Welcome to your post-Thanksgiving Trifecta Weekly Roundup,
which also happens to coincide with Black Friday, the
official kickoff to the holiday shopping season.
Like us, you may be recovering from too much turkey and
pie, you may be lining up to take part at some door-buster
-- or as Donald Trump would say, "huuuuge" -- holiday sale,
or you may even be shopping online, which we continue to
see as the big winner this year; hence, our positions in
United Parcel Service (UPS:NYSE) and MasterCard (MA:NYSE).
More than a few got a jump on online holiday shopping
yesterday, with Adobe Systems (ADBE:Nasdaq) reporting $1.1
billion was spent through 5 p.m. ET Thursday. That sure
makes us feel good about our two online shopping plays,
almost as much as the October Durable Orders report did
about our Boeing (BA:NYSE) shares thanks to a strong pick-up in nondefense aircraft orders.
Taking a step back and looking at the broader Trifecta
portfolio, we enjoyed several moves that outperformed the
essentially flat action in the S&P 500 over the last five
trading days. Those included CVS Health (CVS:NYSE), Foot
Locker (FL:NYSE), Harman International (HAR:NYSE), Qorvo
(QRVO:Nasdaq) and VF Corp. (VFC:NYSE). We had no additions
to the Trifecta portfolio this week, but rest assured we
are rolling up our sleeves as we head into December to
position the portfolio for 2016, which also means adding to
the Trifecta Bullpen.
Macy’s (M:NYSE) CEO Terry Lundgren made two interesting
comments that caught our ears when he appeared on CNBC this
morning. The first was the unseasonably warm October
weather has continued into November, making it the warmest
November in 250 years. To us this means those retailers
that have struggled with demand for seasonal items in
October likely have continued to so in November. We’ll
continue to watch what this means for our VF Corp. shares,
which have rebounded nearly 8% since mid-November.
Second, Macy's Lundgren commented that shoppers are getting
big bargains this holiday season, which on the one hand
speaks to retailers needing to move excess seasonal item
inventories due to the warm weather. On the other hand, it
jibes with the weaker-than-expected October Personal Income
and Spending Report earlier this week that showed consumers
continue to underspend relative to expectations in favor of
saving. To us, this means consumers will continue to search
out deals and value this holiday season, which reinforces
the reasons why we added Costco (COST:Nasdaq) to the
Trifecta portfolio. So far we haven’t seen any E. coli-related weakness in the shares, but we would look to such
weakness if it emerges as an opportunity to add to our
Today the market has shortened trading hours as it closes
at 1 p.m. ET, which means stock volumes as well as news
flow will be light -- a brief respite ahead of next week’s
data deluge. Early next week we will start to see estimated
tallies on the holiday shopping weekend as we close out the
month of November and enter December. The monthly
transition means we will see the usual swath of economic
data coming our way, including manufacturing data from ISM
and Markit Economics that will offer insight into November
activity and orders patterns as well as November job
creation. We’ll drill down here as part of our regular
monitoring of data for our Danaher (DHR:NYSE) and Illinois
Tool Works (ITW:NYSE) positions, and to get a bead on the
latest data that will influence the Fed ahead of its Dec.
15-16 Federal Open Market Committee meeting.
Keeping an eye on the data that the Fed likely will eyeball
ahead of the FOMC meeting means digging into next week’s
Fed Beige Book report, which collects anecdotal economic
commentary from the various Federal Reserve banks. Rounding
out the big pieces of data the Fed will be watching next
week is the November Employment Report. Aside from the
headline figures of job creation and the unemployment rate,
we’ll be checking out average hours worked, wages and the
degree of revisions in the number of jobs created during
the last two months following the big upside surprise in
the October report. Given the seasonal ramp headed into the
year-end holidays, we suspect more part-time and seasonal
jobs were added in November that could lead to a strong
headline jobs figure. However, let’s remember those jobs
tend to disappear soon after the holiday shopping season.
These reports will be the last ones ahead of the December
FOMC meeting, and, in a replay of events reminiscent of the
movie "Groundhog Day," we expect the market once again will
be all over them in an effort to determine if the Fed will
boost interest rates after that meeting. We, too, will be
updating our view on whether the Fed will make a move, but
heading into next week we remain skeptical.
Also on tap next week is November auto and trucks sales,
which will shed some light on how the quarter is tracking
for Harman International. From an earnings perspective, our
Ulta Salon, Cosmetics & Fragrances (ULTA:Nasdaq) will
report its quarterly results next Thursday, Dec. 3. ULTA
shares have rebounded sharply since mid-November, and we
continue to like them as we march deeper into the holiday
shopping season. We’ll have an earnings preview for the
company next week.
Because of the limited market action during the
Thanksgiving holiday week, we will not be including
individual rundowns on the Trifecta stocks (although we
touched on many of them in the commentary above). So, enjoy
the rest of your holiday weekend and we’ll be back next
week with more on what’s shaping the portfolio while also
highlighting additional opportunities to put some of our
cash to work.
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