Wal-Mart (WMT - commentary - Cramer's Take) says business is still weak. The data du jour from the government confirm that jobless claims creep higher. And with today's price index data showing little hint of inflation, the market continues to look past the present weakness in anticipation of a potential Fed cut in the next few months. Thus, we're seeing green on our screens this morning.
The market's strength and resiliency in the face of weakening macro data have been impressive. Maybe the market believes there's plenty of margin leverage left to squeeze out of revenue, as has been the trend over the past 20 years as operating margins have been expanding in corporate America.
The perma-bears can and will continue to say that trend has to revert back toward its average. Maybe they missed the fact that our economy has shifted from industrial to service and digital over the past century. After all, service industries and especially digital/technology businesses have much bigger margins than smokestacks and steel mills. So the market seems to be content and outright optimistic about future margins -- at least for now.
If this market runs back to its highs, the momentum can carry us for longer and further than most anyone expects. It's still a bull market, though the cracks in the armor from the recent gaps up and down show some vulnerability in the bulls' offense.
More soon.
At the time of publication, the firm in which Willard is a partner had no positions in any of the stocks mentioned in this column, although positions can change at any time and without notice.
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