Posts by Jeff Macke
Stocks set record highs last week, and just days later, after some rough waters, here come the Pundits of Doom.
Sure enough, Marc Faber checked in from Istanbul to predict a crash that would be even more painful than the 22% one day-drop of 1987. “There is a colossal bubble in all asset prices and eventually it will burst,” Faber told CNBC. “Maybe it has begun to burst already.”
Or maybe not. Faber concedes that he was wrong when he said much the same thing in May. He was also wrong in August of 2013 when the S&P 500 stood at 1,408. Faber was really early in 2012 when he warned that a move of over 1,422 in the S&P would lead to an 87-style crash in the second half of that year.
Shares of Gap (GPS) are getting crunched this morning after the company reported weaker than expected sales. The retailer said comp store sales for June were down 2%. Family Dollar (FDO) even jumped in yesterday to blame the consumer for its weak results.
The easy story here is to blame the consumer. After all, the Container Store (TCS) says we're in a funk and Walmart's U.S. head told us earlier this weak that low-end shoppers aren't spending money like they used to.
Unfortunately for those looking for pat explanations the big picture isn't so clean. CostCo (COST) reported comps that were up 6%. Limited Brands said sales were up less than expected but positive regardless. Even in grocery where margins are the absolute worst there are signs of improvement. Krogers (KR) CEO told investors last month that customers were stepping up to high end pet food and organics.
Someday there will be a correction. Even if the squall of selling on Wall Street over the past few days proves to be fleeting, I can tell you with absolute certainty that stock prices will at some point move dramatically lower and your shares will do the same.
The question to be asking isn’t if a sell-off will happen but: Are you financially and emotionally prepared? In the attached clip, Jeff Kilburg of KKM Financial offers his 2 cents on how investors can stress-proof their portfolios for the coming draw down (whenever it may arrive).
“It’s been 35 months since we’ve had a 10% correction,” Kilburg tells me from the floor of the CME. “Are we overdue? I would say so. In the pits behind me, where they trade 10 year notes (^TNX), they’re buying safe-haven trades.”
- Jeff Macke at Yahoo Finance3 days ago
Stocks are getting smacked around this morning on weak economic news out of Europe and Asia. Combined with earnings fear and the general consensus that investors are too complacent and you've got a stock market down 1% early and still way above support.
At 1960 the S&P 500 (^GSPC) is still less than 2% off record highs made just last week but it probably feels worse than that to casual investors. That's because the S&P hasn't had a 1% loss on a closing basis in almost 3 full months. When everyone leans to the same side of the row boat it gets pretty unstable. Forget the volatility index (^VIX) or "fear gauge," which is still near all time lows. The way I like to measure mood is by watching shifts in the American Association of Individual Investor's sentiment survey.
Earnings season is here and not a moment too soon for those suffering from the summer time "blahs." Over the next few weeks corporate America will gussy up its numbers and put its best foot forward for Wall Street. The question is whether or not analysts and investors will like what they see enough to justify a stock market that’s already gone ahead and built in some solid earnings news.
In the attached clip John Butters of FactSet says expectations have come down some from where they were at the end of Q1 but there’s still plenty of optimism out there. “The earnings growth rate estimate right now stands at 4.9%. That is down from 6.8% at the start of the quarter but that’s one of the lowest declines in the growth rate we’ve seen in the last couple years.”
There is no free lunch, even if you’re eating nothing but Candy Crush. As the industry for mobile apps grows, the business model that seems to work best are the so-called “freemium” games that give users a taste of the action for nothing but force them to pay up if they want to advance further, faster.
Sure, you can wait for lives to restore on Candy Crush by King (KING) and continue to play for free but for a trifling 99-cents you can get another shot now.
Given the self-selecting nature of grown ups and kids who chose to download apps in the first place (hyper, short-attention spans, disposable income) it’s not surprising these in-app purchases have become big business.
If gold and gold miners were celebrities it would be time for them to look for a new PR team. Despite outperforming stocks in 2014 the group still carries the taint of the bubble that burst in 2012. With the popular SPDR Gold ETF (GLD) showing strong volume and the Market Vectors Gold Miners ETF (GDX) moving higher on Tuesday despite a brutal market for stocks it may be time for some traders to reconsider the barbaric metal as an alternative to suddenly suspect equities. Jonathan Krinsky, the chief technician of MKM Partners says gold and the miners are just getting going to the upside despite a slight pullback in the early stages of July.
After more than five years of reckless stimulus, endless rate manipulation and generally artificial life support the bull market faces a new challenge from the most unlikely place. It's not the Fed but the consumer that could derail the recovery, at least according to a what we heard from a couple of retail execs on Tuesday.
In a conference call last night. The Container Store (TCS) CEO Kip Tindell said America is facing a "retail funk." Not funky, with connotations of heavy bass and jewelry purchases, but funk as in gloominess and general lassitude. Tindell took the unprecedented step of retroactively un-blaming the weather for weakness in The Container Stores first quarter results. "It's more than just weather" said Tindell, "With so many of our fellow retailers we're experiencing a retail funk."
- Jeff Macke at Yahoo Finance5 days ago
Welcome to the dog days of summer. It's hot. Trading is beyond quiet. In fact, the S&P 500 (^GSPC) hasn't moved more than 1% since the middle of April. That's the longest stretch of nothingness since 1995.
Well, it's time to snap out of it. Right about the time the Boys from Brazil take the field against their distant relatives from Germany on Tuesday, the corporate reporting season begins in America. This matters because it's the first time we've heard from corporate America since the disastrous deep freeze of Q1. Stocks are up 8% for the year. We're eventually going to need to see some earnings growth in the next couple weeks or those gains are going to disappear faster than World Cup mania.
Most outlets are going to want to tell you about Alcoa (AA). I'm not most outlets. There are only three companies that matter this week — and none of them smelt. Here are the three best story stocks for this week.
- Jeff Macke at Yahoo Finance6 days ago
Summertime and the livin’ is easy, at least if you’ve been long an index fund for the last five years. Those lucky few are sitting at all-time highs on the Dow ( ) and S&P 500 ( ) with the Nasdaq ( ) lurking within striking distance of it’s 5,000 mark from way back in the dot.com bubble days.
Though most investors have lagged the market as whole Americans are still spending at a decent clip. According to a the average American self-reported spending $91 a day in June. That’s down from May post-recession highs but $1 more than the same poll last year and more than 50% higher than June of 2009.
With spending strong but most investors lagging, chief market technician Jonathan Krinsky says investors should be looking to raise their spending power by getting long some of the lagging names in the consumer space.
“Most people wouldn’t actually think of the retail sector as hot in the summer,” says Krinsky who notes that merchants have lost an average of 3% in 2014 despite the rally. “Seasonally July, August and September is one of the best stretches to be in retail. All three of those months have 1% or more average gains over the last 10 years.”