When will the Fed make its next move? I heard it again today even as the talk is that it's now pushed back until sometime later this year because of Friday's weak employment number.
But I have to ask, is this what the majority of market commentary has devolved to? Is this really at the heart of the notion of investing?
I don't know how long this kind of Fed parlor game discussion can go on and be taken seriously. There are gigantic moves going on, moves that are so much more important than what the Fed does, but we just have to face the music that, if you want to make money, you can't just focus on the Fed. In fact, focusing on the Fed has been a crutch for way too long.
What makes me feel so strongly about this? Because we have had an amazingly bifurcated market while we wait for the Fed and the market itself has become an abstraction.
There's no better example than what happened after Friday's report. When we see something that's not in the range -- the employment number -- then the futures go down and go down big. That triggers discussion of what the Fed will do and why stocks should be sold.
No one says, "You know what? You can't sell McKesson (MCK) on this number because you can't get a more perfect environment than buying a pharmacy benefit manager." Or, "What a terrific opportunity to go buy Rite Aid (RAD) with its new pharmacy benefit manager under its wings. If it can execute, as JPMorgan says today, then lots of money can be made." You can, of course, buy CVS (CVS) because that's an ideal slowdown stock; the back of the store does terrifically.
You can retrain your focus immediately on Kraft (KRFT), which some wag on Twitter (TWTR) told me is boring, or you can refocus on Actavis (ACT). Both go higher in this kind of environment. How about looking at the best of biotech, which has come down big, or examining the hospital stocks? HCA (HCA) is a winner in this environment for certain.
I also like to go back to companies that produced terrific numbers but have long since gotten too high to purchase. Ross Stores (ROST) and Urban Outfitters (URBN) come to mind.
Let's not forget the homebuilders -- huge breakout on spring numbers, Toll Brothers (TOL), Lennar (LEN) and D.R. Horton (DHI) act spectacularly.
Oh, and a weak number could spell the end to the strong dollar, which seems to have peaked right in time for first-quarter earnings. Now we know there's a real issue here, as many of the outlooks for this quarter were based on something like 130 for the euro. Go listen to the Red Hat (RHT) call, an outlier for when it reports, and you can hear about the incredibly powerful and negative impact of the strong dollar on a very good quarter.
Now, let's play it the opposite way. What if the number had been strong? Presumably, the futures would be lower, too, because then the Fed watchers who control the debate anyway would begin to talk about a June tightening. We would then have to listen to that chatter.
Now you could, on the one hand, say I am wrong, and that the "work," the actual examining of quarters and making projections and trying to figure out which companies' stocks fare well in this environment, is just irrelevant. Business news is just about the Fed.
If that's the case, I could argue that I shouldn't even bother doing what I do. It is pointless. Who cares if you can identify a Ventas (VTR) as a company that can benefit from this environment? Why search through the CarMax (KMX) quarter for clues of the future? But, to me, the focus on the Fed has been astoundingly narrow and an exercise in something that makes me feel alternately useless and atavistic.
If I am just trying to interpret Janet Yellen's Fed without the attempt at least to find out how you can make money, then why not just follow sports? Why not just follow the NCAA? Or spring training? Or why not follow TV shows or singers? Or maybe children's sports? They are all similar to me: They are all non-monetary ways to enjoy life and each one is more visceral and rewarding than figuring out if the Fed's going in June or moving in September and betting in a binary way on the futures, something all but about 2,500 people do for a living.
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