You blink during this move, you might miss the whole shooting match.
I am talking about the rotation into industrials and retailers that may very much represent a combination of a better employment number tomorrow and a deal with China perhaps as soon as this weekend.
Those two can propel the averages in a way that's almost counterintuitive versus the conventional wisdom that's been passing for intelligence during this most recent leg of the rally.
What's counterintuitive? Let's start with Boeing (BA) . Tis the season for fundraisers where you have to leave work and chat and then bid and raise money for worthy causes and I go to an awful lot of them.
Given my jobs I am a target of every heat seeking stock missile in the pre-dinner cocktail. You know what people want to talk about?
Boeing, Boeing, and Boeing some more.
Here's one that inspires a level of universality of amazing proportions: people either believe that these two tragic air accidents are going to wipe the company out because of liabilities and order cancellations, or cut it in half because the growth of the company came from the 737Max which is incredibly popular.
What's the stock done?
Do nothing but go up.
Today was another day that should have sent the stock down. We got a report out of Ethiopia that after an investigation of the crash of one of its Ethiopian Airlines that there was no pilot error. The crash, the report says, was entirely because of a plane malfunction. That should be a tremendous hit to the fortunes of Boeing.
Nope, the shares of Boeing were up big on heavy volume and has now rallied 36 points from its low post the second crash. That's an amazing move even if nothing had happened to the 737Max. Considering the reputational damage it's remarkable.
Even more incredible, the FAA is going to try to get all the international equivalents of the FAA to help decide if the inevitable fix from Boeing - no date yet - is good enough. That means there will be a real pause, a pause long enough that it is possible there could be cuts in production. As Phil Lebeau, the dean of the aerospace reporters, said to us on Squawk on the Street today, the stock of Boeing is determined by production orders and there has not been a pullback yet.
So what the heck? How can this stock not reverse?
You see if there is a deal with China, the best sign of good faith by the Chinese wouldn't be a purchase of liquefied natural gas - we are all sold out as Dominion Energy (D) , one of the biggest producers, told us yesterday. Dominion's sold out for 20 years for heaven's sake. What a move that stock's had, which is what goes on when rates go down as they have.
It also wouldn't be a buy of agricultural products. We have had heavy floods in this country and it isn't even clear that we could deliver on a huge grain order.
It would be a buy of Boeing planes. A huge buy. A statement buy. It would be greeted so positively that who can blame anyone for wanting to own the stock. Anyway, we know Boeing is going to fix this issue. You know that it cares passionately about safety and soon you will be flying the max and forgetting what happened. That will happen.
The other way to show good faith? China needs earthmovers. It always needs earthmovers. What a great time to direct the state-owned enterprises to buy Catrepillar (CAT) instead of Komatsu (KMTUY) . It's just an easy call which is why I was shocked yesterday when someone downgraded the stock of CAT ahead of this possibility. Could be a very ill-advised downgrade.
How about the retailers? I've got a couple of reasons that could be behind the move. First, as Doug McMillon said in an interview with Courtney Reagan, the consumer is in very good shape. Terry Lundgren, former chairman and CEO of Macy's (M) , was even more positive saying that the consumer is in great shape and employment is very strong. He practically laughed at how cheap the stock of Macy's is, selling at what he said was five times earnings - it's about seven right now - and that could be the reason why the stock of Macy's was one of the top performers in the S&P 500. It is dirt cheap, with an improving balance sheet and a pretty safe 5.8% yield. It didn't' make the estimates and that's why it is where it is but you have to be emboldened about Lundgren's comments.
Another reason for strength in retailers? A belief that if the tariffs go, the retailers will be the biggest winners. So many of them have had to eat the cost of the 10% tariffs. You could raise numbers immediately if they were withdrawn.
The buyers may be anticipating a strong employment number tomorrow as we had amazingly robust weekly claims today.
We know many of these companies are doing well and they had been hated. Capri (CPRI) , the owner of Michael Kors, as well as Versace and Jimmy Choo is doing very well. So is PVH (PVH) which revealed its earnings on our show. Lululemon (LULU) just delivered an incredible number and it is finally getting its due. I think it can trade much higher. And Nike (NKE) is coming right back as it should because it was a very good quarter for the apparel company, especially in China.
Finally, lets talk conferences. Next week is the biggest confab of the year for retail, the JP Morgan retail conference run by Matthew Boss. I think a lot of the big-time portfolio managers are sizing up retailers and betting that they will have good stories. Some of them, including the ones that were hottest today, have very big yields. This is the kind of trade that I used to do all of the time as a hedge fund manager. I bet it is happening today and tomorrow.
How powerful is this move? Even lowly dog CVS Health (CVS) is going up after being painted with the same poisonous brush of Walgreen's (WBA) despite CVS being thoughtful about this drug store devastation by buying Aetna to become a health care company. That's hard for Walgreen's given how much tobacco it sells. CVS announced a same day delivery service from its stores for $7. I think this will be gigantic for those who want their medicines and don't want to or can't go to the drug store. It's a sign that there's a pulse and that Amazon (AMZN) can't beat that plan. I think the stock has bottomed but I also admit that I was wrong although I thought Larry Merlo, the CEO acquitted himself well when he talked about the long haul changes he is making since the Aetna merger closed. CVS, unlike Walgreen's, didn't seek to put a Theranos Clinic in every store.
One last thought about the consumer: this morning we heard about a terrific number from Constellation Brands (STZ) , which is the owner of Modelo and Corona. The numbers here were stellar, which is a great departure from the others in the space. It's hard to create a negative scenario about going out when you go over the numbers this company put up. I think that it took many by surprise because many a wag thought the consumer is doing nothing but staying home, watching Game of Thrones and ordering in, although the latter will be explored when we interview the CEO of Grubhub (GRUB) .
The consumer is alive, she is well, and she might benefit from a thaw with China and easy to get jobs. So would Boeing and Caterpillar and bets are being made that the next pieces of news will be very stock heartening.
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