Dave-->>Whether they make or miss their targets, MGMT is under no obligation to "update" guidance.<<
In one sense you are right. The SEC has not been in the habit lately of prosecuting companies for failure to disclose significant events in a timely manner, even though the securities laws require such disclosure. But failure to disclose significant events would be out of character for SanDisk. The embezzlement issue is an example. They dislcosed the event immediately and even issued their financial statement early as a result of the disclosure.
Additionally, SanDisk guidance tends toward the low end of expected earnings. The only time that earlier guidance exceeded actual results was several years ago, when digital camera companies, which feared insufficient supplies, ordered double the units they needed, and then later cancelled the orders when they realized there was no shortage. SanDisk took its lumps at that time, and the stock dropped accordingly.
On interest rates, most investment professionals are already anticipating rate increases, and that factor is pretty much incorporated into current stock prices. It explains a large part of the recent sideways trading of the markets, despite greatly improved corporate earnings. Granted that if the Federal Funds rate suddenly went to 4 or 5 percent, you'd get a calamity in short order. Because there's an election in November, and it's clear that the Fed chairman wants to accommodate the administration as best as possible, it's more likely that we'll see gradual increase of 25 basis points in July or August, and then perhaps another 25 basis points in September or October. AFTER the election, it could be a different story.
I'm focused on the next four months, and whether the market is in danger of a major correction before the election. I doubt it. Given that interest rates are likely to rise only about 50 basis points prior to the election, it is unlikely that such a small rise is not already factored into stock prices. After the election, well, we could be in for a major correction triggered by foreign investors avoiding the bond markets until the exchange rate between the dollar and other hard currencies stabilizes.
If this scenario is realistic, then short sellers might be getting out of certain stocks and putting their money into gold or gold shares.
Art |
