They are addicted to senior growth stocks. They can't stop buying them. Know how you can spot it?
They go up when nothing is happening to the company or, more obviously, something negative happens.
Take Starbucks (SBUX) . This morning Panera (PNRA) agrees to a $315-a-share takeover bid from JAB Holding, which also owns the popular Stumptown, Peet's, Baresso and Caribou coffee. Out of nowhere, a company with 2,000 stores has become a major competitor to Starbucks. Those brands needed a home to sell their coffees and it sure wasn't going to be Einstein/Noah's. Panera is a fabulous place to sell coffee of all kinds, hot, packaged, whatever. Hey, don't forget JAB owns Keurig, so let's throw those cups in the mix. You have millions and millions of My Panera club members you can give the coffee to for free to sample it.
So what does the stock of Starbucks do? It goes higher. Think about that. Yesterday, Starbucks had no real competitor in the casual-dining segment.
Today they have a formidable one, and the stock goes higher? That shows how badly people want to own growth.
How about McDonald's (MCD) ? It had one of the biggest shake-ups I can recall, with the U.S. marketing chief, the head of U.S. menu and the top digital officer all leaving.
Sounds like things are pretty dire to have that much of a shake-up. These are huge, powerful jobs and we have to be thinking CEO Steve Easterbrook can't be all that happy with his people. Signs of negative numbers to come?
We would normally be saying that for certain. So what the heck is the stock doing soaring $1.85? You can't make that up. A series of personnel moves that would normally hammer any stock is being greeted positively?
Wow, that shows an incredible amount of love.
Yesterday, McCormick (MKC) , the spice company, held an analyst day. I thought it went well, basically a reaffirmation of what we thought was happening for one of the most stable, consistent companies out there. What happens? The stock barely budges.
Today, though, the stock's on fire, rallying a couple of bucks as JPMorgan took this amazing stock from a Sell -- go figure why he thought it was a sell -- to a Hold. How could there be such a delay?
We don't have a clue why Home Depot (HD) would be so strong today. The company said nothing. Perhaps it's the stronger ADP data? Same with Ulta (ULTA) . It's been flat-lining lately. But today it takes off.
And then there's Salesforce.com (CRM) . I've been waiting for this one to soar after marking time for ages to post a great quarter.
Today it takes off.
I am sure there's some overarching theme here. The relentless drive of Amazon (AMZN) might be giving some buyers cover to buy other growth stocks. Apple's (AAPL) amazing rise to new highs may embolden people. Or the idea of growth with low inflation, what the bonds are signaling, might be behind this burst. Or maybe it is the Panera Bread bid, one that came after the stock had already run about 100 points. Talk about an emboldening action. (Starbucks and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
Whatever, it's a great run and one that most surely would not have occurred if we didn't get that strong ADP number because employment is the key. If we get strong employment, that will counteract a lot including weak auto, retail and restaurant sales.
Nice, unexpected rally.