Daily Talk

The Wall of Worry

June 15, 2018

I’ve been pounding the table for months telling investors to be in consumer-related stocks, and they’ve been on the move – for good reason. Just today, we’re seeing big moves in Harley-Davidson (HOG) and Cheesecake Factory (CAKE). The reason is there is major news about the American consumer, including soaring retail sales and confidence. The key takeaway for me is that the consumer is indeed confident and leaving the house. Believe it or not, department sales are actually increasing faster than the internet sales and restaurant sales are popping while grocery stores fall flat.

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NAV is an Economy-Driven Winner

June 10, 2018

Industrials have been on a stealth rally as a proxy for the U.S. economy. One of my big themes has been intermodal container carriers that are easily lifted off ships onto rail cars and trucks, and one of my favorite names in the space right now recently reported earnings. Navistar International (NAV) is a well-known company that makes trucks, buses and service parts.

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Can We Rally Without Tech?

June 8, 2018

It was a sluggish session overall yesterday, but breadth pointed to core strength and we learned a couple of things about the market and investors. The first had to do with leadership. The market has been riding the coattails of technology for years, especially in 2017 when just five names accounted for the majority of overall gains. But lately, we have finally started to get a glimpse into the possibilities of a rally composed of different leadership.

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FL is Another Brick-and-Mortar Retailer Coming Back

June 3, 2018

Brick-and-mortar retail has struggled in recent months, partly because of the ongoing shift of consumers going online to shop rather than driving to the physical stores and also because of continued fears that Amazon (AMZN) may expand into the apparel space.

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No Let Up in the U.S. Economy

June 1, 2018

The employment report for the month of May was stellar. May nonfarm payrolls increased 223,000, which was above the consensus estimate of 190,000. This is the highest reading since April 2000, and prior to that this number hadn’t been seen since 1969. The average monthly gain over the prior 12 months is 191,000, and over the last three months it’s 179,000. The number of unemployed decreased by 281,000 to 6.07 million while those employed rose by 293,000 to 155.47 million.

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Positive Action Beneath the Surface

May 25, 2018

The market had another chance to show its grit yesterday, as once again buyers materialized to buy the dip. That’s good news, but still the major indices closed lower. This reflects the fact that outside noise is more than a speed bump for the current rally. That noise is related to geopolitical risk and the uncertainty over trade negotiations.

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It’s a Good Time to Own Construction Stocks

May 20, 2018

I like a lot of the trends in America right now, specifically the ones I’m seeing in construction. I expect them to continue, although issues such as lumber prices and worker shortages could create inconsistent results for companies focused solely on residential projects. Meanwhile, non-residential construction spending accounted for $450.7 million in March, and there are segments that should actually pick up momentum.

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Gyrating and Lacking Oomph

May 18, 2018

Thursday was a very interesting session in which stocks seemed more preoccupied with the avalanche of news, gossip and speculation out of Washington D.C. than economic data and corporate news. The three major indices were all lower but market breadth was positive. The overall market bias has recently shifted toward FOMO (or the fear or missing out). There are still some up-and-down sessions that make it clear that the rally lacks some oomph with the market in between catalysts right now.

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The Upside Remains Huge for CAT

May 13, 2018

Caterpillar (CAT) crushed estimates and raised guidance in its April 24 release – a great one-two punch. Some investors may have been surprised, but not me. This is a company everyone needs to pay attention to, not just because of how it is performing but because it is a good proxy for the global economy.

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The Train is on the Move

May 11, 2018

The reasons for investors to get excited about this market are growing. Leadership has broadened out beyond technology stocks. Equities are now working on a seven-day winning streak. The major indices have regained their losses and are currently positive on the year. Investors are reallocating their assets, and safe-haven stocks such as utilities and department stores are being sold as investors take on more risk.

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