This love affair with value over growth just grows and grows. The move is breathtaking in both its love for the uglies and the hatred of pulchritude.
What's incredible is that it doesn't even seem to matter how bad the deep cyclicals are or how good the growth stocks are. They are going to go in divergent directions when they report.
Case in point: Southwestern Energy (SWN). I didn't see anything I really liked from this company, which paid so much at the top for some natural gas assets from a very shrewd Chesapeake (CHK). Sure, the price of natural gas has had a little bump here, mostly because of some storms that shut down Texas capacity. However, the fact is the company's surviving the downturn fairly well, certainly better than we thought just a few months ago, and if that's the case the market's lapping it up.
We are in a come-one-come-all situation where the pin action from Southwestern instantly impacts everything from Range Resources (RRC), another natural gas company, to the oil and gas master limited partnerships that ship the stuff. A drilling stock like Ensco (ESV) is now up almost two bucks from the 57 million shares it placed just a week ago.
I think that at this pace, with oil up again -- now at $44, I believe because of increased demand from China -- we are going to start seeing deals from both oil and gas companies before their stocks get away. It's time for those who have capital to step up and buy those companies that can make money at $35 a barrel, nine bucks below here, yet still have stocks well off their highs.
Where else is deep value? How about the banks? You would think they would have quit already after rallying hard since they reported. No way. This morning SunTrust (STI) gave you a better-than-expected earnings report with higher net interest margins, that key metric I keep talking about of how much banks make off your deposits. Shazzam, the group shines again.
Then there are the rails. Their stocks were hammered mercilessly, but first Union Pacific (UNP) Wednesday and then Norfolk Southern (NSC) last night gave you weaker revenues but still made a ton of profits. So you have to think "trough." And if things get better, these could go a lot higher even than the monster moves they have had off their bottoms.
But how about growth? It doesn't matter how well or how poorly you did, your stock is most likely going down. I have gone up and down that Starbucks (SBUX) quarter last night nine ways to Sunday. It was solid and we wish we could buy more for Action Alerts PLUS because we have a starter position.
Lots of reports are out there that Visa (V) gave you a downbeat outlook. Nope, it gave you the same outlook, but its stock had soared in the interim.
Now, it is true that Microsoft (MSFT) really did flag a slowdown that was materials, and Alphabet (GOOGL) didn't make enough money in mobile to make up for the aggressive spend for what it calls its other bets -- the moonshots -- or for the rather outlandish numbers of new hires. I thought they would be more disciplined. But in some ways it didn't matter anyway.
PepsiCo (PEP) reported an amazing quarter and guide-up earlier in the week and has seen its stock get hit for four quick points down as if it had been like Kimberly-Clark (KMB), which genuinely did miss in sales, although I could make a case for owning that, too, if I didn't think the world's economies weren't going stronger. (Starbucks, Visa, Alphabet and PepsiCo are part of TheStreet's Action Alerts PLUS portfolio.)
So take this all in stride. The rotational bull market continues with the deep cyclicals still the belle of the ball. These pendulums always swing too far in the end, but I think the momentum right now can keep the action happening as long as commodities, especially oil, keep going higher. Remember, oil's strength signals worldwide demand, especially from China, and we are in inning one of that turn.