Today’s intraday move in the SPX is pretty scary. If I was an active PM managing other people’s money, I would be selling longs, putting on shorts and taking the gross down. Being a good steward of other’s people’s money is something to be proud of. Off to NYC for the day, maybe I will stop in and check on the OWS crowd.
/wrk
In August I posted my notes from a one day financial conference on the eve of BSC’s collapse called Memories of 2008 and the Market. A few people knew the conference from which my notes came. It was a conference hosted by Mike Mayo when he was DB. Mike has an essay in the WSJ this weekend.
/wrk
A few weeks ago I wrote a post in which I referred to keeping a notebook and how George Soros’s book the Alchemy of Finance reminded me of the value of keeping a notebook and that my blog is really a distillation of my notebook accessible by all. Today I am creating a new category and entry format that I will use on occasion. The notebook format will be for days when I want to cover multiple subjects without focusing on a specific topic in detail.
Datacenter Switches and Mobile Devices: I was sitting through a presentation from a merchant silicon team last week. They were going over their designs in detail as well as roadmaps and application examples. They put up a slide matching chips to switch reference designs. A customer could choose chip A and build 48x10G switch or chip B with 48x10G and 4x40G design, etc. I was looking at the slide and thinking where have I seen this before and then it occurred to me: the mobile device market. One of the reasons I have been negative on the mobile device market is it really down to four operating systems: IOS, Android, Windows and RIMM. Apple is a fully integrated (vertical) and closed system. That is the most valuable franchise in mobile devices. RIMM has the oldest OS that was designed to solve problems from ten years ago. If you want to design a smartphone today, the process is to pick an OS: Android or Windows. Then you get a reference design from QCOM or Mediatek, etc. The real value is in the user interface (UI). I know marketing, manufacturing, distribution all matter too, but the mobile device market is bifurcated into Apple (the closed OS with ASICs) versus the Windows or Android OS phones with developer built UIs and merchant silicon (reference design) mobile device companies. I am crossing analogies to explore a thought path.
Will the switching market go the way of the mobile device market? Will CSCO someday have to make a choice like Nokia or will they go the way of RIMM? Will a new company or legacy company quickly rise to take share because they built a vertically integrated switching solution like the iPhone? Will the rise of merchant silicon and reference designs create a vast market of white boxes driving down price points in which the differentiation and value is in the software, i.e. the customer UI? Just a thought path I am exploring.
Packet Switching and the Network: I found this article on Blackberry’s SWAT team interesting. Here we go again with the network being the problem and not the solution. Perhaps we all need to review Paul Baran’s paper on distributed networks from 1962.
Market Thoughts: The market is basically un-investible. You can pick individual stocks here and there, but Europe is a mess and not getting better. There was a long stretch of peace in Europe from the close of the German wars of unification in 1871 to 1914; forty-three years of economic expansion and living standards improvement. Europe is completing a 60-65 year cycle and countries are thinking more about dissolution than union. It will be interesting to watch how European politics play out over the next year to see if any old stresses emerge from their slumber. I am not sure which way the FOMC plays QE III, it seems the market wants it, which must mean the economy is bad and therein lays the problem. The market is not a self sustaining entity – it is propped up by artificial entities thus making it un-investible. The governments and central banks should have let a lot of institutions that were over stretched go down, but rather they transferred their liabilities to the public side and we are still living with the cancer. Just look at GM. I think I am one of the few people to think of the Corzine MF Global irony this week. Corzine was head of Goldman-Sachs when LTCM went down forced by bond spreads that went against the firm driven by the Russian default of 1998. The book to read is When Genius Failed. Lowenstein infers in the book that Corzine always wanted Meriwether as a partner. Thirteen years later they can share stories of failure caused by a global sovereign credit crisis.
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
Here is the start of my October 2011 earnings thread. I am already a bit late having been positive on GOOG from the past, I did tweet it last week. A few reactions so far:
GOOG: Sticking with my GOOG call from April, not much to update.
INTC: I have been positive on INTC based on my web 3.0 thesis. It will be interesting to see if results were strong enough to break INTC out of the ten year down channel on a weekly basis. Need a close above $22, but a close above $23.16 on a weekly basis would be a strong signal as that is the 38.2% Fibb going back to 2002. I pitched this stock and thesis to a PM in NYC in September and he laughed at me. Who is laughing now?
AAPL: I still like the product cycles and would be a buyer as it settles. It is all about product cycles.
JNPR: JNPR was defiantly on the mind when I was thinking about my web 3.0 thesis and Moore’s Law exhaustion. I read about fifteen reports on JNPR this morning, which is probably ten too many. I would start by saying I think the company is in the midst of (i) product, (ii) market and (iii) leadership transitions. These three forces need to harmonize for the company to go on a run and I do not see that happening for some time.
INFN: The company is making a bet on 100G and that they have the ability to scale their business to be a supplier in size to tier 1 service providers. One cannot criticize the company for not taking on difficult endeavors.
APKT: Waiting on the official results after the pre neg which I posted about here.
YHOO: I think this stock is un-investible. Negative product cycles and poor leadership; are there any other questions?
PWAV: I posted some thoughts on that last night.
MACRO: The market is really difficult to deal with on a daily and weekly basis. It reminds me so much of 2008, even though I see people on CNBC who say it is not 2008. I have posted on this in the past, but I will add when the market swings on reports from news outlets like Reuters, CNBC, WSJ and government officials and central bankers, we might as well appoint a Committee of Public Safety and start the Reign of Terror.
I will endeavor to post additional updates to this tread over the next few days.
Stocks of interest in the next few days:
10.19: RVBD, WDC
10.20: NOK, ERIC, T, STX, MSFT
10.21: GE, VZ
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
I have written a fair amount about CDNs here, here as well as a post specific to over the top (OTT) video here. Last week it was with some degree of skepticism that I read this article in Bloomberg about AKAM being an M&A target of IBM or Verizon. I know nothing about that speculation. What I do know is a lot about service provider networks, CDNs, networking technology and how content is moved around the internet.
Starting with the premise that it “…may finally be cheap enough…” thesis regarding companies. I have objected to this notion in the past as a lazy thesis on equity prices. I do not understand why people really think if a stock price declines, then suddenly some other company is going to jump in and buy it because now it is cheap. The stock price declined for a reason. Ask the team at HPQ how well that PALM deal worked out after they waited for the stock price to decline.
