Optimism abounds with the market resolutely shaking off bad news while focusing myopically on the good, or relatively good, news. The cheerleaders on CNBC (GE) can scarcely be heard uttering the dreadful words of inflation, recession, stagnation, credit crisis, and foreclosures. Happily, they talk about earnings beats. Surprisingly, there are a number of really substantial earnings beats that seem to justify the current sanguine tone of the market.

A lot of the beats thus far have come from blue chip companies that dominate their industries and sectors. Logically, this makes sense. If we are in a recessionary environment, only our very best companies will be able to capture market share. Secondary companies or second tier competitors will lose market share in tough environments. I suspect that the cash coffers of the Fortune 500 will soon start to be deployed, resulting in a nice pickup in mergers and acquisitions activity and the buying of market share. Beware the rash of earnings reports coming from the middling middle of our corporate roll call.

Now, on with the ceremony:

Intuitive Surgical, Inc. Q1 2008 Earnings Call Transcript – The maker of the revolutionary da Vinci robotic surgical system, this has been a growth stock for the future and the recent past, but apparently not for the present. After hours, Intuitive Surgical (ISRG) reported EPS growth of 81% and sales growth of 65%. These numbers actually beat estimates, something this company has become habitually good at doing. However, the beat was not as large as previous beats and the stock dove 8.6% in after hours trading. Come again? Kudos to the boys at Bespoke Investment Group for calling the potential for a “bad beat.” Full Disclosure: I currently have a long or short position in ISRG in one or more of my private investment partnerships.

IBM shares rise to highest price in 6 years after earnings – Big Blue (IBM) is one of the primary drivers of this recent rally. While everyone was gloomily expecting credit crisis-sickened earnings, the House That Watson Built comes out with an outstanding report. Net income rose a whopping 26% while revenue grew 11% during the first quarter. I have to quibble here with the unalloyed euphoric reaction. The ability to cut or manage costs is exactly what is needed in a recessionary environment and while revenue grew healthily, this is not a case of sales growth keeping in line with profit growth. Everyone else is taking this bellwether stock as indicating unexpected strength in the technology sector. Extrapolation is a dangerous game to play. IBM’s domestic business represents only 35% of total revenues. Unless your small-cap technology stock has a global presence, you may be disappointed yet.

Russia’s White Gold – Cramer is an entertaining fellow. He’s onto the story of how American food conglomerates are beginning to crave Russian food makers. Gobble, gobble, gobble, buying on acquisition speculation is for turkeys. Wimm Bill Dann (WBD) is one such Russian food maker and has benefited from the worldwide inflation of food prices. I’ve mentioned before that food inflation will make us all a little hungrier and Ben Bernanke’s job a little harder.

Crown Holdings sets high following jump in 1Q profit – Population growth in emerging countries is one of the main drivers of the growing demand for food. Someone’s got to package all that food to meet exploding demand from a burgeoning global marketplace. Crown Holdings (CCK) has been a big beneficiary of the demand for food and thus the derivative demand for packaging for food. Beware the toxic balance sheet. Beware even more the equally strong inflation in raw materials. Basic metals for beverage cans have seen strong price advances. Oil’s record-setting price march will surely increase the cost of plastic packaging.

Amphenol raises 2008 profit, sales outlook above estimates – My skepticism of IBM and the rest of the technology sector is made to look silly as smaller player in technology also beats comfortably. Amphenol (APH), a maker of fiber optic cables and connectors reported that sales rose 18% while income saw a 25% jump. Demand for bandwidth remains strong as countless millions waste precious minutes watching stupid videos on YouTube for free. Someone has to produce the digital pipes that make our devolved entertainment needs possible. Oh, did I mention that Google (GOOG) also pleased Wall Street with a rosy earnings report? I’m looking stupider and stupider by the minute.

Macro

• Once again, Mark Zandi and his team at Moody’s Economy.com (MCO) comes through with something interesting. Click through on the image below and interact with the map to find out if your state and county is in risk of recession. My home state of California is definitely at risk, dragged down by rapidly falling housing prices. I currently spend most of my time in Utah, one of the few places that has seen strong economic expansion and even strong real estate price appreciation. Forbes recently named Salt Lake City first in its “Best Cities for Jobs in 2008″ rankings.

