It's much more subdued this time around. Of course, I didn't expect marching bands and a tickertape parade but there isn't a ton of buzz at all. On the cusp of the Dow piercing 10,000 once again, (it actually traded above 10,000 for a few seconds), I guess this time it's not just old hat but not great news considering the all-time high is 14,087...and that was only two years ago. Still, the market has made a remarkable rebound, posting back to back quarters that heretofore have only come around once in a lifetime. Maybe the lack of hype will help the market move higher. As a contrarian, I like the fact that there are still many skeptics. Some are saying that Dow 10,000 is no big deal but it's much better than Dow 6,500.
The big question is how much, if any, of this is justified. Great earnings results from Intel (NASDAQ:INTC) and JP Morgan (NYSE:JPM) could say more about them being global behemoths that should outperform their smaller rivals during times of duress. Then again, their earnings beats could just be an extension of those "green shoots" as they take the next step from "less bad" toward "damn good" (and at some point "really great"). Right now, it's a mixed bag with September retail sales coming in better than expected this morning but down m/m. Moreover, inventory numbers out this morning don't do much to goose hopes of massive inventory rebuilding any time soon.
Inventories came in at -1.5% in August, more than the consensus of a 0.9% decline. Sales were higher, but this was the 13th consecutive month of decreasing inventories.
You know what I find very interesting is the fact that fertilizer stocks are higher after Cargill threw the entire industry under a bus. The company isn't public but it's the largest private company in the country, which makes much of its financial situation public. After saying FY10 earnings decreased to $525.0 million from $1.49 billion year over year, management stated that the global economy is "still fragile."
Despite being one of the few companies to badmouth the broad economy (a luxury of not being public I guess) it's interesting to see so many of the public companies in the space trading much higher today.
Afternoon Notes from WSS Research Desk
- "M-commerce" onslaught by retailers is about to start. Some early movers in mobile device shopping have been Polo (NYSE:RL) and Macy's (NYSE:M). The technology should start to show up in the Apple Store, and allow consumers to order custom apparel or to check product availability in certain brick and mortar stores.
- Abercrombie & Fitch's (NYSE:ANF) Hollister concept is coming to Fifth Avenue in NYC later next year. The EPIC Hollister that opened in Soho in the summer, all 40,000 square feet of it, was a visual success and tourist destination. Still, opening large flagship stores (the Fifth Avenue store will be 15,000 square feet) seems to me a silly strategy to promote a lifestyle image. Why not take those funds, plow it back into new designers and technologies to get in on the ground floor of new trends that support increased productivity within the existing store base.
- General Motors is finally nearing a deal to sell Opel and Vauxhall to Magna (NYSE:MGA) and Sberbank. The talks have passed through two deadlines and have been on the brink a handful more times, each with the headlines reading "Opel Deal Imminent." Well we will see if the deal actually goes through.
- I attended the Johnson Controls (NYSE:JCI) analyst conference yesterday and it was interesting that management said that building actually slowed following the stimulus package and hasn't really recovered yet. A lot of those "shovel ready" projects stopped working or delayed projects in hopes of getting government money, but a lot of red tape and confusion has still hampered that money from reaching the economy.