Thursday, September 4, 2008

Terex (TEX), IBM (IBM) - Be Careful What you ask For

#1 Buy US stocks because the rest of the developed world (and then developing world) will slow
#2 Cheer on the stronger dollar

I continue to scratch my head at people cheering these things in an economy whose only leg to stand on is exports. How do you openly root for a stronger dollar which hurts US exports... and root for weakening export markets? Only in the stock market.

Terex (TEX) is not a company I follow that closely but have it out there with 1 eye as a "global construction" play. Down close to 20% today as the market takes another sacrifice. I think this will be a "preview" of what to expect in the coming 2 quarters from a litanty of multinationals now that we've achieved our goal of exporting our virus worldwide and causing the rest to slow ... (which again is "happily cheered" by the punditry since it means the US can lead the others out of the morasse - as if its that simple - we led them in, we'll lead them out - 1st grade logic)
  • ....the heavy equipment maker cut its 2008 profit and sales guidance, citing soft markets and higher costs at its aerial platforms and construction businesses.
  • Terex said it now expects to post a profit of $6.35 to $6.65 per share for the year, down from its previous prediction of $6.85 to $7.15 per share.
  • Terex officials said that while results at the company's cranes and materials processing and mining segments continue to be better than expected, those gains are expected to be outweighed by slumping demand and higher costs at its aerial work platforms and construction segments in Western Europe and the United States.

Remember, almost all our strength the past year has been US multinationals. The chart of IBM (IBM) for example is telling us something nasty as we cheer on a stronger dollar and other countries weakening. IBM Has been a poster child for US companies reliant on foreign strength and currency adjustments to "make their numbers". Now we are taking away that last area of strength and the market has been cheering it the past 6 weeks.

The alternative? Buying US automotive, airline, retail, and financials. You call that an alternative? I guess so - until facts come out like today's earnings from Hovnanian (HOV), Toll Brothers (TOL) and the myriad of poor same store sales across the retail space. But when you have trillions of dollars and need to stuff it somewhere I guess this is where it will go. But not for good reason. This was my worry when we first mentioned the global economy would slow - what alternatives would we have to invest in? So we are "here" now at this destination. Apparently the market is holding its nose and pointing to "domestic" plays as a source of joy - but not on fundamentals, unless you count "looking ahead into the haze 6 months and assuming the great US recovery is imminent" as fundamentals. I call it denial. So please clap along with the pundits and let's cheer these developments...

Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012