Here's a post I dropped on Twitter before the open yesterday:
To those that have asked: Yes, I continue to hold firm on the above opinion -- even despite a one-day market gain that, apparently, was profoundly epic.
The selling we saw until Monday's session had been tough to stomach: It's not healthy when sell tickets repeatedly accelerate into the close on no real company-specific news. Neither is it healthy when companies such as Facebook (FB) or Google (GOOG) plunk down mega bucks on companies with fringe business models while industrials and other sectors sit tight on their cash piles. Maybe the doomsayer newsletter writers are on to something following four years of being horribly wrong.
Overall, early corporate earnings have been lackluster so far, and the bad weather has been a halfhearted excuse for many companies. If the economy were chugging along, you can be sure folks would have been willing to venture into the cold to splurge a bit. Instead, as indicated by the March retail-sales reports, only fair weather brought people out, as it literally forced consumer spending.
In Other Developments
Although I've advised my clients to be overweight cash until further notice, I will highlight two positive developments that surfaced on Monday.
1. Yes, J.B. Hunt Transport (JBHT) bombed on earnings, producing an ugly miss that reminded me of the messages seen in JPMorgan Chase's (JPM) Friday report. The company's quarter was significantly harmed by weather, as this meant elevated expenses and reduced efficiency.
Nonetheless, J.B. Hunt management made quite encouraging comments about conversations with key accounts -- and the stock was rewarded for that, as opposed to being sent down a river. I will be looking for this same J.B. Hunt-type action when railroads CSX (CSX) and Union Pacific (UNP) announce later in the week. (As an aside, if you want a gig, become an independent truck driver. You may not have a life, but there will be pricing power on your salary.)
2. If the March retail sales report was any indication -- and it was to me -- both online and bricks-and-mortar retail could be headed for a major release of pent-up demand in April and May. Once the weather morphs, hibernators could emerge and spend, joining forces with those that grazed a little in March.
I think you should play this through Dick's Sporting Goods (DKS) or Under Armour (UA). The latter is starting to become the uniform of choice for many, and the company's innovation across product lines remains very impressive.
Finally, a Word on Pepsi
I recently talked shop with an executive from Pepsi's (PEP) sports marketing team, and it was some fascinating stuff. I have a sense the company will acquire a food brand within the next year.