The next flaw in the article is the notion that website acceleration and video consumption is one and the same. As I have pointed out, this is a lazy thesis in which a detailed understanding of how content is provisioned, distributed and consumed is missing from the quote. This is called context. People often confuse the initial technology solution provided by AKAM, which was an extremely intelligent and clever idea, with “bandwidth explosion” as quoted in the article.
When I hear grand standing comments such as “bandwidth explosion” without some form of statistical reference I just ignore it. The initial solution that Akamai provided had more to do with providing distributed (i.e. localized) HTML content and querying for content from uncongested sources via alternative routes than exploding internet bandwidth usage, video, the internet will collapse, blah, blah. The argument can be made that if the internet worked well enough, meaning that service providers provisioned high capacity service to local users and removed over subscription ratios in the hierarchy of the internet structure, thus flattening the network structure, then there would be little need for a distributed CDN as actual service providers or content providers (e.g. AAPL, GOOG, MSFT, YHOO, AMZN) would easily deploy this capability with little need for third party CDNs. That is one of the reasons why we have seen the rise of centralized CDNs (e.g. Limelight) and software companies like PeerApp. It is also the reason why we see a rise in SSDs, flash and the ability to deploy huge amounts of storage in the network.
Let us all keep grounded in reality. Akamai is a tremendous company and they have extremely valuable intellectual property. The network is changing and that is why I think AKAM would want to be acquiring companies. They need new solutions and technologies that address how the internet is changing as their legacy solutions become less relevant.
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
It has been almost two weeks since I posted on my blog. Work and holiday have gotten in the way of posting content I that I think is worth reading. I have always been against posting content from others for the sake of posting. I am not a content aggregator. Two posts today: one on the market and one later on content delivery networks (CDNs).
The past week was interesting with a European bank borrowing some short term funds, Verizon labor union on strike (note they are returning to work as they are apparently closer to a new deal), hot CPI reading, horrible Philly Fed number and so on. I occasionally glanced at CNBC during the week and heard a number of people claiming it is not 2008. In 2008, Verizon juiced CAPEX in the 1H because of a pending labor disruption. Looks like VZ did the same in 2011. In 2008 counterparty risk concerns put fear into the markets. Ditto for 2011. In July 2008 Chris Cox, head of the SEC banned short selling of banks. In 2011, the Europeans did the same. How is it different?
Some brief thoughts on the market:
1. Hope is not a strategy. That is how I think of the strategy that Bernanke-Obama-Summers-Geithner deployed in early 2009. Launch QE1 and later QE2. Force the US banks to capital raise (that was good), insert a large stimulus into the economy (not so good) and force the economy to generate momentum sooner and achieve break-out speed (i.e. hope). I think forcing the banks to raise capital is good, they put a floor under various asset classes with QE1 and QE2, but the economy has lagged and that is the problem. We had a credit crisis and we are still impaired as we have not cleared the bad credit; just my simple way of looking at it. Here is a chart that shows M2/Monetary Base as reported by the Federal Reserve in H.6 and H.3 reports to produce a money multiplier. I also added the Fed’s reported total assets. Bloomberg does a similar calculation here. As an equity investor I want to be able to model the forward business expectations. Kind of hard to draw positive conclusions from that chart; which is the reason why many economists have reduced their GDP models. Here is a simple rule to remember: GDP declines, EPS expectations are reduced and multiples contract.
2. I still hear and read people saying the market is cheap. I ask what is the EPS expectation for the SPX, various indexes and individual equities? If numbers are being cut, how is the market cheap? I think there are aggressive cuts coming to earnings expectations for equities and if this is true the market is not cheap – it is figuring out the new multiple and this will produce big swings until the new consensus is formed.
3. I read various reports over the past week on the risks of a global recession (Joachim Fels) as well as sector notes on tech saying that enterprise and service provider spending is slowing down. One report blamed it on (i) European stresses, (ii) Federal spending slowdown and (iii) deteriorating macro conditions. Again, it really does feel like 2008 and I am not saying the SPX is going to 750 – but it seems we transferred all the private sector stresses of 2008 to the public sector and three years later we are still dealing with the stresses of an unresolved credit crisis; it is just infecting governments instead of corporations.
If you are still reading at this point, I started thinking along above lines back in May. In early June I was worried about the three dislocations meeting and they did. By mid June I thought I could connect the dots and this was validated. More evidence of this mess emerged in July and I thought it was folly to invest through the July earnings cycle.
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
I am travelling this week to CA and on holiday the following week, so postings will be in frequent. I did get an excellent email question about CDN networks on Friday and I will endeavor to post about CDNs in the next several days, expanding on my response to the reader.
I will be curious to see how Asian markets open and how the US markets do tomorrow. I ended up selling all my long positions on Friday and shorting the Euro. I think that will be okay; the bad news is I covered my SPX short, because I was stupid enough to look at the TV when Simon Hobbs was screaming “game changer” on CNBC about the Italian fiscal concessions. I know, I should never let reporters and screaming TV hosts affect my judgment. This morning I received one email declaring “Bust out the DeLorean, back to the future – destination 2008.”
There a lot of opinions as what matters, what does not matter, what is priced in, what is not priced in, who wins the AL East the Sox or the Yanks (I will be at tonight’s game) and so on. I count eight afternoon conference calls hosted by various economists and equity strategists on the meaning of the downgrade from the S&P who pretty much missed the entire housing melt down and global credit crisis. I plan to listen to none of them. I might be a bit jaded, but I posted my notes from the Friday before BSC went bankrupt and I will say that denial is a powerful state of mind.
As for how the markets are going to respond, I have no idea and anyone who tells you they know, should look up the meaning of hubris. The SPX chart is really perplexing with last week closing with a Doji and that is fitting. I think bears and bulls are all fired up and markets need to be pushed around to determine who wins. I think multiples are too high, so people who scream that equities are cheap must be using 2016 numbers. When GDP declines; equity multiples will contract. For all the dividend champions, just remember dividends can be cut at the whim of the BOD and some people have made a career out of calling for a dividend cut. The result of all the European mess, QE and US downgrade is unpredictability. Equity investors dislike unpredictable macro events and my supposition is that equities will do worse until the economy improves.
