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About That Google Blowout: Bull Markets End on Good News, Not Bad

The bulls are going gaga over Google's record quarter. Recall that Tesla also had a record fourth quarter.
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Alphabet (GOOG) Share Price chart courtesy of StockCharts.Com

Alphabet (GOOG) Share Price chart courtesy of StockCharts.Com

Google Propels Record Alphabet Revenue   

Reuters reports Google Propels Record Alphabet Revenue, Driving Shares Up 8%.

Alphabet's shares jumped more than 8% in after-hours trading, also rising on the company's announcement that it would undertake a 20-to-one stock split.

The results were the latest to reinforce that the global trend toward a more digital economy has made Big Tech companies resistant to small-market shocks. While concerns about rising inflation, COVID-19 variants and supply-chain shortages have rattled Wall Street and hurt sales at some businesses, the companies that control key gateways to e-commerce, hybrid work and streaming entertainment have not seen a dip since the early days of the pandemic.

Alphabet's sales jumped 32% to $75.3 billion in the fourth quarter, for a third straight quarterly sales record and topping the average estimate of $72 billion among financial analysts tracked by Refinitiv.

Consumers dove into Google search looking for apparel and hobbyist items, while retail, finance, entertainment and travel advertisers raised marketing budgets, Google's chief business officer, Philipp Schindler, said on an earnings call.

Read that last paragraph above and try to explain that Amazon is a monopoly. It's not. But that's not the key point here.

The Nasdaq is only up 0.5% as of about 1:50 Central, a rather feeble performance. 

Tesla Record Sales 

CNBC reported in December Tesla delivered 936,172 electric vehicles in 2021, with the fourth-quarter setting a new record. 

Key Points 

  • Tesla just published its fourth-quarter vehicle production and deliveries report for 2021, and it handily beat analysts’ expectations.
  • Tesla deliveries amounted to 308,600 electric cars in the fourth quarter and full-year deliveries amounted to 936,172 vehicles.
  • According to a consensus compiled by FactSet, Wall Street analysts had anticipated Tesla deliveries of 267,000 in the fourth quarter and 897,000 for all of 2021.

Tesla Chart 

Tesla (TSLA) Share Price chart courtesy of StockCharts.Com

Tesla (TSLA) Share Price chart courtesy of StockCharts.Com

Tesla peaked on January 4, 2022 at an intraday high of $1208. 

It plunged all the way to $792 then gained a bit in a bear market rally and now sits at $905 down nearly 3 percent on the day despite the euphoria over Google.

ARK Innovation ETF 

ARK Innovation ETF (ARKK) January 31, Share Price chart courtesy of StockCharts.Com

ARK Innovation ETF (ARKK) January 31, Share Price chart courtesy of StockCharts.Com

That chart is as of January 31, 2022. ARKK also rallied a bit to $77.5. It too is down today, nearly 5% to $73.38 as of 2:20 PM February 2.

It is still down over 50% and it is not a buy at this price. 

Bull Markets End on Good News, Not Bad

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People think bull markets end on bad news. They end on good news. 

It's bear markets that end on bad news. 

I expect that huge gap up on GOOG to fill sooner rather than later. And I expect Tesla and ARKK will resume slides in a big way, even if Tesla has a better 2022 first quarter.

Many people are not old enough to remember the dotcom carnage in 2000. I recall it vividly. 

Stocks repeatedly got hammered on blowout great news. All of the good news was priced in, and then some.

Enormous Bubble

Forget the record sales and earnings and look at the PE ratios, smoothed earnings, and other valuation mechanisms all screaming BUBBLE! 

What Can Go Wrong?

  1. The Fed is hiking
  2. Stimulus has worn out
  3. The stock market is stumbling
  4. Pending Homes Sales Unexpectedly Decline
  5. Merchants are stockpiling and pre-ordering everything
  6. Retail sales are falling.
  7. Major deceleration in deficit spending.
  8. Declining working age population will reduce productivity.

Let's Discuss Housing and Recession

On January 31, I commented Mortgage Rates Are at the Highest Level Since Before Covid-19 Hit

On January 28, I commented Pending Homes Sales Unexpectedly Decline 3.8 Percent in December

Mortgage rates are rising, what will that do to home sales. And if Home sales drop, what will that do to demand for appliances, paint, lumber, landscaping? 

All of this stuff ties together as a bull market in stocks encourages second buying of homes, new car purchases, and travel.

That's why, With Nearly Everyone Looking the Other Way, It's Time to Discuss Recession.

All of the pieces are in place for a huge stock market decline.

This post originated at MishTalk.Com

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