The Day Ahead: You're Welcome

 | Feb 22, 2013 | 8:00 AM EST  | Comments
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Stock quotes in this article:

wfc

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wmt

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dfrg

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zlc

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tol

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jwn

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coh

I will neither confirm, nor deny that episodic content from World Wrestling Entertainment (WWE) finds its way onto my non-iTV twice a week. What I will simply acknowledge is that there is a relatively new character on the wrestling scene that goes by the name of Damien Sandow. This Macho Man Randy Savage lookalike supposedly is the "intellectual savior of the unwashed masses," and after running off at the mouth with his infinite wisdom, tells the booing crowd rather matter of factly: "you're welcome."

I am intrigued by his uncanny (scripted) ability to sound uber confident through the use of concise lines of reasoning. I labeled last week "stall week" for risk asset markets for a purpose, that purpose being there was a break in the hyper intensity of the upward advance. So far this week, all that has been affirmed is that we are now shifting into a mini transition to less certain sessions. 

But since you continue to be fed heaping piles of dung while the best accounts find temporary residences in a Cash McMansion or on SafeHaven Alley, please jot the below down.

The Market, Through My Eyes

  • Larger swings into the red for economically sensitive stocks (for example, retail).
  • Leading sectors of the year-to-date rally are violating 10-day moving averages on enough volume that one has to respect the move (for example, financials).  Interesting how Wells Fargo (WFC) outperformed on Thursday compared to the group.
  • A truly fundamentally weak quarter inflicts brutal pain to similar plays in the sector (examples Wal-Mart (WMT) and Toll Brothers (TOL)).
  • I hate tracking gold, so use consumer staples to serve as a signal for potential shifts in market sentiment.  If you go through the laundry list of staples, the message of a mini transition in markets becomes clearer.
  • Dips are not necessarily being bought in the face of subpar global macro news. Case in point: eurozone GDP, Philly Fed and eurozone PMI. There is a feeling out there (at least to me) that the market is starting to lean in the direction of a soft spot in upcoming data that fails to square with valuation inflation.

The Real Life, Through My Eyes

Nordstrom (JWN)

  • Sales at the off-price Rack division almost 4x greater than the full line in the quarter. I think this is a good follow-up to Coach's (COH) dreadful quarter where it was apparent that the aspirational consumer is under wraps.
  • To drive sales, margin had to be handed over to the consumer.
  • Another fiscal-year earnings warning from a retailer.

Wal-Mart

  • My true feelings on Wal-Mart's quarter are scattered on the Internet. Drop a Google search.

Del-Frisco's (DFRG)

  • M&A fee money ain't flowin'? (It sort of is, private dining sales increased 11.6% in the quarter). February to-date sales are down by a mid-single-digit percentage and that included a respectable Valentine's Day.

Zale's (ZLC)

  • "Very soft" February, as even Valentine's Day wasn't able to offset a poor start to the month.

I want you to remember that when markets have primarily run based on P/E multiple expansion (aka Hopium) and the fundamental picture begins to not support that view, it's a concern. As I have said, continue to raise cash. You're welcome.

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