It seemed like a lock at one point. Our minds had been made up. We had pretty much figured things out, even gotten comfortable with the results. Suddenly, though, everything's turned upside down and it's a contest, one that people aren't ready for and has them hanging on by their fingernails.
No, I am not talking about Hillary Clinton vs. Donald Trump. I am talking about the Cleveland Indians vs. the Chicago Cubs, that's what matters tonight, and I think that in many really bizarre ways this World Series finale feels a heck of lot like today's market.
Now, you know me. I care about the players for certain and the game is of interest. But when I think of Cleveland vs. Chicago, I am always defaulting to a map of Cramerica and the players that rule those cities: In Chicago, it's Walgreens Boots Alliance (WBA) , Boeing (BA) , Archer Daniels Midland (ADM) , United Continental Holdings (UAL) and Allstate (ALL) .
I have no idea who wins tonight. But I also don't care, not because I am not interested in baseball. I used to be a vendor selling ice cream at Veterans Stadium in Philly and threw out the first pitch last year at a game against the Diamondbacks. Mike Schmidt's my hero.
It's that I like both teams because they are both underdogs like my teams from Philly, so it's very hard to choose.
Sadly, though, it's not hard to choose which city will win when it comes to the stocks of the largest companies: It's going to be Chicago. Here's why. Let's do them head to head, like pitching duels.
First, the two big dogs, the aces: Eaton vs. Walgreens. When Walgreens last reported, it delivered a very strong number and made it pretty clear that it was confident the Fed was going to allow it to buy Rite Aid (RAD) , a transformative acquisition, sometime next year. I like that. It would be fantastic for shareholders. But even if it falls through, the company will then do a gigantic buyback.
You know what else I like? This morning KKR, a private equity firm with a stake in the largest drugstore chain, announced it is selling 20,461,215 shares to the public and another 2 million shares to the Walgreens CEO Stefano Pessina, who already owns 13% or 141 million shares. That will clear KKR out and shows a level of commitment to Walgreens that's about as strong as I have ever seen a CEO have. My charitable trust owns the stock. We are advising club members of Action Alerts PLUS that we would be buyers when the secondary is priced.
Against it? Eaton, sadly, reported a disappointing quarter last night, pretty much across the board, with weaker orders, particularly in truck-related businesses, and CEO Craig Arnold said the indecision involving the election and the weak macro environment have softened demand and caused him to trim the company's forecast. It was a very downbeat call.
Game 1 goes to Chicago.
Next is Boeing vs. Sherwin Williams. When Boeing reported last week, it traced out a scenario of terrific orders, huge cash flow and a remarkable order book, especially for the narrow-body planes but also for defense orders. Given all the hand wringing about how aerospace had gotten weaker, I found the Boeing report a total wake-up call that this industry is in full bull mode even if there is softness in wide-bodies. As Boeing gets cranking on the narrow-bodies, it can make a ton of money. The stock's taken off, jumping 10 points on the quarter although it has since pulled back, but this was a dynamite quarter.
Oh boy, talk about getting knocked out in the early innings, Sherwin Williams was shelled when it reported a week ago, dropping from $278 to $247 because of weaker paint sales. Many people came in expecting a real good quarter, a can't-miss even, kind of like where the Tribe was a couple of games ago. Oh well, what was really bad, though? The bleak report started a parade of weakness involving a host of home improvement plays that even ended up darkening the Home Depot (HD) and Lowe's (LOW) pictures. Just so rough.
Easy call. Boeing went eight scoreless innings. Cleveland threw in the towel on Sherwin Williams by the fourth.
Game 3, Archer Daniels vs. Parker Hannifin. Here I was thinking we had a gimme for Cleveland because, despite so many different industrials struggling, Parker Hannifin posted some good numbers, especially in aerospace, and it reaffirmed its forecast. Not many industrials have been able to do that. In fact, when PH announced its quarter, it set off a mini-rally in industrials as money that was flying out of health care was looking for a home. By virtue of its solid process controls, sales and its good instrumentation business -- nitty-gritty metal bending from the capital city of metal bending -- it looked like this one was going Cleveland's way.
But then out of nowhere, Archer Daniels Midland, a rubber-armed serial disappointer, actually reported a monster upside surprise with huge margin expansion and terrific ag services and sweeteners numbers. I was astonished. This was Cleveland's game to win. One that took the bettors to the cleaners as this sleepy stock went from $43.50 to $46.60 in one session and then climbed again today. It's been ages since this thing got off the schneid and suddenly it's among the biggest winners in the S&P 500? Are you kidding me? Talk about rising to the occasion!
Now, just when the talk was of a Chicago sweep, who goes to the mound but Beth Mooney of Cleveland's Key Corp. with a mean curveball vs. Oscar Munoz, a recent trade to Chicago's United Continental from CSX (CSX) , the railroad company. Love Oscar, kind of like Bo Jackson when it comes to playing two sports, but Mooney's delivering at a level of play that no airline including United Continental, my favorite airline turnaround can deliver. Now, it is true that the Fed left rates unchanged today, but that won't always be the case, as I expect a hike next month.
But hike or no hike, it doesn't matter. Mooney's numbers this quarter were fabulous with terrific loan growth -- consider that the strikeout number -- amazing net interest margin -- that's the ERA -- and a nice upside surprise, which of course is the W.
Ah, the final. Unlike tonight's contest, Chicago didn't need seven to win. Allstate reports this evening, but it really doesn't matter because it's up against Cliffs Natural, which is an iron ore and coal company, and no natural resources company is a match for an insurance company, especially at a time when the mineral and mining group has been in a multiyear decline. Meanwhile, Allstate's a huge winner in a higher-rate environment as it can make more money off your premiums before it has to pay out to any beneficiaries.
Now what does this series say about the overall market? I think that it captures a lot of the zeitgeist of the moment. A drugstore chain is still a nicely defensive holding. An aerospace company can still get you a win. Ag is coming back. A regional bank's a solid holding in a rate-increase environment, as is an insurance company.
That's right, what wins in the series is winning in the market. I just wish there were more W's to go around.