Matt Nesto kicked off Dos Hombres with some harsh words for the knee-jerk sell-off in Amazon (AMZN) after the premiere retailer reported earnings that disappointed the Street. It wasn't the miss itself but the nature of the miss which took AMZN down $10 in the wake of the report. Revenues were strong but earnings were lighter than expected. What set off the mighty Nesto was the fact that all misses aren't created equal, and Amazon's was driven less by shrinking margins and more by investments in their core business. Merchants have to spend money to make money, and Amazon accelerating spending on fulfillment centers and other core operations.
Spending for specific enhancements in the customer satisfaction realm is in sharp contrast to Google's (GOOG) recent miss on somewhat vague initiatives and increased hiring. One is specifically improving the customer experience, the other smacks of flinging money at waning growth in a core business.
Then the conversation moved to all things Fed. As everyone knows, the government's headline inflation figures, PPI and CPI, are understating what's really happening in the inflationary world. With GDP estimates at 1.5%, CPI running at 3% and the latest Schiller housing data suggesting lower prices for the 8th consecutive month, Nesto dared to utter the Lord Voldemort of economic conditions: Stagflaton.
I have a slightly different angle on today's Fed notes and unimaginably hyped Bernanke press conference. I strongly suggest ignoring all of it. Every last bit. I maintain there is going to be absolutely nothing of import or "tradable" information written in the Fed Statement or uttered in the Bernanke presser. In no particular order, traders' time would be better spent: reading celebrity gossip sites, betting on almost anything, complaining about the NFL lockout, playing Angry Birds, Googling themselves or whining about missing the ramp up in silver. Getting long commemorative 12x8" Royal Wedding Flags is a better trading idea than making a move on any utterance from Helicopter Ben's presser.
Agree? Disagree? Feel free to let us know at BreakoutCrew@Yahoo.com or in the space below.
- headline inflation figures
- Angry Birds