From a near term historical perspective, it will be interesting to compare and contrast the UK and the US. Both countries voted in new governments post the global credit crisis and for the first time in thirty years the governments have diverged paths in terms of spending versus fiscal prudence. Prior to Obama and Cameron, the leaders of the US and the UK had been united from an economic policy perspective. Bush and Blair, Clinton and Major and it all started with Reagan and Thatcher. Much of what I blog about is networking technology – not economic theory, but the two are tightly woven together.
1984 was the year that AT&T was broken up – but it was also the year that British Telecom (BT) was privatized. In the U.S. market, AT&T had existed with little meaningful competition until the formation of MCI. In the UK Market, British Telecom held unchallenged control of the stagnant market for telephony services. There was no competition in the UK telecom market and BT existed as a classic government managed bureaucracy in which its employees were more concerned with pensions and work hours than customers and services. As the Conservative Government of Margaret Thatcher took control, they began to mandate new fiscal policies and BT was the first government entity to be targeted for privatization. Prime Minister Thatcher infused competitive life into the UK telephony market by allowing for the creation of competitors to BT, such as Mercury, and then forced the privatization of BT. British Telecom was forced to stand on its own as a for profit company – with no government subsidies. The shifting economic policies of the western nation-states from state ownership to privatization, set in motion the initial inertia that would culminate in a great revolution in the mid to late nineteen nineties. Revolutions take time and governments that are entrenched in market ownership do not easily relinquish control of economic assets. BT was not the only major telecom service provider to be privatized. From the early 1980s through the late 1990s, a wave of telecom privatization in excess of $154 billion dollars as well as market deregulation expanded throughout the industrialized world.
Within the United States, the desire to reform the government came in the form of deregulation. Momentum in thought leadership was building and a policy shift by western nation-states from economic polices perceived to be routed in Keyes to the adoption of economic policies grounded in Hayak and the Chicago School had rescued the western world from the economic malaise of the 1970s – only to bring about opportunity for great success and great failure. Prime Minister Margaret Thatcher and President Ronald Reagan had started this process in the 1980s. By the 1990s, the energy and telecommunications industries were being deregulated or reformed, which opened previously closed markets to competition. There is no doubt that the reform of government policies played a critical part in laying the foundation for a massive investment in the internet, telecom and technology markets that would explode from 1984 to today. Today, we are left dealing with the after effect of government spending. Which path was correctly chosen will be known in time.
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
I almost posted this yesterday, but I became too busy with work to finish. Here is something that I started writing in the past year about my experience on buy side in 2008. On a day like this, it might be helpful. In early March 2008, I got an email from our DB broker inviting me to a one day conference on the credit cycle. It was going to be and hosted by DB’s bank analyst Mike Mayo.
The pre-start gathering was reserved; almost somber. In some ways it felt like a wake. It was the morning of March 14, 2008. The hallway chatter was done in small knots of people who knew each other. There were about 250 people in attendance. Looking back on my notes, I remember all sorts of snip nits of conversations.
“Well you go to work end up 20% down, go home find out that your house is worth 20% less and go to bed thinking you will live 20% less too.”
“ Greenspan thinks the correction is 18 months long…the good news is the S&P told us we are half way home, only nine more months to go.”
“Remember the good old days when a recession would last 6 to 9 months and a bear market was 2 quarters – now it just goes on and on.”
“Does your calculator allow you to input 100 trillion?”
As people were still gathering and finding their seats, the conference host Mike Mayo, an outspoken bearish financial analyst made the introductory remarks. “We are in the capitulation stage now, fear has taken over and it will not be long until the full bottom is realized.” When most of the attendees were seated, the first speaker was introduced. Her name was Karen Weaver and she had built a reputation as a bearish analyst of scrutinized products at Deutsche Bank. She analyzed products like those that brought down the Bear-Stearns hedge funds nine months ago as well as Sowood Capital.
Her first slide set the mood for the day “Two big questions facing investors today: Where is the housing market going and who are clients 1-8?” The tension in the room was immediately cut in half. Everyone needed a laugh. She gave a salient overview of the mortgage issues. The Government is trying to stabilize home prices, keep people in homes and prevent mortgage losses. The problem is how do you get a six sigma move in a structured product that historically had very little historical volatility? In the near term we have $230 billion of debt to be funded, $138 billion is not syndicated, $32 billion that is syndicated is not closed and $60 billion is not funded.
What follows are my direct, but edited notes from that session. I am posting them because when I look back on the conclusions about the private sector, it shows that so many smart people got it wrong. When you turn on shows like CNBC and Bloomberg as well as the 5,000 investment web sites and 10,000 gold investment web sites, I think everyone should remember that smart people are often wrong, every person has an agenda and no one knows all the data to predict the future.
I do know that much of private sector debt has been transferred to the public sector some ~40 months later and the numbers are much, much larger. In mid-2008, Bank CEOs were out defending their companies and stock prices. In mid-2011, Prime Ministers and Central Bank Presidents are our defending their banking institutions and countries. When times are good, you never hear these people make a speech or give an interview tempering expectations. Only when times are bad do they grandstand to promote the positive. I highlighted some bullets. Remember, these raw notes are from March 14, 2008; BSC was still in business and for the non-investment professional reading these notes, they can be cryptic with a lot of assumed knowledge of financial products.
————————————————————
XXXX, Leveraged Lending
XXXX, CMBS Research
XXXX, Fundamental Credit Strategy
XXXX, Global Markets
XXXX, CEO and Fund Manager
XXXX, Hedge Fund PM
XXXX, Former Fed person and a CEO of Bank
XXXX, CEO of a bank
————————————————————
The reality is it is all about the economy stupid.
