The Daily Dose: What Are You Watching?

 | Oct 07, 2013 | 9:00 AM EDT
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What a crazy weekend. The political talk shows had a certain sense of relevancy, showcasing the oratorical skills of an over-tanned House Speaker John Boehner and introducing most in the U.S. to a fellow named Jack Lew.

In somewhat incredible timing for the executive team at $TWTR and its Gucci loafer wearing bookrunners, a sitting President (or was it his head of social) took to the tweet stream to try and get more followers.

Wow, just can't make this stuff up! Through it all I felt an itty-bitty nod to caving on the part of the Tea Party brigade, most notably Ted "I Made C-Span's Marketing Team's Year" Cruz.

Should investors buy stocks at this early indication of a forced marriage between Democrats and Republicans? Or, are Friday's gains in the market, fueled probably by a leaked and below plan September jobs report via a scared furloughed worker, a mere distraction from the ongoing political crisis that could very well cause an economic crisis? Those were the thoughts.

I believe you have to err on the side of being reactionary, meaning no new buys for the portfolio and raising cash by selling into deceptive rallies. Background on me is that I am often quite measured. I prefer not to recommend added portfolio risk when a top quality company's stock trading on a seemingly fair valuation could be chopped by 5% in the 11 days leading up to the debt ceiling deadline. Color me old fashioned.

Here are a few things I am spying early on in a week that as of now, will be absent government data releases. You really have to uncover other indicators in order to raise the odds of predicting the market's future.

  1. Yes, 300,000 or so Department of Defense workers will be back at the grind Monday morning. And yes, back pay will be awarded to furloughed government employees. But, I am concerned on the impact to sales of retailers from the optics of this entire ordeal. Special attention for me will be on the International Council of Shopping Centers' sales data and associated stock reactions.
  2. The above bullet points make it critical to watch the Dow Transports and Russell 2000. Again, look for signs that damage in the real U.S. economy is spreading.
  3. There are only two comments I care about from former Dow component Alcoa's (AA) earnings: (1) full year demand forecast; and (2) comments on automobiles following a slowing sales growth rate in the latest round of manufacturer reports.
  4. Yum! Brands' (YUM) U.S. same-restaurant sales percentage change in the recent quarter compared to its figure posted three months ago. If Wal-Mart (WMT) is canceling orders (which I believe is true) and McDonald's (MCD) U.S. same-store sales have continued to be sluggish, Yum! Brand's report card could shed light on the plight of Middle America in a sub-2% GDP backdrop (tracking that way into year end).
  5. 31% unemployment rate? I found this story to be interesting and alarming, save it as a favorite. 
  6. Does eBay (EBAY) get the Barron's bounce? I went cautious on EBay a few months ago after having another talk with the company. PayPal is not as structurally solid as the market has priced in. Moreover, the overly-hyped eBay Now service is not what it appears to be to those doing the hyping. Feel free to email me for more information.

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