Did Big Tech Survive On Capitol Hill?

Posted: Jul 31, 2020 12:31 PM
Did Big Tech Survive On Capitol Hill?

Source: Mandel Ngan/Pool via AP

In recent sessions that have seen selling pressure, the ‘buy on dips’ crowd has nibbled, but the declines were not deep enough, and there was nary a sense of panic. 

Yesterday, the ‘buy on dips’ crowd was able to feast. The market yawned at the worst quarterly decline in history. However, the tweet from President Trump right before the open triggered the kind of selling that unmoor bulls that had been looking for reasons to bolt and bears that have been praying for narratives to pounce.

The market opened under pressure, and selling begets selling, although I never sensed panic. 

Market Breadth









52 Week High



52 Week Low



Up Volume



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Then the bulls made their move and focused on the stocks that were set to announce financial results after the bell. The NASDAQ finished higher, and other major indices were fractionally lower. Meanwhile, if those CEOs summoned to Capitol Hill had bruised feelings, the increase in their net worth during the day was a soothing balm:

  • Apple (AAPL): +$4.60
  • Amazon (AMZN): +$18.35
  • Alphabet (GOOG): +$9.43
  • Facebook (FB): +$1.21

Those gains were just appetizers for the gains that were achieved after the close when they all posted blow out numbers. But more on that later.

While there are clearly big winners and big losers in this coronavirus economy, everyone will take a hit if Congress cannot get its act together today. At the very least, there must be extensions of certain programs, including the eviction moratorium. A report from Harvard yesterday suggested 14 states need to go back into full lockdown, and that will haunt this market as well.

Main Street and Wall Street need help and reassurances just for the near-term. 

Portfolio Approach

We are adding a new position in Consumer Discretionary and our Cash is now zero in our Hotline Model Portfolio.

Grand Slams in Big Tech


  • Revenue: $88.9 billion – consensus: $81.24 billion
  • Earnings: $10.30 – consensus: $1.50
  • Guidance: $93.0 billion – consensus: $86.36 billion


  • Revenue: $18.32 billion from $17.3
  • Operating margin: 32% from 27%
  • Earnings: $1.80 – consensus: $1.38


  • Revenue: $59.69 billion – consensus: $52.25 billion
  • iPhone revenue: $26.42 billion – consensus: $22.37 billion
  • Earnings: $2.58 – consensus: $2.04
  • Splitting 4:1


  • Revenue: $38.30 billion – consensus: $37.37 billion
  • Earnings: $10.13 – consensus: $8.21
  • Cloud revenue: +43%
  • Buyback: $28 billion

Today’s Session

Personal Income and Spending

Personal income declined 1.1% against consensus of -0.7%.  Additional income from federal government rescue plans is waning.


To see the chart, click here.

Meanwhile, personal spending at 5.6% was above consensus of +5.0%, but is declining, as much of that spending came at the expense of savings.

To see the chart, click here.

My friends in Congress kept telling me they wanted to reserve judgement on additional aid until they saw the data.  This week the data has spoken loud and clear.  The country needs a booster shot today- stop playing games.

Beyond Big Growth

There are so many earnings out this week.  It will take more time to craft the complete story or more in-depth narrative, but two industrial names offer hope this morning.

Caterpillar (CAT)

  • Revenue $10.0 billion consensus $9.4 billion
  • Earnings $1.03 consensus $0.72
  • New Business $2.74 billion -18% from year ago but impressive

Illinois Tool Works (ITW)

  • Revenue $2.56 billion consensus $2.34 billion
  • Earnings $1.01 consensus $0.71
  • The company has a unique business model


Herman Cain: An American Patriot & American Inspiration

I was asked to write an op-ed about Herman Cain for Fox Business and here is a portion:

His life was a constant rocket ship, powered by optimism, confidence, and determination. His orbit was the American Dream.

Cain earned his undergraduate in mathematics from Morehouse College, one of the most celebrated historically black Colleges in the nation. While doing high-level work as a ballistic analyst for the U.S. Department of the Navy, Cain also earned his graduate degree in computer science from Purdue University.

He went to work for Pillsbury, which owned Burger King at the time. He was given a chance to turn around stores in the Philadelphia area. Cain performed so well that he was offered a chance to turn around Godfather’s Pizza.

I wanted to be a businessman from a young age and would draw logos and daydream about having big factories and a lot of employees.

However, dreams need reinforcement. I needed people to look up to. During my greatest moments of doubt, I recalled others who have overcome obstacles and succeeded, so I could do the same as well. I am not sure where I first read about Herman Cain – it could have been in Ebony or Jet magazines, or Black Enterprise. Nonetheless, he came into my orbit and lifted me like a rocket.

Herman Cain, Percy Sutton, and Reginald Lewis became my de facto mentors.

Later, I would have the honor of meeting Herman Cain, and we struck up a friendship. Amid his rise to super stardom outside of business, Cain was always accessible and never changed. Because he always remained the same person, Cain was propelled into the national limelight as someone that could do for the nation what he once did for an ailing pizza chain.

I loved Herman Cain’s eternal optimism and can-do spirit.  I will miss that great smile and twinkle in his eyes when he would lay out his reasoning, and it always began with: “Now, Charles you know, and I know” and always ended with a chuckle.