The Long Term Investor

A nice FAT loss for me today....not that I care. EVERY....stock down today.....DUH. I also got beat by the SP500 by 0.67%.

We move on from here into the rest of the BIG CAP TECH earnings tomorrow. After that the last one to report will be NVDA later in February.

 

At least there was one [piece of good news for the markets today.

10-year Treasury yield falls below 4% as traders evaluate Fed decision

https://www.cnbc.com/2024/01/31/us-treasury-yields-ahead-of-fed-interest-rate-decision.html

The Ten Year Treasury is now at........3.916%.

 

Yeah Sunshine.....I remember that "Women In Red" thread. I mostly hung out on a thread called...."Super Models". No....it was not a bunch of drooling guys looking at photos of models. It was a stock and investing discussion board.

Do you remember the sad saga of.....Hitman....and unrequited love, on the old MSN boards?

He was also on Super Models and posted in extreme detai.....every day..... about the love of his life.....who had no interest in him other than as a somewhat friend....that she was obviously using and taking advantage of.

His entire drive to make money and succeed was driven by his...."princess". He is one of the few people I have ever seen on boards that actually became a professional trader. He was pretty messed by his the "princess"......but extremely motivated.

 

Here is to another....ten years together (minimum)....Sunshinegal.

 

Looks like a nice little come-back today from the INSANITY yesterday. Nice to be back in....rational reality.

BUT....we do have some big tech earnings tonight....so it all might start again. It is all NOISE......short term noise....that will have no staying power or relevance....other than a few days. YES.....the bull market will continue.

 

Perhaps the FED should take its own advice.

Powell would like investors to treat good news as good news:

https://finance.yahoo.com/news/powe...ews-as-good-news-morning-brief-110023622.html

MY COMMENT

Thanks for the advice. But the FED has trashed the markets and over-hyped the economic situation for over a year now. I have some advice for the FED.....for Gods sake.....sit down and just SHUT UP. Leave the markets and investors alone.

 

I see nothing.....I see nothing.



NOTHING......going on today at all. That is a good thing for the markets.

WELL....I do see one thing....the little bump up in the Ten Year Treasury yield of the past week or so seems to be over. The current yield is down today at.......3.886%.

 

Not a good thing if you are on the firing line.....but....a good thing for investors and the economy.

January hiring was the lowest for the month on record as layoffs surged

https://www.cnbc.com/2024/02/01/jan...or-the-month-on-record-as-layoffs-surged.html

(BOLD is my opinion OR what I consider important content)

"Companies announced the highest level of job cuts in January since early 2023, a potential trouble spot for a labor market that will be in sharp focus this year, according to a report Thursday from Challenger, Gray & Christmas.

The job outplacement firm said planned layoffs totaled 82,307 for the month, a jump of 136% from December though still down 20% from the same period a year ago.

It was the second-highest layoff total and the lowest planned hiring level for the month of January in data going back to 2009.

Technology and finance were the hardest-hit sectors, with high-flying Silicon Valley leaders such as Microsoft, Alphabet and PayPal announcing workforce cuts to start the year. Amazon also said it would be cutting as did UPS
in the biggest month for layoffs since March 2023.

“Waves of layoff announcements hit US-based companies in January after a quiet fourth quarter,” said Andrew Challenger, senior vice president of the firm. The cuts were “driven by broader economic trends and a strategic shift towards increased automation and AI adoption in various sectors, though in most cases, companies point to cost-cutting as the main driver for layoffs,”

Financial sector layoffs totaled 23,238, the worst month for the category since September 2018. Tech layoffs totaled 15,806, the highest since May 2023. Food producers announced 6,656, the highest since November 2012.

“High costs and advancing automation technology are reshaping the food production industry. Additionally, climate change and immigration policies are influencing labor dynamics and operational challenges in this sector,” Challenger said.

The report follows news Wednesday from ADP that private payrolls increased by just 107,000 for the month. On Friday, the Labor Department will be releasing its nonfarm payrolls count, which is expected to show growth of 185,000.

Initial jobless claims totaled 224,000 for the week ended Jan. 27, up 9,000 from the previous week. Continuing claims, which run a week behind, jumped by 70,000, the Labor Department reported Thursday."

