Stay focused. You may think this market is all about Comeygeddon. You may think it's about being Comeytose. But what we care about here is how to make money incorporating Washington but not losing the forest from the trees. It may seem like a day where it's James Comey vs. President Trump, but the real battle is Nvidia (NVDA) vs. Nordstrom (JWN) .
I know, I know, can I really boil down a constitutional crisis into two stocks that are jumping today? Of course I can, because the Comey testimony, riveting to the whole country, means to me only one thing: Forget about Washington if you are looking for anything good. These hearings derail anything Trump wants to accomplish when it comes to tax reform or tax cuts. With all due respect to Groucho Marx, president of Fredonia in that landmark "documentary," Duck Soup, you've got to take up the tax before you can take up the carpet, and at this point Trump can't even take up a carpet.
Yeah, it is that bad for the agenda, even as I tried to quell all talk about impeachment on Squawk on the Street today as that's premature, even as Trump's not draining the swamp, he seems to be drowning in it.
So why's the market up? Simple: There's a battle going on, and it's about Nvidia vs. Nordstrom, which is code for growth vs. value -- today both are jumping.
Let's set the scene. As I said last night, there's a Nifty Fifteen out there, growth stocks that are reached for the moment the market's down on any extraneous factor, and Comeytose/geddon is the ultimate in extraneous factors.
So what happens? The growth managers immediately reach for the list that I outlined, and what was the first stock on the list, the most go-to stock of the era? Nvidia. It's up $9 because this morning a level-headed Citigroup analyst slapped a potential $300 target on this $157 stock because of its extraordinary reach into the data center, artificial intelligence and high-performance computing demand (read gaming).
That's the buyers saying the swamp is winning, Trump is losing, so we have to buy stocks of companies that are doing well without any help from Washington. Mutual fund and hedge fund buyers will sacrifice their left arms for growth, and there are a lot of left arms in a big pile at Wall and Broad.
Now, though, let's talk about Nordstrom. This morning the Nordstrom family announced the exploration of a going-private transaction for the storied chain. Immediately the stock flew up eight points and then gave up half that gain. I think that's silly. If this company is going to go private, it will fetch much more and I think the company will indeed do so.
Why? Because for some of these private-equity firms that have half a trillion in assets, this very profitable department store chain makes sense to take private. That way, the company can spend the way it has to, miss quarters without penalty and pretty much run a store chain without the endless Amazon (AMZN) glare.
Nothing's simple when it comes to value, especially value that may be chimerical because of the changes in retail. Nordstrom, one of the great growth retailers of our time, has had a rough go of it, missing a lot of quarters, because of the changes in retail that involve the slow death of the mall as well as the lightning-quick actions of its crosstown Seattle rival, Amazon. Nordstrom's been known as the service department store, but the brothers who run it know that Amazon's online service is even better.
But the company has invested a fortune in its e-commerce platform and has expanded dramatically into the growing off-price segment while at the same time running a very profitable chain of stores. A going-private transaction might allow the company to do even more, and then one day when it might be clearer that bricks-and-mortar isn't dead, the company can come public again at a big profit to the new owners.
But here's the rub about that. Who will be the new owners? Is this perhaps the ultimate recognition by this storied family that retail's irredeemable and they are going to sell all their stock to a private-equity firm? Is this a cash-out, with the foremost retail family of our time walking away from retail? If that's the case, then we know things are even scarier than we thought. Remember, just this week Mickey Drexler resigned from the CEO job at J.Crew, another company that went private, after a long series of negative comparable sales. I think if Mickey couldn't make it work, then whoever buys Nordstrom won't either, and while I know this was in the works for months and months, the irony shouldn't be lost on you: The Nordstrom family, like Mickey, might be giving up, too.
But let's keep up with the metaphor. Right now we know the growth list. I gave it to you last night. It's entirely possible for the moment that we might be having a rotation into value and it isn't just department stores. The value supermarket chains, Kroger (KR) and Whole Foods (WFM) , jumped.
But perhaps more important, the value financials and even the value oils rallied. I know, sounds like heresy that anyone would buy these. However, this was day two of the bank rally and I think it's because the Fed meeting next week is in sight and the Fed's going to raise rates so analysts will raise estimates for the banks. My charitable trust actually bought a bank stock today after letting them drift for weeks.
And oil? The stocks are trying to stabilize ahead of my $43 target for crude, just two bucks from here. Why? Because if oil doesn't go down to the $30s, if the American producers who are killing the price of the commodity shut in their wells because they aren't making much money below $45 -- something that has happened time and again -- then they will bounce.
Of course, that's the operative term for the banks, the oils and the retailers: bounce. These are trades as part of a difficult rotation spurred by higher rates, the Nordstrom plan and oil trying to bottom.
They don't have staying power, although I repeat that I think Nordstrom's stock is too low and that some of the banks and oil stocks are just too cheap to ignore.
There is one other scenario that some are postulating that I have to put on your radar screen: the possibility that today might mark a short-term peak in the "get Trump" rhetoric and he might be able to reclaim some of America's narrative by talking about tax cuts. I just think the swamp's too dark to pull it off.
To me, a trade in retail, banks and oil, and an investment in the anointed stocks I have flagged beyond FANG -- and let's extend the umbrella to RedFang as our absolute favorite Chinese company, Alibaba (BABA) , announced roaring 45% to 49% revenue growth, 14% better than the analysts thought -- make sense here. We know the prurient nature of the testimony, we know how compelling it is, but it's just a tree, a falling one. The stock forest stands tall in the face of it.