The end of January saw the markets eat up some overbought conditions. February began on a strong note on the back of January’s labor report. All told, the Kahunas put in a positive performance, with the exception of Amazon (AMZN).
There is a clear trend which is becoming more apparent and worrisome for a certain sector of the markets. That is retail apparel. High flyer and a favorite of the momentum loving crowd, Under Armour (UA) dived to a 52-week low when sales and earnings missed estimates as growth appears to be slowing at the company.
Macy’s (M), a fixer upper for years, bounced off of its 52-week low on news that the Hudson Bay Company, the Canadian operator of US brands such as Lord & Taylor and Sachs Fifth Avenue, approached Macy’s for a takeover. Macy’s might not want to brush off Hudson Bay, as sometimes the first offer is the best offer and I do not see anyone else buying Macy’s, except for Amazon (AMZN); which was one of my predictions for 2017.
Ralph Lauren Polo (POLO) also spit the bit when it reported that the CEO would depart. Sears (SHLD) and JC Penney (JCP) are also hurting.
I would note that we have cut back our AMZN position by about half in the past few weeks. Of course, all this retail weakness has occurred before most fourth quarter 2016 retail earnings were yet to be reported. That will occur throughout this month.
The consumer weakness has extended to restaurants, a sector in which we have our least exposure to in a long time.
Monday’s trading could be muted by a Super Bowl hangover. Not only was Super Bowl LI the first overtime game for a Super Bowl, it ended quite late. Students and employees are calling out for the day and even Kraft Heinz (KHC) is giving employees a day off. I am hearing that the NFL is seriously considering moving future Super Bowls to Sunday of President’s weekend.
I am going to schlep into Manhattan today for some meetings and an appearance on Bloomberg Radio at 11:45 AM with hosts Pimm Fox and Lisa Abromowitz. You can tune in on WBBR 1130AM New York, Bloomberg 1200AM and 94.5FM-HD2 Boston, Bloomberg 960 AM and 103.7 FM-HD2 in the San Francisco Bay Area, WDCH 99.1FM and WJZ 105.7FM-HD2 in the Washington D.C. Metro region, Sirius/XM channel 119 and at the Bloomberg Radio Website http://www.bloomberg.com/audio
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AMZN— although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is also a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
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