The Daily Dose: Battle Zones Here and There

 | Aug 20, 2013 | 9:00 AM EDT
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A journalist friend of mine recently began a stint reporting live from a pretty intense area overseas. Not a day goes by that I don't fear for this person's safety; the live shots I watch online and in assorted B-roll are disturbing.

This makes me grateful that I live in the United States of America. Sure, I may get blown to pieces on a subway track by a rogue foreign operative, but each morning I awake there is a sense of security and of hope for the future.

The current market is a tinder box, just waiting to be lit ablaze. I feel it in my soul, which is so intertwined with the market that it's borderline creepy (call me the "Market Whisperer"). Another match will be tossed onto the itty-bitty flame today with earnings from Best Buy (BBY), JCPenney (JCP) and to a lesser extent Home Depot (HD) (comments on August demand trends are where to be looking on Home Depot, the quarter was baked into the name eons ago).

All of these companies have their own individual stories of, but there will likely be a single message bonding them: The consumer was far from being in fine standing in 2Q13, and that was before higher rates began infiltrating the economy at the end of the quarter.

In an effort to bring to life what's happening out there, here are thoughts from the battle zone. Pay careful attention (yes, still cautious, this Thursday will mark two weeks) to the small battles that could erupt into larger bloodshed, or risk blowing a hole through your portfolio that is probably higher for 2013.

Tying It All Together

Want to know why the market is freaking out over the Tapernado? It's pretty simple: Main Street is ill prepared to handle higher rates on their bills, whether it's a credit card bill or the monthly mortgage. Once those loftier bills hit the mailboxes of consumers, they are likely to think twice about pulling the trigger on that long-awaited splurge, on how to allocate discretionary dollars (savings vs. spending) and on whether buying a new car is a wise idea. An image begins to formulate that rates will continue to go up and along with it, monthly expenditures.

A great example of this infestation of Tapernado could be seen in the below comments by Nordstrom (JWN), which is more Main Street than you would think. In looking at this statement, it becomes fairly apparent as to why: (1) all Dow components fell last week, except for perennial dog Caterpillar; and (2) the only true pocket of strength (as in values of the equity increase, not solely relative outperformance) in the market was gold.

"There is a portion of our accounts that have variable-based pricing based on interest rates. And if in the future, if we should see rising interest rates, that there would be some impact from that." -- Nordstrom

Spotted: Outperformance

The perennial disappointment that has become FedEx (FDX) has a stock outperforming in a slowly correcting market. Is there interesting stuff ahead come conference season?



  1. Lost in the hoopla over JC Penney's epic downfall is the inevitable demise of Sears (SHLD). The stock has now broken below its December 2012 low, and has the sub-$30 January 2012 low in sight. I reiterate (and hey, check the tweet stream): Sears is sitting on bad news.
  2. Tired of this overemphasis on "trading". Is there anyone out there investing in their future by seeking to hold a stock longer than one session? If so, send me an email; my firm's research is a must-have tool.



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