• BRICs (Brazil, Russia, India, China markets and stocks) call temptingly to investors frustrated by the recent turmoil in domestic equities markets. They have dominated the issuance of global depositary receipts, accounting for 50% of the record $55 billion raised in 2007. Executives at the Bank of New York Mellon (BK), a large operator in the ADR space, say the trend is expected to continue as BRICs companies are anxious to tap into capital from developed economies as well as listing shares in their own countries’ exchanges. Caveat emptor, while these depositary receipts must pass some regulatory and compliance hurdles, their accounting and reporting standards do not match the rigor of domestic stocks.

• Life, Liberty, and the Pursuit of Happiness: Questions exploring the link between income and happiness are not new. Recent studies show that per-capita GDP is an imperfect measure of welfare. No really? Any attempt at measuring “happiness” will, by definition, be subject to inaccurate opinion and “self-perception” – we humans are an idiosyncratic lot. Furthermore, when income inequality expands (a necessary symptom of meritocracies), large portions of a country’s population loses satisfaction. We live in interesting times (read turbulent) and envy is either a sin or a highly irrational emotion.

Micro

• Building BRICs on education: The national Chinese universities are notoriously competitive and accept only a tiny fraction of China’s brightest students. In the past, the next brightest were relegated to factory jobs and other less “prestigious” careers. As China’s wealth grows, the citizenry will demand more social mobility. Enter private, for-profit educational institutions like New Oriental Education & Technology Group (EDU). I suspect we’ll see more such issues coming to our public equities markets from the BRIC economies. Full Disclosure: I currently have a long or short position in EDU in one or more of my private investment partnerships.

• The Tiger bets on the Dragon in the Year of the Pig: Julian Robertson has served as a great role model for me especially for his legacy of mentoring numerous “Tiger Cubs” at his now defunct Tiger Management who have gone on to run highly successful hedge funds of their own. His influence cannot be measured only on the returns he generated. Now Charles Coleman’s Tiger Global reported a knockout 2007 in which the Tiger Cub generated a 71% return. Big technology names such as Google (GOOG) and Research in Motion (RIMM) fueled the outstanding performance. A large portion of the portfolio benefited from the strong performance of Chinese stocks. Big winners included Baidu.com (BIDU), Longtop Financial Technologies (LFT), Focus Media Holding (FMCN), the aforementioned New Oriental Education & Technology Group (EDU), and Gushan Environmental Energy (GU). Julian Robertson established a reputation for rigorous fundamental analysis coupled with insightful contrarian strategies. That begs the question; when does China become too expensive? Full Disclosure: I currently have long or short positions in RIMM and EDU in one or more of my private investment partnerships.

• Conservative lending principles will hold banks steady through the credit crisis. Even when the yield curve is more positively sloped, giving in to the temptation to relax credit standards will come back to bite undisciplined management. A few banks off the top of my head that have reaped the benefits of prudent lending include Wells Fargo & Company (WFC), US Bancorp (USB), and even Oriental Financial Group (OFG). Oriental belongs to the group of banks that serve Puerto Rico, a small group that has underperformed for so long that Wall Street expectations cannot go much lower.

Technology

• Charlene Li, an analyst with Forrester Research (FORR), writes a good piece on the future of social networks. She impresses me with her forward thinking and ability to simplify some deep concepts. The future of social networking will feature universal identities, a unified social graph, deeper social context for “activities” and a new business model where social influence defines marketing value. These predictions are very relevant to my work at SocialOptimize and I especially like marketing value defined by social influence. Fortune 2000 companies would do well to heed Charlene’s prognostications. Why is Charlene working for a big stodgy publicly traded company? She ought to jump ship and join SocialOptimize.

• Apple (AAPL) takes a serious run at Research in Motion (RIMM) and its Blackberry devices. The iPhone debuted to much fanfare, but Wall Street has been relatively unimpressed with the product and results. Apple recently announced the release of the iPhone SDK, essentially opening up the iPhone as a platform for outside developers to create software for the iPhone. Predictably, this has gotten the tech industry very excited, but Wall Street continued to respond with ambivalence. The day of the announcement, Apple’s stock actually dropped. Kleiner Perkins Caufield & Byers also announced a $100 million venture fund devoted to backing iPhone focused startups. Full Disclosure: I currently have a long or short position in RIMM in one or more of my private investment partnerships.

• Space is still the final frontier. If global warming continues, we’ll need to find alternative places to inhabit. The Europeans launched a humongous “cargo ship” into space to resupply a space station. Live long and prosper!