Happy Cinco de Mayo. Before you head out for margaritas and tacos, indulge us by enjoying this week’s missive. We’ll start with the Magnificent 7, who have had pretty good earnings this quarter, though some have not met expectations of investors
Microsoft is the one that has had the worst record over the past year, with earnings not meeting expectations each of the last four times.
Google (Alphabet) on the other hand has been the standout of the group. It is the mirror image of Microsoft.
Meanwhile, Nvidia has been within a wide trading band, between $165 and $200 and is at the upper end of that band, with earnings expected on May 20.
Meanwhile, over in the land few pay attention to, the S&P Small Cap index (IJR) has been a very solid index performance-wise over the same period, and we expect that to continue over the next couple of years.
On another note, Spirit Airlines has filed for bankruptcy and has halted service. Granted, it was in rough shape for several years. I haven’t been on a Spirit flight, but apparently, it was not held in high regard. I mean, if the “main line” carriers treat us as cattle, I can only imagine what it felt like in that yellow tube known as Spirit. But I do believe that having options and having competition is good for all.
In 2024 Jet Blue offered to buy Spirit for $3.8 billion, but the deal was blocked by the Justice Department.
Senator Warren was perhaps the biggest proponent of blocking the deal. With an X post back then. I’m not trying to make it political, but regardless of R or D, there is too much meddling in some of these decisions.
In fact, here’s the headline from yesterday on CNBC.
So let me get this straight. If we allow an airline that carries less than 2% of the passengers to get bought by another ‘low cost’ airline, that will result in fewer flights and higher fares? Now, without Spirit we have fewer flights and potentially higher fares. Oh, and close to 20,000 workers are out of a job. Just saying…
Finally, the first Berkshire Hathaway annual shareholders meeting without Warren Buffett as CEO was held over the weekend. With over $400 billion sitting in their cash coffers, Buffett made this comment while not being on stage.
Here is the ‘Buffett Indicator’.
It sits at all time highs. Ready to come back down? Nobody knows, but at some point I would expect that to happen. It may not be for many years, or it could be soon.
I hope you have a good week. If you have any questions or comments about this or any other topic. We will certainly be happy to have a conversation.