The Daily Dose: It's All Just Chatter for Now

 | Mar 10, 2014 | 10:45 AM EDT
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Stock gains are here to stay, until they aren't. There are rumblings that a Chinese solar company's demise is a Bear Stearns-like signal of a global market top -- but this is really anything but true. When it comes to scenarios like those of Bear Stearns, Lehman Brothers, AIG (AIG), Countrywide and all the small loan-servicing companies run by Joey from the Bronx -- well, we can rest assured that they are unlikely to appear again in many of our lifetimes.

Chatter of asset bubbles is also picking up steam, but it's just that: chatter. Such ideas are presented during down days for the market, designed to drive highly clickable discussions. The market will ultimately need a truly fundamental development before risk appetite undergoes a meaningful pullback. For instance, there would have to be a series of debt defaults by larger companies in China -- which would certainly alter the outlooks for importers such as Caterpillar (CAT), Coach (COH) and Nike (NKE).

Federal Reserve chief Janet Yellen's statement March 20 will be a potential fundamental development, made so because her words are what have led to the fresh move higher in stock prices. See the chart below: the S&P 500 in blue, the Dow industrials in red, the Nasdaq in green.

Source: Yahoo Finance

Here are three basic things to begin thinking about ahead of Yellen's musings:

1. We are bound to get an interest-rate increase on U.S. Treasuries sometime in 2015 -- the general consensus puts this at the middle of next year. Thus far, the market has not priced this in. But more mention of the actual rate increase could start the pricing six to eight months forward, and the first signs of such would be pressure on stocks of lower-quality companies with high debt levels. The February jobs report now requires Yellen to give the market more information on rates, letting alone tapering of quantitative easing.

2. What is the new threshold for the unemployment rate?

3. Will the Fed quicken the pace at which it's tapering stimulus? The market has modeled itself on tapering being finished by the end of 2014 -- not the summer.

The Eight Coolest Things Just Said by Foot Locker

Should the consumer venture out this spring after a brutal winter indoors, stay with high-quality names whose quality is likely to grow even further. In particular, I am looking for a replacement cycle in home improvement and footwear.

With that in mind, while the rest of the retail sector is crumbling amid the weight of competitive prices and mass store closures, good old mall stalwart Foot Locker (FL) and its Footaction brand are killing it. Here is the back story on how one of the hottest retail stocks remains so -- with eight facts we just learned from its fiscal fourth-quarter release.

1. During holiday 2013, sales increased for the company in all regions in which it operates. This is impressive, considering the major weather disruption.

2. All months during the quarter notched sales increases. The strongest were January and December, when weather was the worst.

3. The company is raising prices on footwear, and it continues to sell more units.

4. Sales of basketball-related products were up more than 10%.

5. While other retailers entered the year with too much inventory, and were forced to promote to clear it, Foot Locker's inventory to end 2013 was basically flat -- and, again, that came against a strong sales increase.

6. The profit margin in the most critical area of the business -- footwear -- rose 20 basis points during the holidays.

7. The Jordan footwear and apparel line continues to be on fire, globally. LeBron and Kobe did well, too.

8. Its pipeline of products continues to be strong. Foot Locker is benefiting greatly from the battle between Nike and Under Armour (UA) in apparel and footwear.

Special mention to investors: Timberland, owned by VF Corp (VFC), was noted as a strong seller in the quarter due to improved styles.  

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