Daily Market Update – August 13, 2014 (Close)
This morning was just another day in a week that has no business having any surprises, as there is essentially no meaningful economic news to be released. If the world stays relatively quiet for the next couple of days there’s then really no reason to see much of anything happen in the market.
So far, that has been the theme and this morning doesn’t appear to be much different, but for no reason, certainly not spurred on by robust earnings, the market hovered near a 100 point gain for much of the day.
With some large retailers reporting earnings this week, starting with Macys this morning, it will be interesting to see whether or not the consumer is returning to their old ways of discretionary spending.
The expectation would be that as employment numbers move higher and that as people start erasing some debt, you would start seeing a return to the retailer, although I’m still having a really hard time wrapping my mind around Citibank’s belief that the retailer most likely to benefit from an improving back to school sale season would be Williams Sonoma.
Most of the kids I know still have lots of pink sea salt slab left over from last year, so I don’t see them flocking to get more.
On the more mundane retail side the initial news from Macys was discouraging if the thesis was that people were in a better position to spend more of their newly earned salaries and would actually spend that money..
The way the usual stream of events works is that increased employment leads to increased spending which leads to both increased pricing and increased production to take advantage of that increased pricing. In turn that leads to even more need for workers, which leads to wage inflation, which leads to increasing interest rates.
For anyone watching the game, it is the anticipation and fear of increased interest rates which is thought to welcome the end to the market’s climb higher.
So in the bad news is good news kind of world that we’ve lived in for much of the past two years, any measure of lower revenues or decreased growth rates at retailers would be seen as a positive sign, insofar as it would be seen as delaying any increase in interest rates.
Tell that to Macys this morning.
As the morning does get started I’m hopeful that maybe the pattern of the last few weeks will repeat itself, although despite today’s gains there was little ability to take advantage of the move higher.
During those previous weeks there wasn’t much action until the latter part of the week, as the markets tended to show some positive turnaround and offered rollover opportunities to catch up for all of the income not generated earlier in the week due to the absence of many new position purchases.
I would never tire of the repetitive nature of that kind of surprise, but it is difficult to see the catalysts for it again this week, but I do suppose that’s the essential component of any surprise.
At the mid-week point I thought that I was done with any new purchases for the week, but with nothing else really going on, it was hard to resist another pullback in eBay, marking the 22nd purchase of shares in about 20 months,
That new purchase notwithstanding, I would very much like to see some assignments to help start the new monthly option cycle off to a good start. If not that, then at least some positive movement to allow positions to be rolled over.
The early morning indication did have us moving in the right direction, but as most everyone should have learned by now, there’s usually no good reason to get overly confident until it’s all over for the week.