Pin the Retail Donkey (AMZN,XRT,HD)

Pin the Retail Donkey (AMZN,XRT,HD)   We’re going to step out on a limb today and encourage you to consider the retail sales trade that we’re proffering hereunder.   It’s not an easy thing to buck the trend at a time when big name sellers are closing at their fastest pace ever all across this land, when companies like JC Penney and Macy’s and Sears are facing what could be their final breaths, and when traffic at malls across America appears to be drying up like a pack of seals stuck in a Saharan sirocco. Whither the American Shopper…?   There’s no question that online sales are taking a bite out of the bricks and mortar retail group, with companies like Amazon obviously reaping the lion’s share of the new business.   In fact, e-retailing as a whole is looking to expand by some 14% this year, according to most estimates (compared to 13.1% in 2016), while traditional ‘in-store’ sales are figured to grow at the same 1.5% rate they did last year.  Department stores, alluded to above, appear to be moving in static fashion, looking for a break wherever they can find one.   But it’s less than likely…

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Le Plus Que Ca Change… (HD,SPY)

Le Plus Que Ca Change… (HD,SPY)   Bull and bear markets can be defined in a great many ways, but the simplest and most direct (and correct) definition is, naturally, our own: And there you have it.   Not much more need be said.   With what appears to be a war looming in the Far East with North Korea (and maybe China), in the Middle East with Syria (and maybe Russia), at home in Berkeley for safe space, on airplanes that don’t have enough space, and quite possibly in outer space for new tourist destination space, there’s every reason to believe that a bear market is coming.   What the…!?   It’s all rather dire, and yet the market shrugs it off, one editorial at a time, one bombing run and explosion at a time, one inflammatory, knife-wielding, Facebook live-stream crime at a time.   And the rates they keep a’rising.   But no one cares.   Or, rather, the market doesn’t.   In what should be understood as the quintessential wall of worry, today’s headlines offer the ideal backdrop for Wall Street to play the buyer.   And so it’s doing.   Despite the news, a look at…

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Breaking: Transgender NYSE Floor Trader Charged with Self-Rape! (GM,HD)

Breaking: Transgender NYSE Floor Trader Charged with Self-Rape! (GM,HD) Sometimes you get hit with a single news item or piece of data that literally knocks you off your feet.   It’s unnerving, to put it mildly, because over time one gets used to the sanguine moves to and fro in the regular series that one examines.   And then whammo!   We had a day like that yesterday when the NFIB released its small business optimism survey, and we were thrown to the mat like “Killer” Kowalski in his title match against “Mad Dog” Vachon back in 1978.   We were there at the old Maple Leaf Gardens when it happened, and no kidding, it looked exactly like this – Call it euphoriorus de la Trumpus, but c’mon guys, is it not a little overdone?   Anyway, it got us thinking. How much optimism is this guy really worth?   The market flew after the election.  Homebuilders’ confidence soared.  Small business has now apparently gone messianic. And, as we’ll show below, investors’ propensity for risk has just breached a fold in the space-time continuum and entered a hybrid dimension known as eh-nys. Is it not overdone?   Small business may…

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2017: Year of the Hair-Ball (HD,LUK,HSY)

With 2017 but days away, we feel it appropriate to take a moment to offer a few thoughts on the year to come, and to wax a tad introspective.   It won’t take too long.   We do it because the world is not just about investment money and the ‘pursuit of happiness’ (as our Founding Fathers euphemistically called it).  There’s also the healthy suffering and sacrifice that we invest in our families and children, in our communities and the institutions we hold dear.  For them, no amount of sweat and toil is too much.  We love and appreciate them, and so we stick our necks out, bend and wrack ourselves, going sleepless and aching for their sakes, in order to create a world that we hope will be better and safer and more humane for our efforts. This coming year will test those commitments.  There will be both private and publicly sponsored efforts to distance us from what we love and cherish, and to render how we choose to commit ourselves to what we love and cherish as, if not downright illegal, then certainly immoral.   You will feel the press from forces near and far to abandon what…

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Slap-Happy Credit Trade (V, AXP, FAS, HD)

We start today with the dollar, as we believe the case for long term dollar strength is a powerful one.   And that’s not just because the Euro is taking a drubbing after Italy’s latest referendum results.  The Euro will likely see a continued arse-kicking as France, Germany, the Netherlands and other countries begin their move to the political right over the next year.  Elections are expected to significantly weaken establishment parties in those countries in the spring and summer, and with it, support for the very idea of a unified Europe and currency.   That’s all dollar positive, of course, as are current weaknesses in the Japanese Yen and Turkish Lira.  The latest dollar-yen move was, in fact, the biggest in more than twenty years!   As for Turkey, we’ll likely see other Emerging Market nations following that country’s lead into the land of currency weakness, while still other nations, like India, in attempting to enact a cash-free society – with all the pain that entails – will further boost to the U.S. Dollar.  There’s nothing like telling people that every one of their financial transactions will be monitored by government to give them a hearty desire to hold…