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
What are technology companies going to tell us over the next several weeks? Already they have told us plenty. I did read an email from www.streetaccount.com (which I love as a service) stating that so far they tracked 119 updates, 27 increases (6 full year), 42 decreases (5 full year) and 50 reaffirmations (25 full year) and that was as of Friday, July 1st. There were a few new pre negatives in the last few days. Companies that pre-announced disappointing results in the quarter that I wrote down were:
– Phillips said “In Consumer Lifestyle, the traditional consumer electronics market, in particular in Western Europe, is facing ongoing weak demand, declining license revenues and the impact of the TV disentanglement. This will more than offset double-digit growth in Personal Care and Health & Wellness…” Translation we want to look good because we are going out because we had to cancel the cable connection? 🙂
– Tom2
– EXFO
– WLF
– Progress
– NTCT
– RVSN
– SPIL
– NOK
– DRWI (Reported last night in line with pre but guide was short of consensus)
– TSRA (Last night)
In the last few months RIMM, CSCO, HPQ, FNSR and CIEN all reported and forward guidance was not so hot. It seems that companies trading on growth multiples can expect a quick 30% off the top if they do not live up to expectations. If CEOs are not crisp with their answers on the sustainability and linearity of their growth during intra-quarter conference season; they should expect a 25% haircut in anticipation of the actual results. Why are the multiples high for growth companies and why are the haircuts on misses so fast? I have some thoughts on the matter.
Large Cap Stocks are Dead
Let us start with the premise that large cap tech stocks are dead. There are a few exceptions, but for the most part investors are not excited about MSFT, GOOG, CSCO, INTC, etc. Absent growth, investors seek capital appreciation in high beta growth stocks and this is especially true for the technology sector.
Market is Cheap
Over the past few days I have seen the market is cheap call start in strategy notes and on CNBC. A PM friend recently said to me that the market is cheap call is the excuse for PMs to buy beta. The question he poised was whether a group of cheap stocks were masking a group of wildly expensive stocks, thus making the market multiple appear “cheap” or “okay.” I will stop translating his words and just quote directly from his email “So instead of buying the cheap stock, the average PM says ‘gee the market is reasonably valued, I will go buy some beta’ – so they go buy MORE of this stuff that is wildly expensive already and it gets worse, not better. It is a market of individual stocks; it’s not a single market. And the average PE thing is really distorting. Need to really go industry by industry, stock by stock. Then tell me if the ‘market’ is cheap or expensive. And I really think it’s stock by stock.”
When Growth Falters, Buy Something Quick
Here is an article that says that FFIV is going to buy ALLT for $450-500M. This is somewhat interesting because the last time FFIV bought a company for $400M is was Acopia and that did not work out well. The question is why would FFIV want to spend ~5% of their market cap on ALLT? I think the answer is when growth falters, buy something quick. I could be wrong, but this assumption has proven true many times in the past. It should all be clear when FFIV reports their results and we can get management’s view as to the market TAM and growth rates.
The Key is in the Details – Not in the ETF
I think another problem with the market is ETFs. I think it is too easy for funds and individuals to decide that they want exposure to semis or software or materials and to get that exposure through an ETF. Why do the fundamental work when you can get long semis, short telecom services and get a basket of cloud stocks without having to read anything about any company? It is easy to be long some tech ETFs and hedge through some double short ETFs on the broader market if Greece blows up. This is why my blog has been about product cycles. The details are in the product cycles within the individual company – it is not in the ETF and not in getting long beta because the market is cheap because a math wiz ran a bunch of correlations back to 1920. Maybe that is why the market goes up 5% last week on very little news, low volume and the wildly overpriced stocks built on high growth expectations have a deep downside when future expectations do not live up to current realities.
Long Tail of Legacy Tech
When earnings start, I am going to be listening for information around two primary themes and several near term data points. The first theme is for the large cap technology companies that have a long distribution tail of legacy business like CSCO (August), INTC, JNPR, and DELL (late in the Q). How fast is your business eroding or is it stable or growing?
The second theme is around the high multiple growth companies like RVBD, ARUN, FFIV and APKT. I want to know if growth expectations are still in tact and if your growth markets are taking share from the large cap companies with legacy markets. As for data points, here they are:
– ADTN…tell me about CAPEX.
– T and VZ…tell me more about wireless ARPU and CAPEX
– AAPL…tell me about the iPhone and the iPad
– AKAM…forward view of the business and CDN trends
– JNPR…was the Q as bad as it sounded at the BofA/ML tech conf?
– CSCO…will report in August, you are the first to tell me about July
– QCOM…MSM units and pricing trends
– JDSU…is your view different from FNSR?
– EMC/VMW…all about big data and virtualization trends
– Cloud Data Centers…what is the adoption rates for public DCs?
– Europe…how is business in Europe?
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
In the past three days there has been a number of interesting market days. Monday and Tuesday were up days, yet yesterday was a mid day reversal. I have found little to blog about on the technology side. I started writing an adjunct piece to a Network World article on the twelve ways the cloud changes everything and I will probably finish it and post it tomorrow.
Until then I thought I would just offer up some thoughts on the market as the Greek-FOMC events are now in the rears and my inbox has been full of market talk and less tech talk. Here is an example:
“Francois Trehan has generally had this whole thing nailed. Clear linkage with increasing inflation>LEI lower>lower mkt. He argues that is largely preordained for another 6-9 months even with flat gas prices. Witness philly and empire June numbers; we already setting up for another ISM miss. Even DB (heretofore always bullish) is getting on board recently, suggesting an ISM averaging 50 in 2h would suggest S&P 1141 based on historical correlation. These other sideshows on sovereign spending/debt are just turbochargers on the above. Still strikes me the vast majority believes econ will pick up in 2h. Too many CNBC references to japan, weather, my mother-in-law , yada, yada, yada as excuses.”
With the Federal Reserve lowering US growth expectations, I think investors and analysts need to be careful about multiples. When the economy slows, growth slows for the best companies and multiples contract. I have been told by a number of sell side analysts that they do not model in macro, so it is left up to the buy side as well as strategists and economists. A few quick observations from my Monday piece:
– AAPL…rallied with the market, but still below the 200MA. I have read a few “it will break $300” calls.
– CSCO…John Mendelson (who I have met with many times) of ISI was positive from a technical perspective, but I think he is early. I still think CSCO lacks catalysts and product cycles are not positive, but at $14-15 can be a place to hide.
– AKAM…I should probably write a post on AKAM, but in the meantime I thought this was interesting from Dan, yet most people seemed to have missed it.