MY COMMENT

I see this as a good thing. We need to get labor and hiring totally back from all the pandemic distortions. This is proof of the actual labor supply and demand starting to work the way it should.

Yes I am sure much of this is driven by AI and companies deciding to increase productivity and go as lean as possible. Get used to it....over the long term the jobs market is going to be severely impacted by AI. The trick will be....avoiding an extended period of DEFLATION......as jobs disappear forever.

 

I am getting tired of waiting......no not anything to do with investing or the markets. I am tired of waiting for a sculpture that we have coming any week now. When the piece is done at the foundry it will be shipped. I thought it might come in January but....nope. now I am hoping for February. Unfortunately....there is a chance that it may not be done till March.

I dont want to call and check on the progress....I dont want to bug them and be a pest.

This piece is an ICONIC piece of modern Western sculpture. We have a spot all picked out for it and a selection of antique boxes and cabinets....to choose from.... to set it on. Over time I am sure it will be a great investment.....although.....we do not buy art as an investment.

 

I mention the above since there is nothing going on in the markets today....other than good stuff. The little.....HISSY-FIT.....by the markets lasted only one day. Now we move on from here.

 

I STILL find this story extremely fascinating.

Bud Light sales down nearly 30% year over year as rivals continue to climb
Anheuser-Busch brands still taking a hit following 2023 boycott over controversial Bud Light partnership

https://www.foxbusiness.com/markets/bud-light-sales-down-30-year-over-year-rivals-continue-climb

MY COMMENT

As a marketing person in business school and through my life....I find this little episode FASCINATING. NO....BUD and headline writer......this is not and never was a boycott.

It was an instantaneous, mass movement, away from the BUD LIGHT brand. It is not going to change or go away. it is going to be a long term change. You dont see marketing events like this very often.......but it can happen.

A classic business school case study topic......in total failure of marketing and a total failure to understand your customer base. Unfortunately BUD did not clean house in the executive ranks over this disaster. The response by the company was also a TOTAL FAILURE. I believe BUD had about 1-2 days to turn this around......but their response was totally incompetent. They were obviously caught off guard and had no idea what was happening....or worse....why it was happening.

NO....bringing back the horses and perhaps a dog or two for the Super Bowl....is not going to make it all good.

 

Good old COSTCO. In most of my portfolios it is the second or third largest holding. This is due to the HUGE growth that the company has done over the long term.

The company is BOOMING today....up by nearly $5 per share. The current price is just over $700. Not quite an all time high but very close.

Now.....if only they would split the stock.

 

I just looked at my account for the first time today.

EVERY stock is up at the moment. Lots of room to run today....although the DOW is now in the red. The question as we get into the final hours of the day will be whether short term investors, speculators, and traders....are willing to hold going into the big tech earning reports after the close.

 

I hate to see this little story.

Voiding Elon Musk’s $56 billion Tesla pay plan is a 'wake-up call' for directors at all companies

https://finance.yahoo.com/news/void...for-directors-at-all-companies-090026769.html

(BOLD is my opinion OR what I consider important content)

"A decision by a Delaware judge to throw out Elon Musk's $56 billion Tesla (TSLA) pay package is a threat to the wealth of the world’s richest man. It also could alter the way CEO compensation is decided at companies across America.

"It’s a big deal," said Cornell University visiting lecturer Brian Dunn, who noted this was the first case ever to overturn a board’s decision on compensation.

The decision from Delaware Chancellor Kathaleen McCormick is "a wake-up call for all directors on the importance of arm's-length negotiations on CEO pay," Dunn said.

What McCormick found is that Tesla's directors had breached their fiduciary duty when they awarded Musk the largest compensation opportunity ever granted to a public company executive.

Why? Because of "extensive ties" between the people negotiating the pay package and a lack of public disclosure about Musk’s relationships with those who approved the deal.

"Put simply, neither the Compensation Committee nor the Board acted in the best interests of the Company when negotiating Musk’s compensation plan. In fact, there is barely any evidence of negotiations at all," McCormick wrote.

The ruling will reverberate across the business world as other highly paid executives and directors watch the legal conflict unfold, according to analysts and experts.

