The Daily Dose: Sampling the Financial Buffet

 | Sep 10, 2013 | 9:00 AM EDT  | Comments
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Stock quotes in this article:

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jcp

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urbn

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aeo

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aro

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anf

What do market folk not obsessed with sub $5.00 stocks and scalping $0.05 on a long, such as yours truly, do in between earnings seasons? That's a good question.

You could ponder deeply some investor education tips, for example, like these on retail stocks. You could hold team meetings to unearth new ideas and keep everyone hungry off another hectic earnings season performance. You could boost the minutes spent out of the office and on the pavement talking with companies (as I did with J.C. Penney (JCP) on Monday, and, no, I can't share any of the information, sorry) and contacts and then grab a cocktail with like-minded individuals in financial services.

Or, you could be a hermit crab and caress Excel spreadsheets, gently massaging formulas so they spit out support points for other sourced research findings. I am doing all of those things, except for the cocktail, as there is no time to be wasted if one is dead set on being the best in class in a competitive field.

Here is a buffet table of financial thoughts.

Apple is About to Officially Evolve

A cheaper iPhone made from cheaper materials is counter to the situation with the iPad Mini: the iPad Mini solves a form factor issue. A cheaper quality iPhone is likely to trigger a material boost to Apple's (AAPL) global volumes and total profits. But it is a cannibalizing product that opens the door for a tarnishing of the brand long-term. Apple realizes it can no longer gain super robust margins from premium price points alone due to credible threats from peers. It is now seeking to drive earnings via a global volume push of a lower end smartphone. That's great for the next four quarter financials, not necessarily for the results in year 2018.

Chart of the AM: Leaders are Leading!

As I noted on Monday morning,  the market's breadth during last week's rebound was an encouraging aspect. It was one of the primary reasons why I entered this week continuing to be constructive on stocks. In this regard, it was also positive that breadth in Monday's session was favorable as all 10 S&P sectors advanced. Importantly, leading indicator parts of the market are in fact leading the Dow and S&P, suggesting another round of upbeat U.S. data for September (minus payrolls) that minimizes the perception of market death by the dreaded taper monster.

Source: Yahoo! Finance

Thus far, the market is creepily unfolding as I thought. However, one shouldn't let this move go to their heads (aka stay disciplined) as in truth, expectations are becoming elevated right into the Fed meeting (expectations: not much, if any, taper).

The Bernanke press conference also is a true wildcard event. He could signal officially his plans to exit at year-end and take a stab at schooling Mr. Market in a "Jawbone", with respect to forward communication efforts.

J.C. Penney Quickie

All I will offer is this: If you have followed the lead of the new whale shareholders in the stock and become a shareholder yourself, start watching markdown levels on the second floor into the holiday season. As a starting point, I would say a good percentage of the merchandise in the home area is being currently discounted 20%-30%.

Urban Destruction

Only thought I had when seeing a mid-single digit percentage comp (Street was at high-single digits) from Urban Outfitters (UBRN) in its 10-Q published after the close: If the winner in the mall for 18 to 35- year-old apparel had a weak finish to back to school, imagine the dreadfulness that occurred for those companies that issued earnings warnings in August due to poor product execution (Aeropostale (ARO), Abercrombie & Fitch (ANF), American Eagle Outfitters (AEO). Revolving consumer credit falling for the second consecutive month  and non-revolving credit rising, supports the notion articulated by retailer executives, There is a crowding-out effect on display, where consumers are favoring long-lasting big-ticket goods purchases instead of splurges that only satisfy superficial near-term needs.

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