Before I launch into my diatribe on the state of the markets, a few thoughts on salesforce.com:
While a cursory look at their earnings might inspire some confidence, a deeper dive (and subsequent commentaries) leave a lot to be desired. I shorted CRM with a full understanding that this was the mo-mo of all mo-mo stocks and could rip higher with my face at any time. And while the after hours trading was encouraging, I’m hardly prepared to declare victory yet, though I am emboldened by today’s events.
They missed on deferred revenue, which, by all accounts, is what they’ve been preaching as the key reference point for investors. Instead, now we’re hearing Benioff retreat from emphasizing strong deferred revenues; instead, he’s now underscoring the importance of their recently initiated 2013FY guidance. The revised narrative should hardly engender much confidence in CRM bulls.
As a bear, what was more encouraging was Benioff’s Mad Money interview. Give Cramer some credit here–he pressed Benioff on multiple occasions. In one exchange, when asked about growth in Europe, a perfunctory “We see growth in all markets” answer was all Benioff could muster. When asked why CRM no longer reports new account totals, we were told that it’s because it’s too difficult for CRM to sort between their new customers and accounts that came along with their recent acquisitions. Got that?
In the famous words of Happy Gilmore: I know what you’re doing, and I don’t like it.
Tomorrow might give us a bounce from the after hours lows, as there are plenty of underwater shorts in this name. Then again, with its high institutional ownership, CRM is vulnerable to massive sell-offs. A market leg lower would certainly facilitate a GMCR-like crash in CRM, but at minimum, even if the overall market leads higher, the CRM growth story looks like it’ll be on hold.
Looking at the broader markets, I am at a loss as to who has the stones to step in and catch this knife. We’re still green for the year, despite falling out of this perfect triangle everyone’s talking about. Let’s rehash the headwinds, shall we?
Europe. A looming super committee failure. Civil war in Syria. VIX north of 30. Europe. No resolution to the MF Global debacle. There are no shortages of scary headwinds. I remain wholly on board with many market participants’ thesis that, eventually, despite what ECB officials and the Merk say, the ECB will step in and be the buyer of last resort. End of story. They will print. But to get there, the market needs to force Draghi’s hand. The slow motion car crash sounds like an apt metaphor here. We can’t get to the printing without the crash. So, it’s coming. Be careful. Be nimble. The Turkey Gods implore you.
Update: Thou shalt not doubt the Great Tim Tebow.
