Market wrap: Unhealthy lifestyles rule in this screwy market

Posted Oct 22nd 2008 12:45PM by Jonathan Berr
Filed under: Earnings Reports, Apple Inc (AAPL), Wal-Mart (WMT), McDonald's (MCD), Boeing Co (BA), Merck and Co (MRK)

Setting aside any talk of price-to-earnings ratios or cap ex spending for a second and consider the following: McDonald's Corp. (NYSE: MCD) posted a great quarter, easily beating analysts expectations, as did cigarette makers Reynolds American Inc. (NYSE: RAI) and Philip Morris International Inc. (NYSE: PM). Philip Morris maintained its outlook while Reynolds raised guidance. Drugmaker Merck & Co. (NYSE: MRK) had lousy results and is laying off 7,200 workers. Selling the coolest phone on the planet (at least for now) did not help the results of AT&T Inc. (NYSE: T), which reported worse-than-expected third quarter results.

Wait, there's more! Boeing Co. (NYSE: BA) reported horrid results because of a machinists' union strike. Wachovia Corp. (NYSE: WB) likely last results as a public company were as awful as people expected. Apple Inc.'s (NASDAQ: AAPL) guidance was tepid, though not apparently as awful as some expected since the shares are rising. Let's not forget that the market is down yet again by triple digits, so it's not surprising that some of these stocks are trading down despite their reports.

To recap, smoking and fast-foods are a good thing and making drugs, technology or practically anything else is a bad thing. The best cliche I can come up with is that this market is an order of fries short of a Happy Meal. Its elevator does not go all the way to the top. I just can't think of any more folksy metaphors to explain my frustration. Please respond with any better ones.

What does it tell us about our economy that cigarette makers are doing well and technology companies are doing poorly? Are consumers spending their discretionary income on a nicotine fix rather than an iPhone 3G? Though McDonald's sells plenty of healthy fare, I have not ever seen anyone order a salad at the world's largest restaurant chain. How sad is it that during this time of economic uncertainty, people -- including yours truly -- are finding comfort in the high carbohydrate diet of the golden arches?

Forget champagne wishes and caviar dreams. Consumers are making due with less -- a lot less. Not surprisingly, shares of high-end retailer Tiffany & Co. (NYSE: TIF) are near their lowest point since 2002. Meanwhile, shares of Wal-Mart Stores Inc. (NYSE: WMT) are up more than 10% this year.

Tags: AAPL, BA, featured, MCD, PM, RAI, TIF, WB, WMT