– FFIV…numbers were raised on Wednesday at Barclays and it was downgraded at JPM today. I stand by what I wrote on Monday which is they need to print solid growth numbers or the multiple is going to contract. “Here is another stock needing a beat and raise in July. The stock is precariously poised at a neutral position where the results are going to make the bulls or the bears a winner. One up trend line has already been broken. This is a great company and I have told the management team that on many occasions, but the expectations are very high. One good characteristic this management team has is they do not hide crap. If they are going to miss, the management team will make announcement early. If I was on the leadership team and the numbers are going to be good or bad I would pre pos or pre neg. That will decide the issue.”
– APKT…I think the growth potential and product lead over competition is insurmountable.
– CIEN…I bought some CIEN at $16.50. I am positive LT that the company will benefit from an upgrade cycle, but I think this is a 36 month cycle and they are about 6 months into it, so these things take time as SPs are not spending wildly. Have patience.
– GOOG…broke $500, below every MA going into quarter close. I think it sees $460 before the print.
I was reading a note from one of my favorite technicians, Tom Fitzpatrick at Citi. His note on Europe, specifically Ireland and Portugal is worrisome and just because the Greeks had a vote I do not think that is a reason to put risk on. I played golf with a hedge fund PM on Tuesday and he complained the market is all macro and no fundamentals. I think that is what the credit crisis and central banks have given the equity markets almost three years after LEH: the gift of macro and less fundamentals. I just watched the weekly claims print and with the futures down 10 handles, those weekly numbers are not going to help.
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
Eleven days until Q2 CY11 closes. We should be entering the peak spending period of the calendar year. Budgets are set and open for spending. Half the year is done and CFOs have a good feel for business trends and will have given the green light to spending. If anything is amiss, we are going to find out next week or the week after the long weekend as that would be the period for any pre announcements. For a look into the 2H of 2011, we will need to wait until reporting companies give guidance during July reports. For company executives, the next eleven days could be easy if the quarter is almost done or it is pressure time to close deals, ship products and make the numbers before customers disappear for the long weekend.
Since the RIMM pre-neg on April 28th, we have had series of disappointing numbers from technology companies. I highlighted those earlier as well as here. I thought I would walk through a few charts and look at the near term action in a few selected tech stocks and think about what I would do with this these stocks into the July print. The stocks are: CSCO, JNPR, FFIV, RVBD, APKT, ADTN, AAPL, QCOM, GOOG, AKAM, MMI, GLW, BRCD, JDSU, MSFT, AMT, EQIX, AMZN, NFLX, T and VZ. I will provide my quick take on each of these equities with a relevant chart. These charts are directly out of my Stockcharts.com account and I will try to add some annotations. I think charts are a reflection of sentiment and I do think that some indicators like Demarks and Ichimoku help determine where the stock is going to trade depending on the data. I do not think equities trade because of the chart, but rather the chart helps indicate where it will trade based on the news or the print.
CSCO: It looks like my prediction on where CSCO stock was heading post Q3 results was spot on. Now what should do with it? The first point to consider is that CSCO will be affected by JNPR, CAVM, NETL results as well as some of the contract manufactures. CSCO will report on August 10, after completing the full month of July and they will guide for Q1 and most likely Q2 of FY12. That means CSCO is going to tell us how they think spending is going to hold up through January 2012. Maybe the company will guide the full FY12. I think the stock is increasingly looking like a place to hide around this $14 level. It is hard to be bullish without getting a feel for the guidance in August.
JNPR: This a poster child chart of a stock that ran on better global macro and then fell off a cliff on macro getting worse. The fall since June was from comments by sell side analysts and the CEO on a back end loaded quarter. Maybe the JNPR team will be working hard over the next 11 days? Stock is in a precarious position. Right on the trend line off the MAR 09/JUL 10 lows. JNPR is currently below all the MAs except the 600MA which it is within 83 cents of convergence. Resistance is setup around $33.50-34. Bullish analysts are freaking out with the collapse as I read one report in which the analyst was now using a 2014 multiple to justify his PT. Please. JNPR needs to meet and guide up on the July print or this stock is going to trade in the $26-32 range for the rest of the year. The window to short is closed. I would not own it until I see the numbers.
FFIV: Here is another stock needing a beat and raise in July. The stock is precariously poised at a neutral position where the results are going to make the bulls or the bears a winner. One up trend line has already been broken. This is a great company and I have told the management team that on many occasions, but the expectations are very high. One good characteristic this management team has is they do not hide crap. If they are going to miss, the management team will make announcement early. If I was on the leadership team and the numbers are going to be good or bad I would pre pos or pre neg. That will decide the issue.
RVBD: Here is the FFIV chart twin. The one difference I would say is the chart is looking far more ominous than the FFIV chart. These guys need a serious beat and raise or the stock is back to the mid $20s. This is another chart with too much risk for me. Although the stock did run off the March 2009 bottom, it was really the 2H 2010 rally that pushed RVBD to levels it had never sniffed before.
APKT: I have been an APKT bull for long time. This chart looks a bit like FFIV and RVBD, but the recent action and bounce off the upward trend line are all good indicators. Product cycles are positive, large market growth potential, management team bullish at conferences. I am buyer and still a buyer into the print. I would say that a break of $60 and I am out until it settles, but I would be a buyer here at $62-63.
ADTN: The third brother to FFIV and RVBD. When I first started blogging again I wrote about ADTN, which was on the eve of Q1 earnings. It feels like the stock might have gotten ahead of itself in terms of CAPEX spending expectations. ADTN is one of the first companies to report and I consider them to be a table setter for JNPR, CIEN, CSCO, TLAB and all the other stocks levered to service provider CAPEX. One concern here is that CIEN just had their analyst day in NYC and they did not really call out booming SP CAPEX so that is a warning. This stock feels like it finds it self range bound in the $30-36 range unless their business is seeing a good inflection from SPs. They will give guidance for Q3 around 10:50 in the morning on July 13.
AAPL: If you are stock bell weather person then the chart of AAPL is concerning. CNBC has teams of these people who talk about stock leadership. I see very little wrong with AAPL’s business, but I would state that trading below the 200MA and showing some topping formation is very concerning. It feels like a bunch of LOs are banking some profits and this stock could settle in the $250-275 range before making a run post August. Just a feel at this point.
