The Daily Dose: Buyers Freeze Ices Market

 | Mar 14, 2014 | 11:00 AM EDT
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Happy Friday! Want the simple answer for Thursday's market's reversal that has me secretly preparing for a long weekend of news watching? There were more sellers than buyers of publicly traded stocks. Okay that is clearly way too basic and I know you want the complicated angle. Here are three things to chew on:

  1. Portfolios are not positioned correctly for the fundamental demand shift in China so visibly underway. Google search "China ports" to get a feel for what I am reading.
  2. There is an aversion to holding onto risk into Yellen's upcoming testimony should she stumble for the first time, mirroring Bernanke's comments that routed markets last summer.
  3. Government involvement in the private sector is becoming scarier, the latest being this overtime issue put front and center by President Obama. Companies, especially those on slim margins such as McDonald's (MCD) and Wal-Mart (WMT), are not prepared for the government to attack their business models and believe me, these same companies have not articulated the financial impacts of deeper involvement to investors big or small.

So there you have it my fellow copper price plunge watchers. Expect the next three days to have an abundance of scary headlines that only tosses gas on a bull market led more so by multiple expansion. That said, I prepared three topics for a TV segment yesterday and wanted to quickly do an analytical around the horn.

Amazon (AMZN): It must raise revenue from its proven products and services (Prime, Kindle) globally to reinvest in unproven products and technology. I actually view the Prime price jack as an acknowledgement of further operating margin weakness due to tons of investment spending in technology and online prices.

McDonald's: There is an uprising amongst low income America developing, I sense it. McDonald's allegedly making workers do tasks off the clock to keep its wages low is just the tip of the iceberg for the company on this matter, and a direct result of HQ placing crazy burdens on franchises. In McDonald's recent 10-K, it noted that litigation that it currently is a part of is not viewed as material to future financials. Therefore a class action suit, a growing one, could certainly impact how many restaurants the company opens and its approach to the dividend.

General Motors (GM): I would be concerned on how the ignition issue weighs on the broader used car market.

5 Reasons Lululemon Will Continue to Struggle

Following a Jan. 13 earnings warning due to continued production and demand issues, Lululmeon's (LULU) stock price is down 16% in 2014. Before you get your face ripped off further obsessed Lulu bull, here is why the company will continue to struggle:

  1. Web traffic at the likes of Dick's Sporting Goods (DKS), Foot Locker (FL), Nike (NKE) and Under Armour (UA) is increasing significantly as these businesses seek to go more directly to consumers. This is already hurting Lululemon: its online sales growth has slowed for over three straight quarters.
  2. There is explosive growth occurring for offerings from Nike and Under Armour. Higher quality and more versatility, for lower prices, than at Lululemon.
  3. To reconnect with consumers post 2013 fumbles, Lululemon may have to introduce opening price point product lines.
  4. Sales and margins were under pressure before February/March store activity. No good.
  5. Lululemon is not connecting its apparel to technology in the same manner as Nike and Under Armour. Health and social monitoring capabilities built into clothing is an emerging trend.

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