"I think that this will make directors wary of offering big pay packages to make the CEO happy," added Dunn, who is an expert on executive compensation. "Do I honestly think it will lower CEO pay overall? No, but I do think it will reign in the extremes of which Tesla was not alone."

The shareholders' attorney, Greg Varallo, said when Musk's compensation plan was reached in 2018, it was around 33 times larger than the largest pay package in history, which was Musk's prior compensation deal reached in 2014.

"It was so large that it single-handedly skewed the compensation data," Varallo said. "This idea that all of a sudden a billion dollars is now conceivable is due entirely to this package. If you erase this package by rescinding it ... my guess is the comparability data begins to deflate."

Musk's compensation plan was crafted to pay out in 12 separate tranches of Tesla stock options, but only in the event that the company achieved a series of $50 billion market cap increases, coupled with either revenue or adjusted EBITDA targets over four consecutive quarters.

The performance-based compensation — which was restricted by a lock-up period of five years and capped at $55.8 billion — was tied to the value of Tesla’s outstanding shares as of Jan. 21, 2018.

For each benchmark fulfilled, Musk was entitled to 1% of Tesla’s 2018 value.

For now, the rescinded compensation arrangement leaves Musk with no access to the $55.8 billion. However, at the time of the court’s ruling, the Tesla CEO had neither exercised nor sought distribution of those shares.

"The court's hard work will redound directly to the benefit of Tesla investors, who will see the dilution from this gargantuan pay package erased," Varallo said. The original lawsuit arguing board members breached their fiduciary duties was filed by shareholder Richard Tornetta.

Tesla's board could appeal McCormick's decision to the Delaware Supreme Court, or strike up a new compensation plan that complies with McCormick’s decision. Varallo said he expects the defendants to appeal.

Dan Ives, an analyst at Wedbush, said Wall Street is monitoring how Tesla's board will react.

Tesla stock fell 2.2% on Wednesday amid a broader market sell-off; so far this year, the stock has dropped 24%.

If the defendants do appeal, the Delaware Supreme Court will likely review whether McCormick correctly characterized Musk as a controlling shareholder in the compensation transaction, according to University of Virginia Law professor Michal Barzuza.

At the time of the accord, Musk owned a 21.9% interest in the EV manufacturer.

"How exactly they define controlling shareholder, that’s more complicated, and this is a relatively low threshold," Barzuza said.

The issue is a critical component of McCormick's decision, she said, because Delaware law applies heightened scrutiny to transactions between a company and its controlling stockholders.

Musk took to his platform X, formerly known as Twitter, to share his displeasure in a set of posts, recommending that companies avoid incorporating in Delaware and instead choose Nevada or Texas. Those are two states where his companies Tesla, SpaceX, and X Holdings already maintain a presence, and where fiduciary duties are more lax.

"Never incorporate your company in the state of Delaware," he said in one post. He then asked users to vote on whether Tesla should change its state incorporation to the Lone Star State.

On Thursday, he said the vote was "unequivocally in favor of Texas" and that Tesla would hold a shareholder vote on whether to move.

Complicating matters is Musk's recent push to receive even more Tesla shares to secure 25% voting control of the company. The move highlighted Musk’s already heavy influence over Tesla.

Musk has reiterated that his desire for additional shares isn’t about greater compensation, but rather wielding more influence over company decisions, especially as Tesla continues to develop advanced AI technology.

"With the Delaware court decision, Musk’s latest demand for 25% control of the company ought to give the board the legal cover to reexamine his demand," said William Klepper, academic director and adjunct professor at Columbia Business School.

Because the decision calls out multiple board members as not truly independent due to the ties they have with Musk, shareholder concerns could mount over whether those board members should be approving Musk's future compensation.

"Investors in Tesla will need to consider if the Tesla Board can fulfill its fiduciary responsibilities if it is beholden to its CEO over the general interest of shareholders," Klepper said.

More broadly, experts said the ruling will prompt some compensation committees at other company boards to think carefully about the due diligence required in crafting a CEO’s pay package. A central concern in the Tesla litigation was the influence executives can have over the people tasked with negotiating their pay.

To avoid the potential for self-dealing and real or perceived conflicts of interest, the vast majority of US companies have fully independent compensation committees or consultants to set executive pay using an objective process, said Jun Frank, managing director at ISS-Corporate.

