Oh, the old "rearranging the deck chairs on the Titanic" line. Thanks David Farr, thanks for delivering another subpar quarter for Emerson Electric ($EMR), the big industrial, and thanks for blaming it on governments worldwide. I don't recall David Cote from Honeywell ($HON) trashing governments. I don't recall Sandy Cutler from Eaton ($ETN) talking about the furniture on cruise ships. How did Ellen Cullman at DuPont ($DD) make her numbers, given that she had to have been on the Titanic too? No matter. We are quickly ratcheting down our economic worldview, and while I respect Farr, I would rather acknowledge that some people have handled this moment better than others.
Today's total breakdown left us thinking that stocks have had it for the year. That the earnings have peaked. That this is an "all hope is lost" market. I come out differently. I have recommended putting on the first quarter of positions. After dumping a huge amount of stock in the last few weeks and building a sidelined position, we have started putting some of our cash to work. Gingerly. Small. Safe names. Good yields.
The spending is done at these levels, though. Now have to wait for still-lower prices to do more. Those prices will, I believe, reflect too much negativity vs. the U.S. economy. They will reflect this stunning decline in yields, which are saying, "You are in a recession right now."
And then we will buy our next round.
Patience. We are getting the negatives built in. At this pace, we will be there very soon.
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