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Big Fat New-Home Trade (HD)

It’s been a fascinating couple of weeks, no doubt one that historians and social scientists will be focused on for decades.   Market historians, too, will find much of interest in this period, we believe, as it marks the transition between the second and final phases of the bull market that began in 2009, or 1980, or 1931, depending upon who’s doing the counting.   For our part, it matters little.  The essential thing is that all engines are a go for this last stage, booster rockets have been engaged and capsule separation is now occurring, even as we write.   With Dow 19,000 now in the record books, we trudge on to 20,000, perhaps 25,000, and who knows where thereafter.   Eerie Glances Back That said, it’s not without moments of trepidation that we watch the market action these days, view the economic numbers and dig through the corporate news.   For there appears from time to time something eerily reminiscent of those carefree days prior to the Lehman Brothers crash of 2008 that overtakes us – jolts us – and whispers of the need to be circumspect regarding the upcoming run.   And nowhere is it more conspicuous…

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Rotate Your Money, Pal! (IDU,FAS,HD)

Most people who drive automatic cars are unaware what would happen if, while cruising at highway speed, they threw the transmission into reverse.   Now, we’re not suggesting anyone try this on the way home from work, or even down at the local speedway, but having made the blunder ourselves on one occasion, we can assure you that the resulting action is not what you’d think.   There’s no riotous gear grinding, no thousands of itsy bitsy metal pieces shooting out like bullets onto the road, no screeching/wailing/careening this way and that, a la some late 70’s Burt Reynolds movie.   None of it. The car turns off.   It what?   You heard me.   The car turns off. It goes into some kind of sleep mode.   And here every make and model may be different, but the essence of the matter is that when the car moves from drive to reverse, some sort of ‘save’ button is levered, and the car simply rolls neutral-like toward a stop.   Rev her up and go again!   Our own experience was that a simple turn of the ignition fired up the old Nissan, and we were right back into…

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Deep Breath. Hold. Exhale. (UPS,HD)

There’s growing evidence that the worst is behind us and that markets are calming.   Against a backdrop of stabilizing oil prices (now having thoroughly tested the $30 level and come away secure), traders big and small seem to be taking a breath.   Volatility, too, as measured by the CBOE’s VIX index, has fallen back to its trendline, a move that we believe marks the end of the panic attack of the first six weeks of the year.   Have a look here – Transportation stocks, too, have been climbing steadily, looking every bit the solid citizens they were until their late 2015 tumble had everyone worried they were about to be deported to Tijuana.   Thankfully, they’re now back, and if not pointing as yet to a robust carriage of goods over the next three to six months, they’re at least indicating that the December/January selloff was overdone.   More on the transports in a moment.   The final tally for fourth quarter earnings was also better than the consummate wreckage analysts expected, with both top and bottom line beats coming in relatively strong. Profits (top chart) beat Wall Street analyst expectations by the best rate in half…

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The Builders: Trump, China and the Depot (HD,XLP,XLY,XOM,USO)

When the FBI demanded access to Apple’s encryption technology to unlock the iPhones of the San Bernardino terrorists, we were disturbed.  As far as we were concerned, Apple’s refusal to empower an already intrusive surveillance state was commendable. But others saw it differently.   Donald Trump, for one.   Trump went on the offensive, saying we ought to use ‘common sense’ and give the government what they need to fight the bad guys, to know if there were accomplices, etc. And that would be a great thing – to catch the bad guys. All of them. And lock them up.   But there was something unsavory about Trump’s appeal and his further suggestion that we boycott Apple products until they comply with the government’s dictate. To our minds, there’s something resolutely hollow about a government’s claim that privacy must be sacrificed for the sake of criminal justice.   In our experience, there’s always a larger, unaddressed problem that necessitates the need to pursue this type of ‘justice’. Somewhere, there’s a faulty policy, a bad practice, poorly conceived laws or just plain wrongheadedness that sets us up for intrusions of this sort, that allow, for instance, the state to listen to…

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Taking a Stab at Oil (XOM,USO,HD)

We’re in the middle of a bounce.   We don’t know how long or how high it will carry, so until we see genuine technical signs of a continued bull, we have to be guarded.   That said, we bulls still have a few key indicators on our side.   The first is sentiment, which is dreadful. No one is happy, the world looks increasingly dangerous, protest candidates are surging, and the last thing on the minds of Main Street investors is shoveling more of their savings into equities.   Fair enough. We track AAII sentiment numbers precisely for moments like these. We’re now in the pit of sentiment hell. It can’t get any worse.   And that’s a plus from a contrarian standpoint. Simply put, it means nearly everyone who wants to sell has already done so and is expecting calamity. And that’s precisely the point at which the smart money buys. But what if it’s just a temporary bounce that fizzles?   Then so be it. We’ll see what happens to sentiment as the indexes do advance. If they remain painfully pessimistic, we’ll remain chuckle-dee-do.   Another Plus   Consider also, the market has done little to nothing…

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