A Correction Says What?
Wall Street’s World! Wall Street’s World! It’s party time. Excellent!
All right … OK … all right. Party on, bulls! Party on, Great Stuff!
Why all the excitement? The S&P 500 Index hit a fresh all-time high today!
With stocks trading at pre-virus highs, the pandemic is clearly a great big nothing burger. So, it’s time to party like it’s 1999!
Wait, didn’t the dot-com bust come shortly after 1999?
Quiet you. A little sarcasm never hurt anyone.
If the pandemic were really a concern, would U.S. housing starts have soared 22.6% last month? The Commerce Department even revised its June data higher.
And with new housing comes … anyone? Anyone? Bueller?
Home improvement projects!
Yes, Home Depot Inc. (NYSE: HD) reported strong second-quarter results this morning. Earnings came in at $4.02 per share, as revenue rose 23.4% to $38.05 billion. Both figures handily topped Wall Street’s expectations. Foot traffic was also up, as same-store sales spiked 23.4%. Nowhere to go? Time to work on the new house.
Speaking of going places, fixing up that old busted ride in your driveway was also a big hit in the second quarter. Advance Auto Parts Inc. (NYSE: AAP) continued the fixer-upper trend as it, too, beat Wall Street’s earnings and revenue expectations.
“Without question, we benefited from a surge in industry demand in the quarter fueled by the government stimulus, unemployment benefits and the impact COVID-19 had on consumer behavior in terms of how they repaired and maintained their vehicles,” said CEO Tom Greco.
There’s so much DIY going on, I probably should have led with a Tool Time opener instead of Wayne’s World. “Howdy neighbor!”
All sarcasm aside, these are positive developments for the U.S. economy. But, are they good enough to push stocks to pre-pandemic highs?
Sha, right. Acorrectionsayswhat?
Going: Who Saw This Coming?
What in the wild, wild world of social media is a-goin’ on here?
The one that President Trump threatened to ban if an American company doesn’t buy it?
I won’t go into that whole mess again.
And now, a company with no social media presence at all … a company completely focused on enterprise software apps … a company with no consumer-facing operations at all … Oracle, has thrown its hat in the ring to acquire TikTok.
What’s Oracle thinking? It just doesn’t make sense.
One thing is clear, however: TikTok only pawn in game of life.
Going: Get Racked
Rackspace Technology Inc. (Nasdaq: RXT) isn’t even a month old on Wall Street and already garners big-time attention.
What’s Rackspace? It’s a company that helps businesses move their data to the cloud. And moving to the cloud is big-time business right now. You know, because of the pandemic.
Anywho, Rackspace helps companies move to Google Cloud, Microsoft Azure, VMWare and Amazon Web Services (AWS).
That last one is the kicker. AWS revenue soared 29% to $10.81 billion last quarter, and Rackspace was a key part of that jump. So much so that Amazon.com Inc. (Nasdaq: AMZN) is reportedly in preliminary talks to buy a minority stake in Rackspace.
Rackspace is majority owned by private equity firm Apollo Global Management Inc. So far, neither side commented on a potential Amazon stake.
As for Rackspace shares, RXT trades below its initial public offering price of $21 — and that’s after today’s Amazon news. That’s not very encouraging for investors, if you ask me.
Gone: Shop Smart, Shop Walmart?
Watch out, Amazon! Walmart Inc. (NSYE: WMT) is gunning for online sales in a big way.
How big? I’m glad you asked.
Walmart reported blowout second-quarter results this morning. But beating Wall Street’s top- and bottom-line expectations was only part of the story.
Sure, earnings rose 22.8% year over year, and revenue jumped 5.6% to $137.7 billion. But online sales surged 97% to hit record levels for Walmart.
The company cited strong curbside pickup adoption during the pandemic for the spike in e-commerce.
Yes, yes, well done, Slytherin. Well done, Slytherin. However, CNBC’s Jim Cramer believes there’s a rather important issue facing Walmart the rest of the year — namely, government stimulus.
“I think the company needs to be a little cautious because unless there’s another deal from Washington they won’t be able to maintain that pace,” Cramer said on Squawk Box.
Considering that most of Walmart’s “low-price” seeking customers are the ones most in need of unemployment benefits and stimulus cash, Cramer is certainly on to something here.
Investors realized this as well. WMT opened nearly 2% higher but ended the day lower.
Today’s dose of quote-worthy realism comes from the analyst crowd — Miller Tabak & Co.’s Lead Strategist, Matthew Maley. This time, we’re talking about just when to step away from a teetering house of cards.
In one quote, you see everything Great Stuff has told you since the beginning of this pandemic rally.
That stocks are overdue for a pullback. (Overvalued? Impossible! Higher we go, laddie!)
That the Fed is not here to backstop us as investors — unless you’re a major hedge fund or institutional investor. (You aren’t, are you?)
The Fed is acting to bolster investor confidence by securing access to credit and liquidity — that’s a fancy way to say “can get money.” It’s not here to directly lift stock prices, though that’s an indirect result.
What this means is that the Fed will only open the money taps wider if credit confidence plunges. Maley speculates that anything short of a 10% to 15% correction in the stock market won’t prompt the Fed to open the spigots. And I agree.
We’ve gotten cushy here in the heady July heat — erm, August. (How’s it almost September?) We’ve not seen anything drastic and flighty since early June, just puttering around the market’s lofty heights. So, the Fed’s plan is working as intended.
But someone will eventually hit the overbought panic button. And that’s the moment Great Stuff has prepared you for.
Keep your powder dry. Put most of your cash in safe-haven investments. Buy gold.
These are not just platitudes or pithy sayings. These are real-world investment tips to keep you safe through this crazy market and prepare you for the best buying opportunity.
Great Stuff has kept you way ahead of the pack here. Maley suggests taking profits off the table now if you’ve got ‘em. Add to that dry powder stockpile you’ve been saving up.
The takeaway here: Does this look and feel like an all-time high kinda market to you?!
Now, I get it — you might not be the “time the markets” kind of investor, and I hear you. Markets stay irrational, you stay solvent, yadda yadda.
You need to play both sides of the volatility coin toss, no matter how much the market grasps at straws and all-time highs. You need a simpler way to look at the market — a way to break things down to just one trade.
Picture this: one trade. One ticker symbol. Once a week. Turns out, that’s all you need to target 100% gains or more — in just two days, on average — with each and every trade, letting you adjust your bullishness or bearishness on a dime.
Great Stuff: Zang!
All right, all right, all right, you know the deal! I yell “Marco,” and you yell back with a raucous chorus of “Polo!”
It’s almost Reader Feedback time here at Great Stuff, and we’ve been itching to hear from you. Why not drop us a line at GreatStuffToday@banyanhill.com? Hit us with the curious, the crazed or the bizarre. We can handle it. (Can you?!)
Here, we’ll even get the conversation started today:
- Have you been up to any home improvement DIY tomfoolery?
- Do you think the market’s overdue for a pullback?
- How much of your portfolio are you keeping in cash versus stocks?
- Have you checked out this killer volatility-beating strategy? Check it!
- How about that gold rally, huh?
- Got any music recs to share? You go first.
Once again, that’s GreatStuffToday@banyanhill.com. Have at it!
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Until next time, stay Great!
Editor, Great Stuff