QCOM: I have been bullish on QCOM for awhile. I also think QCOM is one of the ways you play real value and positive product cycles in the mobile device market which I generally think sucks. As much as I like the stock, I am not a buyer at this level. I am not a seller, I am just cautious and would buy a pull back or if the numbers reflect some serious growth I am happy to jump on the momentum train. Footnote…I am using a 10 year weekly chart for QCOM as this has been a high drama stock over the past six years as I think a daily chart has too much noise.
GOOG: I have been wrong on GOOG and I have admitted it. I still see significant value in the company and I am buyer under $500, but this is another stock that is alarming to people who watch market leadership stocks. The GOOG chart is breaking down on many levels and I think it might see $435 before it sees $535 again. Should the market get over the macro blues this stock will run although the tone and disclosure of the management team on the next call will be important as investors are still getting comfortable with the cadence and disclosure of the new leadership team.
AKAM: This is an ugly chart. I would say that the July print is very important for AKAM. When they blew up in 2008, it was the July print. When it sold off in 2007, it was the July print. In 2009 it sold off after the July print. This stock is considered an indicator for the digital media transition and of late has been suffering from competitive concerns with LVLT and LLNW. I think the evolving structure of the network has more to do with their challenges, but this is a fact missed by all the analysts who cover the stock as they look at CDN pricing as a leading trend.
MMI: This chart says stay away. I continue to think that outside of AAPL and HTC, the way to play the mobile device market is through stocks like QCOM and GOOG. Not RIMM, NOK or MMI. If you want to be involved in MMI than you are making the assumption that a vertically integrated maker of smartphones has a better R&D team and product cycle than HTC, Samsung, LG, Huawei, Sony-Ericsson, etc. Maybe. Maybe not.
GLW: This chart just feels like convergence to the 600MA. I would be willing to get long GLW, but the global macro trends suck and I do not think the average consumer is going to put 10 flat panels in their home. I have two flat panels now and drops for the another 4 with no plans to buy more, but we all need to buy a lot more panels and devices with Gorilla Glass to keep this stock above $20. Feels like a $15-19 stock. It will be levered to panel prices and global consumer spending.
BRCD: Stock got a boost when Paul Mansky of Canaccord Genuity said it was a likely take out target for DELL because DELL needs to acquire more real estate in the data center (DC). I do think that BRCD owns prime real estate in the DC, but I am not sure it is real estate that anyone else but BRCD wants to own. Stock is in an up channel after bottoming in mid-2010. I just do not see it as an exciting growth stock with public spending in down period and the best that can be said is DELL, who has their own issues to sort out, should buy them. I see no reason to own either way. Product cycles need to improve to be interesting.
JDSU: Wow…did a number of people get excited after the Q4 print. The recent FNSR report pushed it back down through the 50% Fibb level…I think the stock is going to find some support in the $12-15 range and that is where I would be a buyer. It is a difficult company to model as it has three distinct businesses with very few synergies. If networking and optical networking is booming the stock works and they are trying to expand into the commercial laser business as well. Experienced investors with a long memory will always fret about inventory builds and annual price concessions.
MSFT: Similar to QCOM, I like to look at weekly on MSFT versus the daily. The daily chart is signaling a near term breakdown and I would be careful about being long at this price level. The weekly chart says the stock is at the bottom of the long term channel around $23 and would be a buy here. A break of $23 on the weekly would a disaster so if you want be long, I would set stops at this level. Barons had piece on MSFT over the weekend.
AMT: This looks like a place to hide to me. Stock is resting near the highs with little threat to the business. I would be long even at these levels. In general I think the tower business is good business to be in as I think real estate is more defensible than a smart phone. A better way to play the mobile device market is through companies that contribute a defensible element to the mobile device market. I would put AMT in the bucket with AAPL, QCOM and GOOG.
EQIX: I am a contrarian on this stock as I do not think this is the way to play the cloud. Perhaps I will write about that in detail later, but for now the chart is very worrisome and I would say the bulls and the bears on this stock are very opinionated and the stock could easily trade in the $60s from this level. This is a stock for people who like to read 60 page quarterly filings and not for the faint of heart.
AMZN: The stock has been on a tremendous run an I think this is one of the best ways to play the cloud. I think the stock collects itself around the $175 level before resuming a march higher in post August time frame. Utility computing is a trend I want to be leveraged to and this is one smart company. My prior blog post had a link to a video about AMZN which I think all cloud investors should watch.
NFLX: Wow…stock has been lights out since Feb 2010. It looks like it is completing a higher low cycle and will go on another run. I would be a buyer here looking for pop and if I got it, I would put a stop loss in around this $245 level where I would be a buyer. Stream content to a multitude of devices over the internet is a big theme.
T: T getting some serious love for a large cap in March when macro turned negative. Hard to be an incremental buyer up here, but if it dips back into the mid to upper $20s it is a nice add. If macro turns worse this equity will see inflows. If it does pull back some more, it will be a nice hedge to buy against a macro blow up like Europe or US debt. When they report on July 18, the CAPEX number is going to affect a lot of networking stocks.
VZ: Like T, a bit a defensive play but the stock got a run going on the iPhone launch. It has recently fallen through the 150MA as well as upper support levels. Too close to the 200MA for my interest. I would wait for a better entry point or to see how the Vodafone dividend drama plays out.
If you want to be bullish and you think the marker trades higher into year end, then I have some good macro fodder for you. The market has been strongly macro driven in 2011 with Japan, Europe, ISM and unemployment numbers driving the tape. I had one large cap PM recently write to me in an email that “This market is brutal. Just brutal.” Here is some bullish commentary from a Deutsche Bank note from Friday:
“Given there are many similarities between 1980 and today from a geopolitcal perspective (Oil in 1980 was at $91 in today’s terms, the Soviet Union was invading Afghanistan / there was an uprising in Syria and inflation was on the upswing. The big difference? Fed Funds was 9-20% in 1980 vs. 0-0.25% today), I looked back at the SPX500 performance in 1980 to see how the market performed from ISM peak to trough. From February to the market lows in March, the market was down ~17% (2 months ahead of the ISM bottoming in May ’80). But from the March market lows to 12/31/80, the market rallied 38% (see attached chart). We are only down 7% from the YTD highs and believe it or not, the market is STILL up 1% YTD.”
