Top Market News: What Happened In Investing Today

by: SA Editor Mike Taylor, CFA

The FOMC minutes came out to little apparent fanfare, probably because people are still recovering from July 4 barbecues.

O'Reilly had a tough day after guided for slower-than-expected same-store sales growth.

Amazon's Alexa tallies its "skills," Google's Europe troubles persist, and Wall Street has mixed views on Tesla.

Fed Minutes

(This man can dissent with the best of them. Wikipedia)

If it's contrarian to like the Fed, then I'm contrarian. Here's a passage from the minutes to the June 13-14 meeting:

The staff viewed the uncertainty around its projections for real GDP growth, the unemployment rate, and inflation as similar to the average of the past 20 years. Many financial market indicators of uncertainty were subdued, and the uncertainty associated with the foreign outlook appeared to have subsided further, on balance, since late last year; these developments were judged as counterweights to elevated measures of economic policy uncertainty.

I am similar to the Fed in that my level of uncertainty around all of these metrics is similar to the average of the past 20 years - I'm totally uncertain. Anyway, as funny and stilted as the Fed's language is, this is a good reminder to investors that they should be thinking in terms of ranges, probabilities, and degrees of confidence rather than focusing too much on point estimates.

I am fairly confident that Neel Kashkari will get higher levels of media attention in the next two years on the back of his dissents at these meetings. I like Kashkari's straightforward approach to article titles, as in "Why I Dissented," and "Why I Dissented Again." In the latest, he says:

One of the big questions I am wrestling with is whether the labor market has fully recovered or if there is still some slack in it.

I too am wrestling with this question. It seems like one of the weirdest things not to be able to answer, but that's the nature of our current environment, I suppose.

Full minutes text

See also: Oil market has "materially worsened", says longtime bull Andy Hall, Biotechs head higher ahead of Q2 earnings dump, Goldman mulls spinoff of bond sales app

Retail Watch

(Oh Really, O'Reilly? Wikipedia)

O'Reilly Automotive (ORLY) warned about a same-store sales miss, the stock got torched by about 20%, and let's just go back to the Fed minutes real quick:

Growth in consumer spending appeared to be rebounding after slowing in the first quarter of this year. Participants generally continued to expect that ongoing job gains, rising household income and wealth, and improved household balance sheets would support moderate growth in household spending over the medium term. However, District contacts reported that automobile sales had slowed recently; some contacts expected sales to slow further, while others believed that sales were leveling out

Feels a little squishy. One question I had following the O'Reilly news was why the stock had priced in such apparent lofty growth expectations. Then, I looked at the 2016 income statement and was surprised by some seemingly fat margins: 50% gross, 20% EBIT, 15% net. I think part of the challenge of this market is that solid businesses can still be expensive and therefore vulnerable to big declines. Layer on secular shifts in retail and a hazy economic picture, and it's pretty tough out there.

Tech Squibs

  • Amazon's Alexa passes 15K skills (NASDAQ:AMZN): I'm not fully solid on what constitutes an individual skill. For example, it looks like telling a user about the latest science news is counted separately from telling a user about the latest news from Maryland's Eastern Shore. What is Amazon's skills count after adjusting for one-time items?
  • EU antitrust regulators consider another Google fine (NASDAQ:GOOGL) (NASDAQ:GOOG): I get the impression that Europe is more active on antitrust than the U.S.
  • Analysts buzzing after Tesla update (NASDAQ:TSLA): I read recently that increased valuation dispersion among different companies was a leading indicator for market downturns. What about increased valuation dispersion concerning the same company, from the sell-side community? Our news item quotes price targets of $385 and $180, which is quite a spread.

FinTwit Corner

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.