Mixed Signals

A contributor weighs in on the definition of a corporation, the 2/10 yield inversion and your editor’s vocabulary:

“I’m a longtime Agora member — I predate The 5 using timestamps — but your article today finally got me off my duff.

“Corporations are out to make money. Period. I assume that their pronouncements are intended to be toward that one end. Therefore, I disregard them, for the same reason I disregard recommendations from Goldman Sachs about what stocks to buy or sell.

“At least part of the reason there have been inversions in the 2/10 yield is because interest rates are so low that random fluctuations could account for the event. The fact that they haven’t lasted very long is likely due to arbitrage.

“Plus, the economy and markets in general are throwing off all kinds of contradictory signals, making it hard to say that the inversion really means very much. That’s the reason that I want to be defensive right now.

“Finally, I must congratulate you on using ‘desultory’ correctly! One of my favorite songs (and this will date me WAY back) is an early Simon and Garfunkel song, ‘A Simple Desultory Philippic.’ It’s my favorite for giving to the opposing team in charades.”

Your secret’s safe with us, sir… and that must be one mean game of charades!

Your Rundown for Tuesday, Aug. 27, 2019:

Discount Retailers, Premium Returns

Per our reader’s mention of “contradictory signals”, our analyst Greg Guenthner notes something similar this morning:

Everyone is expecting a total breakdown — technical guys, fundamental investors, armchair economists. They all think the market is heading towards a crash. Yes, we’re still stuck in a range. But I don’t think I’ve ever seen so much pessimism with the averages this close to all-time highs….

Here’s a question for our readers: (and feel free to write in) Why do you think there’s so much pessimism surrounding the U.S. economy right now?

With that said, whether you’re feeling on-edge about the market or not, a basket of stocks to take note of so far this year is discount retailers.

It’s no secret brick-and-mortar stores have been slammed by Amazon’s dominance. Articles about the “retail apocalypse” run just about weekly.

“Despite these odds,” says Yahoo Finance, “the stocks in the Retail – Discount Stores industry have shown resilience in the year-to-date period.

“The industry has surged 24.1% in this period compared with the broader sector’s rally of 14.8% and the S&P 500 Index’s growth of 13.7%.”

Looking for specific stocks in this sub-sector? One of our favorites — Dollar General — would be included; also, Target, Walmart and Ross Stores.

Do some homework, too, to chart the performance of ETFs that lean heavily on Walmart, in particular — especially after the retailer’s last earnings report.

Market Rundown for Tues. August 27, 2019

S&P 500 futures are up 10 points to 2,888.31.

Oil’s up 68 cents for a barrel of WTI to $54.32.

Gold is up $3.90 to $1,541.10 per ounce.

Bitcoin’s lost $204.00 to $10,160.84.

Have a good day. We’ll catch up tomorrow.

For the Rundown,

Aaron Gentzler

Aaron Gentzler

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Aaron Gentzler

Aaron Gentzler is the publisher of Seven Figure Publishing. He is also the editor of The Rundown and has been with Agora Financial / Seven Figure Publishing since 2005. He's been covering technology and markets for over a decade.

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