It's getting monotonous. Companies deliver some seriously good quarters, but it happens on days when oil can't hold and the dollar gets stronger and they might as well write off all they have accomplished.
That's really what happened today when the dollar got stronger yet again and oil, which had been up huge, gave up most of its gains because oil reversed from earlier strength.
Look, I know that these two trends shouldn't be so powerful. This morning when I got up I read a tweet from Sara Eisen asking people to post what they think is the main driver of this market. They do a terrific poll each morning as part of that fabulous show and I love to weigh in.
I plugged in 1. Oil, 2. Dollar and 3. Tech earnings per share (specifically Apple (AAPL)). Sara read them on air and Wilfred Frost said that he had to take issue with my focus and said the Fed had to be in the mix right up top.
I came back and tweeted: "I am not dismissing the Fed, just no Fed index avail each hour to trade off of."
But there will be tomorrow because tomorrow's the day when we get the nonfarm payroll numbers and I have to tell you that I think it's a big number that can actually transcend the oil and dollar obsession.
But before I do that, let me tell you what went on in oil. Much of the movement we have had down from the high $40s has come because of questions about demand. It's become very self-fulfilling. Oil goes higher when we get data that show the worlds' economies are picking up. Oil goes lower when we find out that demand's slackening. Today was highly unusual in that oil went up not because of the demand side, but because of the supply side: a fire near the big Canadian oil sands project. Hate it or like it, that part of the continent goes part and parcel with North American independence. At the same time there's some fighting in Libya that could momentarily cut back production from that big OPEC state.
Trust me, if you are a bull and you want oil higher because it leads the stock market, you want it from the demand side not the supply side because the supply interruption is just temporary. Canada will come back on line and Libya, well, it's Libya. Par for the course.
But tomorrow is the real deal. If we get a weak payroll report, if this economy doesn't grow as robustly as would have been expected just a few weeks ago, then it will unleash a host of negative consequences for the market.
First, oil will most likely go down. We know that oil down means that people flee the market.
Second, we will hear that there's no real growth and there's nothing the Fed can do about it. In fact, the Fed already did the wrong thing by raising rates when everyone else was loosening around the world. We had just begun to recover from the credit crisis that ensued after the tightening, particularly in the energy space.
Third, if you listened to Donald Trump this morning, the putative Republican Party nominee, you know that he will be on the stump talking about how anemic job growth is. So will the endlessly running Bernie Sanders, who will most likely still be running long after the election.
When you run, you get a mike. Here's what will come out of both their mikes: relentless drumbeats against American businesses that have taken jobs offshore. Donald likes the web. He knows the viral YouTube clip of the clumsy United Technologies (UTX) exec telling his assembled factory workers that their jobs are going to Mexico. Trump just won Indiana tapping into that sentiment. You think he's going to drop it now? At the same time he will no doubt resurrect that attack on Apple for not making all of its devices here. When he bashed corporations before he didn't have the gravitas that you gain when you win the nomination. That's all changed.
It could be impactful.
Same with Sanders who really hates corporate America. He's got Hillary Clinton in check on saying anything good about business.
Fourth, the bank stocks, which have been telegraphing a low-to-no growth scenario will most likely break down to levels that we had before their last quarterly reports when we were starting to worry about bad oil loans and recognized that rate hikes would be scarce.
We had come to expect that with things being a little better in the country that we would get a June rate hike. You take that off the table with a weak employment number and these stocks will really get clocked. You can always tell when the market's sensing that we are going to have some sort of deflationary scare, which is what a slowing jobs report will portend, when you see the banks go down but the insurers go higher and that's happening huge with gigantic gains in the stocks of Chubb (CB), Allstate (ALL) and Travelers (TRV). It makes sense. You pay them to insure things that are going to be losing value because of deflation. They are among the few winners in that scenario, although I have some others in a moment.
Fifth, the retailers could get clubbed again. I say again, because we saw some true destruction of retail value today that has taken my breath away and stunned me upside the head. None other than L Brands (LB), the purveyor of Victoria's Secret, gave you preliminary guidance that showed a dramatic decline in revenues, including a 1% drop at Victoria Secret's same-store sales. No wonder the stock dove more than $9. The great thing about L Brands, run by the amazing Leslie Wexner, is that it is truly a collection of brands that we thought were immune to Amazon (AMZN). But what we should have realized is that no one is immune to mall traffic declines and that's what this nosedive signals. You have to believe that it bodes poorly for Gap (GPS), Macy's (M), Abercrombie (ANF), Urban Outfitters (URBN), American Eagle (AEO) and Nordstrom's (JWN). That's not what a bull wants to see.
What's going on? Your phone is now your mall. You don't need to browse at stores you didn't intend to go into except you walked by them or through them on the way to your destination. It's just nasty out there.
Sixth, a slower number will just continue to rotation out of the cyclicals and into the soft good stocks, the companies like Kraft-Heinz (KHC), which reported a 1% growth in sales yet vaulted three points higher because of raw ingredient cost deflation as well as a weaker dollar. That group as I mentioned last night is one of two bull markets going on right now, the other being in media. Witness Discovery (DISCA) and Scripps Networks (SNI) joining Time Warner (TWX) and CBS (CBS) with terrific numbers. Can Disney (DIS) be too far behind when it reports on the tenth?
Finally we get a reinforcement of all the missed quarters out there, which means tech will take it on the chin again. The bad days breed a reload of sales these days and that means, like I tweeted, tech, particularly Apple, could get hit again. This even though Apple reported another deal today, this time with SAP, that will bring about even more recurring revenue. The bears won't be happy, I guess, until Apple buys Spotify or Pandora (P) instead of eviscerating them, which I think it can do.
Once again, I caution against being too negative, Sure, it's a suboptimal moment for all but the mini-bull markets I have outlined.
Without some growth you are going to get this contraction in breath with the money pouring into the stocks of those companies that do not need a strong economy to thrive. The bulls need a number tomorrow that's just strong enough to think that there could be some growth, but weak enough that the Fed heads won't feel the need to scream for instant hikes that this market can't handle. The amazing thing? That may just be the number we get.