But in the wake of the ruling, Frank said, companies may need to apply a more thorough test of independence, especially when company executives can exercise significant control over the board.

For those sympathetic to Musk and Tesla, however, the adverse ruling against the $600 billion company might discourage companies from incorporating in Delaware, where the litigation took place, Wedbush’s Ives suggested.

Both Nevada and Delaware have adopted exculpation statutes that protect directors and officers from liability for breaches in their duties of care.

However, Nevada's statute is much more lenient in that it also protects directors and officers from liability for breaches in their duties of loyalty, so long as the alleged misconduct is not intentional."

MY COMMENT

I HATE this ruling and where it is going to lead us. I have seen many , many,.....usually CELEBRITY CEO....outrageous compensation packages over the years. BUT....this court decision is going to open the floodgates to government and political control and regulation of company management and pay packages. Judges are absolutely....NOT....independent of government and politics.

There is already a remedy for share holders when it comes to CEO compensation and other company issues......SELL YOUR SHARES.

Poor Delaware......this is going to open a big door to companies bailing out of the state. I hope MUSK does move his corporate registration to Texas.

I imagine this will have a big impact on all the other Elon Musk companies that are now private. He will have to think carefully whether to take them public.

 

Well, well......that did not take long. the MASSIVE gains today shows that the market reaction to the MSFT and GOOGL earnings was simply......BS.

I had a big FAT gain in my stocks today. Not quite....but nearly.....as big as the loss yesterday. EVERY stock was in the green today. I also beat the SP500 today by 0.68%.

Now we move on to today's earning reports.

 

The Amazon earnings BEAT.

Amazon reports better-than-expected results, as revenue jumps 14%

https://www.cnbc.com/2024/02/01/amazon-amzn-q4-earnings-report-2023.html

(BOLD is my opinion OR what I consider important content)

"Key Points

• Amazon reported fourth-quarter earnings and revenue on Thursday that sailed past analysts’ estimates.

Amazon reported fourth-quarter earnings and revenue on Thursday that sailed past analysts’ estimates. The stock climbed more than 5% in extended trading.

Here are the results:

• Earnings: $1.00 per share vs. 80 cents per share expected by LSEG, formerly known as Refinitiv
• Revenue: $170.0 billion vs. $166.2 billion expected by LSEG

Wall Street is also watching several other numbers in the report:

• Amazon Web Services: $24.2 billion vs. $24.2 billion, according to StreetAccount
• Advertising: $14.7 billion vs. 14.2 billion, according to StreetAccount

Amazon said first-quarter sales will be between $138 billion and $143.5 billion, representing growth of 8% to 13%. Analysts were expecting revenue of $142.1 billion, according to Refinitiv.

Sales at AWS climbed 13% in the fourth quarter to $24.2 billion, in line with Wall Street’s forecast. That marks a slight uptick from the previous quarter, when sales expanded 12%, but it’s a deceleration from the year-ago period, when sales grew 20%.

For the past year, growth in AWS has decelerated, as businesses trimmed their cloud spend. But Amazon executives signaled some improvement in last quarter’s earnings call, with Chief Financial Officer Brian Olsavsky telling reporters in October that the company was “starting to see more and more new workloads come up.”"

MY COMMENT

A CLEAR BEAT by Amazon. this will help to SHUT UP the nit-pickers and Negative Nannies on the big cap tech earnings. We now have three BEATS....MSFT, GOOGL, and Amazon.

 

Here is big cap tech BEAT number four.

Meta shares jump more than 10% after profit triples and company announces first-ever dividend

https://www.cnbc.com/2024/02/01/meta-earnings-q4-2024.html

"Key Points

• Meta shares jump on better-than-expected results and first-ever dividend payment.
• Investors are looking for signs that Meta’s online advertising business continues its rebound from a brutal 2022.
• Sales in the fourth quarter jumped 25% year-over-year while cost and expenses decreased 8% year-over-year to $23.73 billion."

MY COMMENT

This is BEAT number four. Another CLEAR BEAT in thee big cap tech world.

Although I do not own this stock and will not own it any time soon....I am not a fan of the single shareholder that controls most of the voting shares in the company.