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
Now that the hockey drama is over and La Coupe Stanley is back in my hometown for the third time in my life, we can get back to work. As an addendum to the prior post, we had a few further data points emerge. CIEN hosted their analyst day yesterday in NYC. I think the event only reinforced my belief in three dislocations in the market and they are showing signs of impact. I also think that CIEN further confirmed my thoughts in my Tuesday post. It is not really a good sign when a company cannot articulate why the pace of their market is not going faster. Maybe it is macro, maybe it is broader ARPU trends in their downstream markets or maybe the exaflood has not hit yet. Maybe the future is not going to play out as expected?
After the close, FNSR reported results and it did not go well. This morning a lot of blame being thrown in the direction of China for the miss and lowered guidance. If China companies are the cause of the weakness that is disturbing and I am puzzled by the analysts this morning spinning it as positive. I wrote in early May “futures are down 3 handles to FV, but it is still early. I would expect a them to uptick starting at 0400 EST. BofA/ML out with a negative CAPEX call into earnings. Hard to be long anything levered to US CAPEX. I would be seller if I owned anything networking stocks levered to US CAPEX. I think growth companies like APKT, FFIV and BSFT are okay for now. Would be a seller of CSCO, ERIC, TLAB and ARRS. All for different reasons.”
After the close today we are going to get the RIMM results. I have offered up some comments on the mobile device market in the past, but I will have an interest in the results today because when RIMM pre-announced their results on April 28, I read one report from a sell side analyst who said that it was good they lowered expectations so early in the quarter as it gave them more than a month to beat the lowered expectations. Please…I will be looking at the numbers tonight.
Side note on Greece…. Greece got their first bailout in May 2010. About a month after the bailout, a top 5 US bank brought their European strategy, credit, macro team in for meeting with me. I distinctly remember their European strategist (a German) pounding the table to buy the market as Greece has their money and the Greek issue is off the table for at least three (3) years. At the time I asked him what about the other three PIGS. He said their might be issues, but no concerns with Greece as Germany has stepped up. I am glad that worked out and I stand by what I wrote in early May “From a macro perspective it is hard to be excited and easier to be bearish. Maybe sell in May and go away is a prudent action.”
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
I just finished a round of golf with temps in the 90s and a hot sun beating down the whole time. At first it seemed pleasant, a beautiful day for golf all exclaimed. The SPX as +7 handles on the turn when I was in the club house for lunch. The round started off well, but the heat and sun took a toll. I got lazy on the swing. The heat bore into my self-confidence. The numbers started to add up, I could not deny the deteriorating conditions. The pins started to look further and further away, more difficult to achieve without a little kick here, nudge there and drop over there. I could not drink enough water to quench my thirst. It was a hot, sweltering round of golf that bore into you with each hole – kind of feels like the market today.
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
I have been off the stock picking subject matter for a few weeks as there has been a lot to digest in terms of technology. For an early Friday post before a long weekend in the US, I review a few of the stocks I made calls on since the blog restarted and added a few more for twenty.
JNPR: The analyst at Auriga downgrade JNPR a couple of days ago based on concerns about Openflow affecting adoption of Juniper’s QFabric as well as pricing pressure in routing and switching markets. I think the product cycle is still positive for JNPR, but there is a theta calculation to this cycle. I am not concerned about Openflow affecting adoption of QFabric as I think failing to technically explain QFabric to the world has more to do with the confusion around the architecture than the headwind of Openflow. The stock has definitely cooled in the past few weeks and I am neutral. I would wait to buy around $33-34 if you want to be long.
ADTN: Product cycle positive. US capex favorable, but the stock seems topped out around the mid $41 level. Neutral.
CSCO: I have written a lot about CSCO. Chart is right on track with the prediction after earnings. I still think you need to wait till post August earnings before it is a buy. Product cycles are still negative. Neutral.
RIMM: Product cycles are negative, but the new BB with the Snapdragon processor is getting positive reviews. Stock has bottomed out in my opinion, but it is hard to see a positive catalyst without better clarity on earnings. Neutral.
NOK: Another challenged mobile device maker and I do not want to hear about how some new Windows phone will save 2011 and produce better earnings. Product cycles are negative. Stock is bottoming out at the $8 level. Hard to see a positive catalyst for 2011 unless a large group of investors want to have a kumbayah moment. Neutral.
AAPL: Product cycles are positive, but the stock looks like it is topping out. I would be reducing the long position at this level. Sell. It can be traded around the WDC an iPhone 5 launch.
GOOG: I think there is a lot of positive product cycle momentum with GOOG, but I will be the first to admit that the weekly and daily charts broke all manner of technical indicators and that makes it very concerning. Sometimes you have to accept what the market is telling you. I would look for new entry point and it is probably below or around the $500 mark. Long, but looking for lower entry point.
FNSR: Product cycle is still positive, although ROADM momentum has slowed. Price level back to trend line from 2009 market bottom. Resistance starts at $25-30, but it is a buy here as CAPEX trends should be favorable into YE. Long.
APKT: Nothing has changed despite market none-sense chatter contrary to my prior post. Long.
FFIV: F5 presents a very interesting chart. I would be long the stock through June. July is another matter, but for now the technical indicators and stock action imply the bulls what to rally this stock into the next print. Owning it into the next print is another matter for later. Long.
RVBD: I put RVBD right after FFIV because these stocks look like twins. The product cycle is still positive for RVBD, but the recent stock action looks like the bulls want to rally it into July earnings. As with FFIV, I think earnings is another matter. For now, if I wanted to be involved I would be long.
SCMR: Not sure much has changed with recent earnings since the last post. It has a high level of risk/reward. If I could buy it at $16-18, no problem; at $22+ not so sure. Neutral.
QCOM: Positive product cycles, but the stock seems to be getting tired after the last run. I am okay buying it at this level. Long.
HPQ: Every other day it seems the WSJ has a negative article on HPQ. After the Hurd drama the WSJ should send a check to HPQ for providing so much content over the past year. All we need now is a Baron’s piece that says the Baron’s Trader is positive on HPQ and Cramer rant to put a bow on it. HPQ finally bounced off the lower resistance level from 2009 a few days ago. $35 and change seems to be the bottom point if you want to be a buyer. More reward to the upside than the down side, but it is likely the stock does nothing here for a few months. Long if anything, cover the short.
