WASHINGTON, July 14, 2015 – Going into the final hour of trading Tuesday, it seems like a fairly decent environment on Wall Street. The problem is, this week’s Era of Good Feelings has a temporary feel about it.
Averages continue to go up despite poor U.S. retail sales figures. The allegedly-solved Grexit dilemma is still not really solved. (Wait until Greek voters see that a chunk of their national assets will now be controlled by Brussels.) The Obama Administration is putting the finishing touches on Obamanation’s shameful sellout to the mad mullahs running Iran.
And, of course, there’s always that Fed-threatened interest rate increase to terrify dividend-lovers and fixed income investors, because high-yielding investments all tend to tank in an environment where interest rates are on the increase.
Regarding those sales numbers, income-focused investment blog The Yield Hunter notes,
“Retail sales today were announced at down .3% month over month—the concensus was +.3%. For the most part household related goods (i.e. furniture) were where the softness showed up the most with apparel and building materials also disappointing. Auto sales which are still strong overall fell 1.1% month to month.
“At the same time inventories remain at high levels (relative to the last 4 -5 years). Inventories are at a 1.36 times sales levels which is .07 above a year ago. While this seems small, it is only small in an economy that is growing at a decent clip (say above 2.5%). Any further softening in retail sales and/or increases in inventories are likely to increase the likelihood of layoffs ahead.”
Normally, this kind of news collapses any positive trading mood on Wall Street. But today’s bad retail news seems to be a non-event. Go figure.
In other news, the Greek “agreement” still has to go through the Greek parliament, and who knows what will happen there. There’s a very real possibility the current Communist government might fall on this issue. Under normal circumstances, such an event would be the cause of rejoicing by the Maven.
But under current circumstances, such an event would throw a monkey wrench on the time schedule for a real settlement, which almost certainly has to be inked, and in place by July 20—before another Greek debt payment is due. This whole mess is like a bad movie or TV serial. Don’t miss the next thrilling episode.
News that Obama’s capitulation to Iran is allegedly a done deal toppled U.S. oil prices this morning, right? Nope, wrong again. The price of West Texas Intermediate is slightly up, not down. This means that A.) fears a U.S.-Iran treaty would increase international oil supplies and lead to another price dive were tall tales spun by short sellers. Or B.), such fears are true but either overdone or already absorbed by an already oversold market.
Or, C.: It’s all a crock. We tend toward choosing C. Markets this summer increasingly seem like the Caucus Race in “Alice in Wonderland.” No particular rules, and definitely, no finish line. It’s theater of the absurd, but with real dollars at stake.
Today’s trading tips
We’ll stick with our Monday idea, nibbling a bit further into regional bank stocks. To them, we might add Wells Fargo (Symbol: WFC), whose second slightly-missed quarter in a row has weakened the stock back to where we might want to pick some up.
We’ve been in major U.S. oil refiner Valero (VLO) for a few weeks, having bought it on a savage dip and now finding ourselves up about 10 percent. Given the volatility of this market, we’re inclined to thank God for this rare gift and sell it.
Otherwise, we’ll wait and see. For the Maven, at least, many moves have been the wrong moves in 2015, and we’re rather interested in reversing field in the second half. True, the fat dividends and generous interest we continue to collect are keeping our investments pretty much in the black, but marginally so. We need to do better.
When we get our mojo back, you’ll be the first to know.