Bull-Bear Debate: Will Google Bum Out the Bulls?

Minyanville  |

I'll tell ya, it ain't easy being green—and that's been the case since December 2011 when we offered the same exact vibe.

While some newbies in the 'Ville might mistake us for Pollyanna, the Old School in our midst would chuckle at that notion.  If anything, we've been branded bears over the course of the last decade, which isn't such a bad thing considering it was the worst 10-year stretch in financial market history.

Be that as it may, looking back doesn't help much when trying to navigate a forward path. And while the Buzz & Banter has recently been chock full of bullish bents—it's been more bullish than I've ever seen—Hoofy has been rewarded for his optimism...thus far.

Yesterday, on our real-time Buzz, I offered the following take:

Please take this in the manner intended, which is our collective best interest.  When I see uniformity of opinion, regardless of how educated those opinions might be, I sit up and take notice, regardless if I do anything about it.

Yes, the tape acts great—it shrugged off the sovereign downgrades and gobbled up supply as fund managers relaxed the risk-parameters that handcuffed them into year-end—but few markets move in a straight line.

I'm not brave enough to draw a line in the sand and battle the animal spirits, but I'm nimble enough to make bets that have defined risk.  As such, I've nibbled on some downside puts—one in the financial realm, another in a tech high-flier—with very tight parameters (I've set stops above today's (yesterday’s) high prints).

Only time will tell if I'm rewarded for going the wrong way, but I would be remiss if I didn't share my stream of consciousness in real-time. Take it for what it's worth, which might not be much!

Fast-forward to this morning, as we digest the avalanche of earnings. The following analysis was shared by Minyanville editor Michael Comeau last night, in real-time.

Google (GOOG) is getting whacked after the company reported a fourth-quarter profit of $9.50 per share, which is well below analysts' expectations of $10.45 per share.  Revenue was also light at $8.13 billion. This may be an issue of misplaced expectations rather than fundamental weakness, as positive chatter towards Google had become deafening headed into the quarter.

IBM (IBM) shareholders are in a better mood, however, after the IT giant beat analysts' earnings expectations with a quarterly profit of $4.71 per share. Revenue was a bit light at $29.5 billion, but the company's fiscal-2012 earning guidance of at least $14.85 per share is fractionally above expectations.

Intel (INTC) also beat expectations, though it should be noted that the company cut guidance on December 12 due to the impact of the Thailand floods on the PC supply chain. Nonetheless, the stock is seeing a bounce after hours as first-quarter revenue guidance is roughly in-line with consensus.

Microsoft (MSFT) raised fears among investors. Also, Microsoft revised its operating-expense guidance down for 2012, which is definitely good news for Microsoft bulls.

Conclusion: Three out of four aint bad, though it should be noted that NASDAQ (IXIC) futures are weak after the close due to the impact of Google, and its spillover to Apple (AAPL), which is huge in the index.  Pay close attention to commentary regarding Europe. Despite a large of volume of negative pre-announcements heading into the current earnings season, a consensus seems to be forming among traders that the U.S. economy is holding together decently. Infosys (INFY) recently had bad things to say regarding European IT spending, so we could see confirmation/denial regarding such from these here four horsemen.

I will share that when I woke up this morning to find the NASDAQ futures flat (in the face of Google trading $50 lower), my first-blush reaction was, “If they’re not going lower, they’re going higher.”  There’s no secret sauce to that formula—nor is it foolproof—but the reaction to news is always more important than the news itself.

By Todd Harrison

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DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not necessarily represent the views of Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to:

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