The Daily Dose: No Filter

 | Oct 09, 2013 | 9:00 AM EDT
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You want to know something that is overvalued, besides's (AMZN) stock?  Try the use of "#NoFilter" across all social media platforms. The social term, I think, is meant to show the consumer of the content that the poster of the content is giving them the real deal insight.  Whatevs.  Here is my earnings season related #NoFilter moment...

Source: Screenshot

Since you probably are looking at the wrong things within the earnings reports from Alcoa (AA) and Yum Brands (YUM), which is completely understandable as Speaker Boehner has warped your brain, allow me to give a bit of perspective straight from the heart.

Alcoa's earnings beat was company-specific, egged on by a seemingly never-ending productivity improvement initiative by the always cheery CEO. That suggests you should temper your enthusiasm, sport, as to how the report could signal amazingness from comparable entities because...

...Sequential growth by business segment for Alcoa wasn't anything to write home about, underscoring the global economic realities that go undetected in data that's released at 9:45pm EST or by a survey firm. For example, Alcoa noted flat revenue in its Engineered Products segment and a fall in volume from Industrial. Woopsie!

Now onto Yum, or should I say Yuk. Yeah, the CEO is a rock star that is legendary for getting employees to buy into the corporate culture. But let's cut the crap, results today matter and in that regard, the CEO's consistent overhyping is causing the business to underperform consensus expectations (and hey that matters!). The largest takeaway for me, however, was the U.S. business: (1) inflation is lingering (not hearing this from the casual diners, stock prices reflect deflation); and (2) more promotions were required to drive the meager comp (#economy).  Bottom line: your winner in this space is Chipotle (CMG), one of the few that has a modicum of pricing power (though it's not planning on raising prices this year due to the moderation in input costs).

CDS Spreads Widening/Other

Not surprised by the sell-off on Tuesday one darn bit.  I have been advocating caution because the current situation has happened before and hence, the market's reaction could be nicely gamed. Here is a helpful link showcasing the rising fear.  In times of increasing systemic risk, like now, widening CDS spreads are usually the norm.

What else I saw in the market on Tuesday:

  1. First signs of buying the traditional safe haven equities: ED, AEP, DUK, ETR, K, PEP, KO, HSY relative outperformers.
  2. Growth names were sold, particularly on the Nasdaq. Selling those winners to raise cash I suppose.

And in Closing

JC Penney (JCP) is consuming my life. Before the open yesterday, I reiterated my sell rating on the stock after slicing and dicing another misleading report from the company. No price target applicable on this dog. Below is a good table to share with your zillions of Twitter followers.

Source: Belus

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