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The Week That Was 8/21/17

|Includes: DICK'S Sporting Goods, Inc. (DKS), TGT, TJX
Summary

Review of Retail Earnings

North Korea

Trump's effectiveness

Last week featured an uptick in volatility because of both earnings and political uncertainty.

Retail reported last week and had some winners and losers. Target (TGT) and TJX (TJX) were the big winners of the week, both beating on earnings and continue to prove that Amazon isn't going to kill these retailers overnight. TJX, the parent company of TJ Maxx, Marshalls, HomeGoods, among others, is a company we believe will continue outperform and we will report on soon. The bad: specialty retailers Dick's Sporting Goods (DKS) and FootLocker (FL got pummeled. Each dropped over 20% on bad earnings, and both shared the same concerns: producers like Nike are shifting toward Direct to Consumer (DTC) so DKS and FL, the two biggest traditional clients, are not receiving as much business as they used to. To add a personal anecdote, just last week I went to a Dick's to try on a pair of Nike's Air Max, only to purchase it on Zappos (owned by AMZN). These two stocks are looking cheap, but they are definitely cheap for a reason, buyer beware.

The rest of the market is worried about North Korea and the effectiveness of the Trump administration. Trump's brinkmanship and loose language regarding the nuclear communist state has the global community worried about possible nuclear war and increasing tensions between the worlds two largest economies, China and the United States. Also in the beltway, much of the 'Trump Bump" was the promise that Trump would deregulate and cut taxes. He has done a formidable job on the former, but the ladder is becoming every more questionable because of his antics. Republicans have no major legislative accomplishments over 200 days into his administration, and Trump's constant stream of firings does not look good for the effectiveness of his staff. Steve Bannon, divisive yet key political figure, joins the ranks of the fired Sean Spicer, Reince Preibus, and Anthony Scaramucci. It's almost like Trump's NBC hit, "The Apprentice. White House Edition", and on the next episode we'll see if embattled AG Jeff Sessions gets sent home to sweet home Alabama.