Cautious Investors Return To Safe Haven Stocks

Well, the swagger has all but vanished, even though the S&P 500 is in the shadow of its all-time high. Instead, the action has taken a decidedly cautious approach with buyers flocking to traditional safe havens, including Utilities. Yesterday wasn’t a pretty picture, but it’s nice to see smaller names get a play.

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The Trillion Dollar Players

On November 29^th, 1976, the New York Yankees signed outfielder Reggie Jackson to a five-year contract worth $3.5 million.

It was the richest contract in baseball history.

Reggie hit .328 with 12 homers in 34 playoff games with the Yankees. On the way to earning the moniker “Mr. October,” the Yankees racked up the victories:

• 4 American League East titles
• 3 American League Pennants
• 2 World Series

The bottom line is Reggie delivered!

These days, players make the money Reggie earned in a week or two, but few can match his accomplishments. Back then, to whom much was given, much was demanded, especially in New York.  In a way, you could say the same is true for the stock market.

Investors are looking for the Big 5 names in the trillion-dollar valuation club to lead the way, and that’s precisely what they’ve done. Yesterday, an article in The Information counted 70 anti-trusts investigations around the world against the Big Five. 

The news pressured these names, but it’s unlikely it will keep them down for very long.

NDX

Widespread Weakness

Fewer than 50% of the S&P trading above their 50-day moving average turned lower after a bounce off June lows.

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Weakness in sectors that have dominated this year is surprising. 

Internals Continue Meltdown

I’m beginning to sound like a broken record, but the overall volume is flaccid, and market breadth is even worse. The tidal wave of decliners over advancers continues, and for the second session in a row, there were more 52-week lows than highs on the NASDAQ Composite.

Banking Revolution

I don’t often mention Wall Street research, but I had to share these comments on Square (SQ) by an analyst from Mizuho Securities because I just wrote about it this week. Everyone should have exposure to Fintech and the banking revolution. The analyst says the company is en route to becoming the ultimate neo-bank and money center bank of the future with an addressable market of 400 to 500m accounts -and have a price target for the stock of $380.

I don’t often mention Wall Street research, but I had to share these comments on Square (SQ) by an analyst from Mizuho Securities because I just wrote about it this week. Everyone should have exposure to Fintech and the banking revolution. The analyst says the company is en route to becoming the ultimate neo-bank and money center bank of the future with an addressable market of 400 to 500m accounts -and have a price target for the stock of $380.

Portfolio Approach

There are no changes this morning to our Hotline Model Portfolio.

Today’s Session

State of Consumer & Retail

It was a nice bounce back for retail sales, which stumbled in May.  By the way, that May number was revised lower to -1.4% from initial read of -0.7% after stimulus checks ran out.

Weakness in autos can be traced to the semiconductor chip shortage, but I am a little surprised with pullback in furniture and building; although, the dearth of housing supply is playing a role. I’m looking at comparisons to April and there are several highlights.

Negative highlights

• Total sales 621.3 billion in June still below 628.8 billion in April
• Internet 88.0 June versus 89.0 April

Positive highlights

• Clothes 25.8 June versus 24.7 April
• Department stores 12.1 June versus 11.2 April
• Restaurants & bars 70.6 June from 66.5 April

The market liked the report overall.