The bias and momentum have shifted to the downside as the market embarks on next leg of the decade-old rally. Weak stocks are getting weaker and new lows continue to mount. On the NYSE, there were 51 new 52-week lows, the highest number since January 2 when the number was tumbling down from 1,401 on December 21, 2018.
Health of Consumer
Retail sales for January posted a very solid number with headline growth up 0.2% month to month and 2.3% from a year earlier. Excluding autos, the result was a very robust +0.9%, and +1.2 when stripping out autos and gasoline.
The control number of +1.1% improves first quarter GDP estimates. Meanwhile, the December number actually got worse. The initial headline -1.2% is now revised to -1.6%. The experts are confounded, but I know I’m right when I say the media spooked consumers with all the doom and gloom and calls of an imminent recession.
Bright spots include sporting goods and building, while restaurants grew faster than eating at home.
Retail & Food Services January | M/M | Y/Y |
Headline | +0.2% | +2.3% |
Ex-autos | +0.9% | +2.8% |
Ex- gas | +0.4% | +2.9% |
Ex- autos & gas | +1.2% | +3.7% |
Autos | -2.4% | +0.2% |
Furniture | -1.2% | -2.7% |
Electronic | -0.3% | -3.3% |
Building | +3.3% | +8.7% |
Food | +1.1% | +3.2% |
Health & Personal Care | +1.6% | +2/8% |
Gas Stations | -2.0% | -4.2% |
Clothing | -1.3% | +1.6% |
Sporting Goods | +4.8% | -6.1% |
General Merchandise | +0.8% | +2.2% |
Online | +2.6% | +7.3% |
Food Service | +0.7% | +5.4% |
After the report, the market rebounded a bit, but it has since turned lower.
Portfolio Approach
We took profits and lowered weighting on Consumer Discretionary and raised Cash. If you have any questions, contact your account representative or email research@wstreet.com. If you are not currently a Hotline subscriber, click here to get started today.
Communication Services 1 | Consumer Discretionary 3 | Consumer Staples 1 |
Energy 1 | Financials 1 | Healthcare 2 |
Industrial 3 | Materials 3 | Real Estate 0 |
Technology 2 | Utilities 0 | Cash 3 |
Today’s Session
With Boeing (BA) knocking 300 points off the Dow, caution is the word of the morning. I will say, Boeing’s management seemed nonchalant when the Lion Air 737 Max went down. I’m not dissing them, but I thought they were too cool for school. With China and other nations grounding their 737 Max planes, Boeing needs to move quicker to cool global panic.
The good news is the black box has been found.