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Morning Commentary

WILL CONGRESS EVER GET SMART?

By Charles Payne, CEO & Principal Analyst
8/28/2020 9:30 AM

Yesterday, for a moment, the Dow Jones Industrial Average (DJIA) was at a record high, before it pulled back into the close along with the broad market.

This session recalled the 60s comedy classic Get Smart created by Mel Brooks and Buck Henry. It starred comic genius, Don Adams.

A popular line from the show was “Missed it by THAT Much,” which is exactly what the Dow Jones Industrial Average did, closing at 0.1% from the breakeven line for 2020.

On another note, Walmart (WMT) is teaming up with Microsoft (MSFT) to potentially buy TikTok, which has investors salivating.

JP Morgan (JPM) and American Express (AXP) got big lifts from the Fed rate visibility and steepening curve.

Also, Boeing (BA) caught a bid on the Abbott Laboratories (ABT) rapid testing approval. It will be some time before the company regains the ‘sway’ it once had over the Dow, and that’s only if the world embraces travel at pre-Covid19 levels.

Congressional Follies

Back to Get Smart… If this classic comedy is what is happening on Capitol Hill, it is a classic tragedy. 

I guess we knew before it happened, but the market got a little oomph from reports of a call between Nancy Pelosi and White House Chief of Staff Mark Meadows. But even before it happened; Speaker Pelosi reiterated a strong stand that Democrats were not prepared to yield.

The two sides stand on opposite shores, facing the great ocean-sized impasse that will not budge, even with growing signs the remarkable rebound is on the verge of fizzling. I thought the market would have wobbled a lot more by now, considering how long it’s been since the initial round of stimulus expired.

Growing Pangs

The broadening of the winner’s circle continues to be difficult. There are more S&P winners, but it’s a grind.

Market Breadth

NYSE

NASDAQ

Advancing

1,665

1,556

Declining

1,305

1,823

52 Week High

101

142

52 Week Low

12

31

Advancing

2.38 billion

1.67 billion

Declining

1.43 billion

1.87 billion

S&P 500 Winners: 

S&P 500 Losers: 

NASDAQ Winners: 

NASDAQ Losers:

Retailer Winners

Retail Survivors

Earnings

% Above

Best Buy (BBY

$1.71

+59%

Urban Outfitters (URBN)

$0.35

+188%

William Sonoma (WSM)

$1.80

+79%

Ulta (ULTA)

$0.14

+40%

Gap Stores (GPS)

-$0.17

+137%

 

Several retail names missed this week, but it was no surprise. On the other hand, Urban Outfitters (URBN) and Gap Stores (GPS) have been written off by Wall Street for a long time. The question is: can they reinvent themselves while simultaneously implementing an effective omnichannel strategy?

It looks as if Gap Stores is making it happen, as overall digital sales increased by 95%, and this is even before the Kanye West collaboration took place.

Rate of Growth

Sales

Digital

Comp

Old Navy

-5%

+136%

+24%

Gap Stores

-28%

+75%

+12%

Banana Republic

-52%

+26

-27%

Athleta

+4%

+74%

+19%

 

Portfolio Approach

Yesterday, we took profits in a Consumer Discretionary position in our Hotline Model Portfolio.

Today’s Session

Upward bias continues, but I am a little surprised equity futures didn’t get stronger after key consumer data was released.

Personal Income

United States Personal Income

Personal Spending

United States Personal Spending


Comments
WILL CONGRESS EVER GET SMART?....( pelosi-?

....does a bear sh-t on a toilet?

prettydirect on 8/28/2020 10:10:40 AM
Congress, smart. Thatís a classic oxymoron

Michael D Thomas on 8/28/2020 1:27:09 PM
Their only job is buying votes and they are not very good at that.

Evernew on 8/28/2020 1:38:31 PM
 

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