Spending Boom...Or Just a Love of Motorcycles?

The market sold off on disturbing news out of Canada. A lone psycho who recently converted to Islam decided to take matters into his own hands. He murdered a soldier and grazed a solemn monument, not unlike our Tomb of the Unknown Soldier. The frantic search and realization ISIS and other terrorists can reach North America directly or through sympathizers is unsettling. Yet, it is something we have come to understand and hopefully become more prepared. Not all such attacks will be carried out by drug- addicted losers, so vigilance and preemptive police work is crucial.

On that note, I can only hope its influence on the stock market does not spill over into today's session. In the end, terror is only successful when people live in fear.

That's a lot of Dough for a Broke Country?

Let's revisit a potential spending boom... there are intriguing signs that Main Street is tired of austerity and is ready to join their rich friends and live a little.

Tuesday, Harley Davidson posted strong earnings in part to a 3% jump in sales of hogs in America.

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Harley Davison’s earnings were followed by a report from Polaris yesterday which had great results across the board.

• Off-road business $823 million, +17%
• Snowmobiles $163 million, +13%
• Motorcycles $63 million, +28%

Fewer things speak of "play money" compared to an off- road vehicle and snowmobiles.

For consumers to start buying these things, they will either throw caution to the wind or feel better about their economic circumstance.

FedEx reported this morning that it expects to ship 290 million packages between Black Friday and Christmas Eve, up 8.8% from a year ago.

The question is, where is all this cash coming from? Well, people are going to have to dip into their savings; however, we could be on the cusp of another refinancing boom? In 2012, home refinancing added $1.2 trillion to the economy, which declined to $818 million last year, and until recently, was estimated to tumble to $358 million this year.

Look at what is happening; the last couple of weeks, refinancing (refi) applications are soaring again at the same point they turned in 2002, 2006, and 2009.

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Mattel vs. Hasbro

The market and investing is all about trends, and it is pretty clear in the toy business which company has the wind in its sails. Hasbro (HAS) beat earnings estimates in three of the last four quarters, including a huge beat on Monday, while Mattel (MAT) has missed consistently.

• Always begin with top-line growth and the cost of revenue.
• Global success is critical to most large publicly traded companies these days.
• Make sure companies are not cutting back on advertising or in certain industries, or in research and development. In Mattel’s presentation to analysts, they bragged about lower advertising and called it savings.
• I’m all about margins – not the absolute number, but rather the direction they’re moving in… Mattel’s margins are better than Hasbro, but the latter’s are improving rapidly while Mattel’s are spiraling lower.
• This takes us to earnings per share, the ultimate check on the checklist.

Business with boys is fueling Hasbro, while Mattel’s old standby, Barbie is floundering big-time and its recent hit, The American Girl, may have run out of steam.