That Was The Week That Was-4th Week July

 

Robert C. Doll, CFA, Chief Equity Strategist Senior Portfolio Manager at Nuveen Investments in his July 22nd Newsletter wrote:

‘We want to watch top-line revenue carefully.’ The top themes going forward:

• The Fed is repeating the same message.
• The recent rise in oil prices should not be a significant drag on global growth.
• U.S. retail sales missed consensus expectations but were ahead of last year’s numbers.
• The federal deficit is  running $400 billion less than last year.

WHAT TO LOOK FORWARD TO THIS WEEK:

Monday Morning’s MarketWatch.com reports on what to look forward to this week. Jobs could get a bit stronger while GDP is expected to report growth at a stingy 0.1% in the second quarter.

 Bespoke Investment Group on July 22nd reported that: Microsoft, Intel and McDonalds oversold. Overbought stocks include Bank of America, GE and United Health Care.

Zacks Reports on July 22nd- ‘Earnings stink and no one cares…yet.’

‘When stocks get fully valued and estimates are coming down then stocks will either stagnate of retreat.’ Zacks contends that we are not there yet but will notify when to get more defensive.

Avi Gilbert @ MarketWatch.com warned on July 23rd, ‘ All roads lead to 1500 on the S&P 500 Index.’ This when the S&P 500 closed at 1696. Of course he didn’t say when but his calculations when markets retreat they’ll move to that level.

ART CASHIN on CNBC explains, maybe, why the markets keep ‘on-trucking’.  In a live interview on CNBC on July 23rd Cashin explains that the markets are overbought but the theory on the street is that the Hedge Funds don’t want to miss any part of a rally and keep the money flowing into equities. Bob Pisani added that the retail investor is holding and not selling as the markets move higher. Everyone knows this and  investors are like a long-tailed cat living in a room of a hundred rocking chairs nervously watching the action.

‘’Good Times…good times…’ Apple reported better iPhone sales and hit numbers exceeding analysts expectations Tuesday last. Shares were up Wednesday. Morningstar, same day, reiterated $600.00 share price fair value. Facebook reported earnings last Wednesday after market closed and numbers far exceeded analysts expectations as the company’s mobile ad revenue (which was virtually zip one year earlier) and up 76% from the previous quarter. The news was that no company has had to react to expanding its computing infrastructure as fast as Facebook has (Bloomberg Thursday July 25).  Shares up huge in after-hours trade. Even Cramer on CNBC was gushing about how Facebook was doing a Google better than Google.

MarketWatch Headlines: As Facebook Shares Leap 30% Wall Street eats crow. July 25th

‘All those snide remarks and snarls about Facebook may be history, at least for awhile.’

WSJ reports Thursday July 25th Bond investors running to money markets. Money eventually will come to equities, the Journal reported.

Where are Interest Rates Headed? Remember the Fed promised not to raise rates but why are 10-Year yields approaching 2 week highs? Investors can go to Google finance and check out yields daily on the main page. The 10-year closed last Wednesday at 2.49%.

WSJ reported Friday July 26th Investors have pulled $78 billion from bond funds  in the 7 weeks ending July 17th.  ‘Investors,’ the article goes on, ‘love affair with bonds is going through a rough patch.’ Not only individual investors but institutional investors are also rethinking their allocation into bonds. Bond funds have been the investment of choice for conservative income investors. Now investors are moving from bonds to money markets, even though MM pay nothing. At some point these same investors will rotate to equity-income funds.

Hate this Market? Zacks sez he doesn’t blame you.In his July 25th blog Mitch Zacks opinions bad news makes us feel bad but bad news keeps the Fed in the game. Without the Fed the markets may pull back substantially. But, Zacks, writes, even though there is a wall of worry, the markets are recovering. Maybe slower than we’d like but overall recovering.

The week ended with the markets barely up. But with more than half the S&P 500 companies reporting this will be the second least surprising earnings season in the last four years according to Factset. The biggest misses have been found in utilities, materials and tech industries. Here’s the Factset chart:

My Good Friend Bill Minor sent me this list of home improvements and how they returned $$s to homeowners when the property was sold. You can reach Bill at billminor@billminorsellshomes.com

Finally- Amazon posted a (not so) surprising loss after pouring more money into infrastructure. Jeff Bezos is betting that a massive delivery system and  cloud computing will delivery down the line. The company has been called one of those ‘never sell’ stocks. Amazon is also betting on grocery home delivery. Even with the one penny miss the shares surged over $8.00 Friday July 26th to close over $312.00. Story time, I was at Bed, Bath and Beyond shopping for this special pan that was on super sale. The store sold out of it but had it in the warehouse and could ship it…for a fee. I said forgetaboutit I’ll order it from Amazon. Bed Bath management huddled and I got the pan, the discount and no charge on shipping. That’s how big Amazon is and has changed the face of retail for the small shopper. 

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Questions call Paul @ 586 295 0430 or write him at pstanley@westminsterfinancial.com. Share this blog with someone who cares about your money.

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