DELL: Stock just made a triple top off the 2009 low after breaking the down channel from the 2009 peak. It is not often that stocks have such big swings. Despite all the moves, hard to declare the company is in a positive product cycle in the age of tablets and blades. Neutral with a bias lower at this price level. I would not own this into August earnings.
JDSU: A lot of overhead resistance at the $20 level. As with FNSR I like the stock to perform better in the 2H, but it might be easier to buy this stock late in August and September for a run into early 2012. Neutral with a bias to the upside.
INTC: More of an industrial company than a technology company, the stock did something on a weekly chart it had not done in 9 years. The product cycles are positive and it finally broke a very long downward channel during which there were four peaks and three new lows. Long.
MSFT: Despite all the recent headlines, the stock is center in a ten year weekly up channel. The daily chart looks disappointing, but are you really going to own this stock in a world of tablets and MACs for growth? Stock is a holding bucket. Neutral.
BRCD: Defiantly in a upward momentum channel and at the current rate will regain the October 2009 high sometime in mid-2012. Long with a low interest level.
S: On a daily chart, Sprint looks like it is breaking out in a new bullish channel. On a 9 year weekly chart the move requires a microscope to detect. Coming off the 2009 low, $6 has been a tough barrier for the stock to break. Momentum is better and it looks like $7 is in the future before $5, but I think there are better risk/reward equities.
LVLT: When had my old blog in 2007, I once wrote a negative post on LVLT in February 2007 perfectly timing the $6.80 high. The stock has not had a whiff of this level since. I received fantastic hate mail as well as bullish emails so far fetched I wondered how detached from reality the authors were. For entertainment purposes before the weekend I included an example below from February 2007. As for the stock today, it does look bullish for the first time in a long time, but I would not be involved in this company when you can buy AAPL, FFIV, APKT or GOOG which are companies that make a lot of money and have a really good business.
“CroweBonics is Silicon Economics applied to our communications business. It’s a fun reference to the phenomenon which Crowe has opined so often. It’s nothing more unless we get into the more complex Mini Max Model. I have never used their model due to the simplicity of my mindset when looking to apply investment thesis-when the company started, and some believe, will factually kick in with the tsunami of video traffic hitting all “networks.” It’s the price elasticity of demand concept. We are comfortable with 3:1 ratios where bit demand is growing three times price compression. If demand is growing at 75 percent and prices are dropping at 25 percent; we have a 32 percent GROWTH rate. The hangover in telecom killed the formula, as you know. Even traffic growth doubling each year would be revenue neutral to the top line while fifty percent year over year price degradation might occur. At last check, IP & Data traffic was growing at 40 percent according to my research. I believe we have begun and are heading into the HYPER GROWTH portion of the S curve…So William, we have a “healthy business” it appears again (CroweBonics), and a best of breed management team!”
/wrk
* It is all about the network stupid, because it is all about compute. *
** Comments are always welcome in the comments section or in private. Just hover over the Gravatar image and click for email. **
Welcome to trim the near term numbers, but keep the full year numbers intact day. The reasons for cuts are many: CAPEX commentary from ADTN, Japan disaster, IDC and Gartner PC numbers out over night…pick the reason it does not matter. We are getting a lot of earnings over the next few weeks and AA and ADTN already disappointed as well as ASML and Amadeus. What should an attentive analyst do? Trim your numbers now. That is why it is hard to long stocks in the near term and SPM1 is -7 handles as I type. PC numbers confirmed negative sentiment over night and this is prompting estimate cuts for MSFT as well.
– GC
Futures are down 3 handles to FV, but it is still early. I would expect a them to uptick starting at 0400 EST. BofA/ML out with a negative CAPEX call into earnings. Hard to be long anything levered to US CAPEX. I would be seller if I owned anything networking stocks levered to US CAPEX. I think growth companies like APKT, FFIV and BSFT are okay for now. Would be a seller of CSCO, ERIC, TLAB and ARRS. All for different reasons. CSCO is in a management turmoil. Wikis and councils get an F-. It will take time to sort. TLAB has a negative product cycle and too much leverage to T to be a long. Not enough spending by cable companies to drive ARRS higher.
– GC
We are on the eve of a lot tech earnings over the next few weeks. ADTN reported last night and hosted their call this morning. Guidance was in line and the business was good, but not good enough to sustain the current multiple if you have been a recent buyer. Look at a 10Y weekly on the company.
Any questions? I did not like so, but in case you missed the point of the chart it tells me that the multiple got stretched and it was prudent to sell as the price level was in an abnormal position.
Decisions, decisions, decisions…what should a tech investor do? As for concerns we have a lot to choose from: US Govt debt ceiling fight, end of QEII, Japan nuclear mess, consumer spending, unemployment and looming confrontation on sovereign taxes. From a macro perspective it is hard to be excited and easier to be bearish. Maybe sell in May and go away is a prudent action.
Here is my first attempt at setting up the first portfolio post of the new blog which is a work in progress. As I have more time to post, I will expand on the details in the portfolio section, but to start I will look at the portfolio from a sector basis and add equity detail in the sectors in the future. The general approach is 14 sectors composed of ~65 sub sectors and ~800 equities. Today I will start with the 14 primary sectors.
| 4/13/2011 | ||
| Sector | Equities | Bias |
| Semi Equipment / Process | 29 | NEUTRAL |
| Semiconductors – Legacy | 25 | SHORT |
| Semiconductors – Core | 58 | LONG |
| ODM, EMS, Disty, Photonics | 42 | NEUTRAL |
| Hardware – Commercial | 29 | SHORT |
| Hardware – Personal | 24 | LONG |
| Networking – Infrastructure | 53 | LONG |
| Software | 61 | LONG |
| Service Providers | 103 | SHORT |
| Internet | 28 | LONG |
| Digital Media | 21 | LONG |
| Clean Tech – Solar, Power, Water | 133 | SHORT |
| Consumption | 8 | SHORT |
| Materials | 29 | NEUTRAL |
– GC
SIWDT 