A couple of things about yesterday’s session.

Disney (DIS) rocked big time, scoring ten million subscribers in the first 24 hours of its streaming service, but the 7.3% move wasn’t enough to lift Communication Services (XLC) higher.

Humans eschewed headlines, but machines aren’t built that way. Midway through the session, the Dow Jones Industrial Average (DJIA) reported China was pushing back on the amount of agriculture they would buy in the “phase one” trade agreement. Instantly, the DJIA gave up one 100 points, but after twenty minutes, it began to reflate.

Still, investors were in defense mode as the top three winners were all haven sectors. Moreover, the market breadth was negative.

S&P 500 Index	+0.07%
Communication Services (XLC)		-0.04%
Consumer Discretionary (XLY)		-0.31%
Consumer Staples (XLP)	+0.76%
Energy (XLE)		-0.43%
Financials (XLF)		-0.64%
Health Care (XLV)	+0.12%
Industrials (XLI)		-0.42%
Materials (XLB)		-0.58%
Real Estate (XLRE)	+1.01%
Technology (XLK)	+0.22%
Utilities (XLU)	+1.48%

Market Breadth

NYSE

• Advancers: 1,364
• Decliners: 1,574
• New Highs: 74
• New Lows: 69
• Up Volume: 1.36 billion
• Down Volume: 2.12 billion

NASDAQ

• Advancers: 1,334
• Decliners: 1,800
• New Highs: 106
• New Lows: 126
• Up Volume: 1.14 billion
• Down Volume: 992.8 million

I continue to say we are going through classic consolidation, and I think the rally is passing the test, as it’s very tempting to take some winners off the table. There are still a couple of key earnings releases left this period, including Walmart (WMT) this morning. The stock has reflected a company where management saw the dangers and made key adjustments.

It was more than beating the Street, which was a given (see below), along with comp-store sales and inline business growth. In the last two quarters, the company has wowed them, but the stakes have risen even higher with Amazon (AMZN) pushing one-day grocery deliveries. Beyond its battle with Amazon, we will get a good sense of the strength and appetite (no pun intended) of consumers.

WMT	Quarter	EPS	Consensus	1 week
8/15/19	Q220	$1.27	+$0.05	+5.8%
5/16/19	Q120	$1.13	+$0.11	+1%
2/19/19	Q419	$1.41	+$0.08	-1.4%
11/15/18	Q319	$1.08	+$0.07	-7.2%
8/16/18	Q219	$1.29	+$0.07	+4.8%
5/17/18	Q119	$1.14	+$0.01	-3.6%
2/20/18	Q418	$1.33	-$0.04	-11.1%

It’s Getting More Expensive to Have Fun

So, the Consumer Price Index (CPI) report saw higher prices from the usual suspects such as medical care services, but there was also a huge jump in recreation services (see chart).

Also, eating away from home surged 3.3% from a year ago, powered by full-service joints, where costs popped 3.5%. However, a big part of the increase came from folks just being tethered to the company vending machines, where prices leaped 4.1%.

New parents have a lot more than a baby crying that’s keeping them up at night.

• Baby Food: +4.3% year-over-year
• Infant Furniture: +14.9% year-over-year

The sale of televisions dropped 19.6% year-over-year, but stationery products rose +9.2%. Perhaps we are watching less of the boob-tube (except for Fox Business) and writing notes and letters.

I’m not sure. Heck, I forgot how to write in cursive.

Portfolio Approach

We’ve taken a lot of action, and our model portfolio is close to being fully vested.

Today's Session

Stock of the Day

Walmart (WMT)

• Transaction +1.3
• Ticket +1.9%
• Comp store change +3.2%

Other highlights of the report: 

• E-commerce +41%
• 3,000 grocery pick up
• 1,400 same day delivery

What Happened to Tariff Inflation?​

Consumer Price Index

• Window & Floor -4.6%
• Major appliances -3.3%
• Laundry equipment -6.2%
• Apparel -2.3%
• Women & girls -5.3%
• Women dresses -8.8%
• TVs -19.6%
• Computer software -10.2%

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