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Bringing Cycles Back; These Boots Were Made For Walgreens

I Want To Ride My Market Cycle

Wind me up, put me down, start me off and watch me go!

I’ll be runnin’ circles around this market sooner than you know

Queen into the Caesars? Huh, must be Thursday.

You better believe it, Great Ones! Cycles, circles … the market’s stuck in both, like a greased-up revolving door with ice on the floor. Oh, and add a bicycle to the craziness too.

Ummm … what?

Why, ‘twas but two years ago, in these same virtual pages, that we first uncovered a market cycle that repeated itself over … and over … and over again. (I mean, it’s kinda implicit in the word “cycle.”)

If you missed out on the “fun” or have simply repressed the past few years … let’s catch up right quick.

First came the trade war cycle. That tit-for-tat spat with China about tariffs, tariffs and, you guessed it, more tariffs. Wall Street cheered every minute mention of potential progress, then slammed back down to reality when the progress stalled out.

Then came the stimulus cycle — another never-ending back-and-forth as the White House and Congress pushed their own stimulus packages. Retail’s getting more money? Oh, send stocks up again! Wait, we’re not getting another check? Back down with ye!

So what about right now? Like, today? March 31? Get ready for a whole new kinda cycle. Longtime Great Ones, you’ll know where I’m going with this…

Oh no. Back on the merry-go-round we go … round.

Behold: the new trade war market cycle chart:

Oh noes! The market’s trading on pure headlines and emotions? When have we ever seen this before…

Heck, by the time you read this, the “you are here” position will probably need to be updated once again back into the “no progress is made” phase … just like the near-daily cycling action of the China trade war.

I’ll admit, no one wanted this chart to come back for a third go-around. No one wants the Ukraine/Russia conflict to continue. No one wants there to be a new war-based market sell-off cycle.

But — and you knew there was gonna be a “but” — if the market’s a-cyclin’, all y’all better start pedaling.

That’s to say, don’t be surprised if the market keeps jerking around you (and your portfolio) amid the uncertainty. Because if Wall Street hates anything … it’s uncertainty. Uncertainty over stimulus spats, uncertainty over trade wars, uncertainty over real wars … it’s like kryptonite all up in this market!

Throw in the usual inflation information, the housing market’s nervous gyrations, oil prices going haywire because of the Russian conflict, all the other uncertainty hitting the market at once … and you have one boiling, toiling cauldron of chaos a-brewin’.

And don’t even get me started on investors’ emotional cycles that we talked about last week

Big whoop. Literally everything is cyclical. What’s the big deal?

The big deal? The big deal is that when you spot the cycle … you can start spotting trading opportunities amidst all this market mayhem.

‘Cause it’s easy once you know how it’s done. You can’t stop now, it’s already begun! You feel it runnin’ through your bones…

And you trade it out.

I do what now?

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AMDang, Son, Where’d You Find This?

Ahoy, all y’all AMD (Nasdaq: AMD) investors! Did you see that ludicrous display last night?

Ahoy? What is this, Popeye? And what ludicrous display?

Barclays Analyst Blayne Curtis just downgraded AMD, dropping his price target by a whole 22%. The reason for the treason? Curtis cites “cyclical risk across several end markets,” namely AMD’s gaming, PC and “broad-based/XLNX” market. Oh, don’t you get me started on yet another cycle…

On top of that already loosely supported argument, Barclays posits this:

The core issue here is what will be AMD’s growth trajectory coming out of this potential correction and the answer to this will be just how competitive Intel and ARM will be in 2024/25.

Umm … preemptive, much? So Barclays predicts a coming correction for the gaming, PC and “broad-based/XLNX” markets … because obviously this isn’t related to propped-up valuations everywhere… (Sarcasm, in case you couldn’t tell.)

And I’m supposed to believe Barclays telling me that AMD’s doomed because … maybe, just maybe … Intel and ARM might be more competitive three years from now? After a correction that hasn’t even happened yet? Yeah … OK.

I could see ARM being a potential threat — there’s a reason Nvidia (Nasdaq: NVDA) wanted to scoop up ARM so bad, after all — but Intel (Nasdaq: INTC)? The company that just stopped moving its chipmaking goal posts and finally started overhauling its production? I’ll believe it when I see it.

Keep calm and keep holding AMD, Great Ones.

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Walgreens Boots Up

You wouldn’t know it by looking at Walgreens Boots’ (Nasdaq: WBA) 5% drop today, but the pharmacy chain released a rip-roaring earnings report that was just what the doctor ordered.

Sales and earnings both beat expectations these past three months, despite concerns the drugstore chain could lose momentum in this post-pandemic cooldown period.

Here’s what had WBA investors initially wildin’ out this morning before COVID concerns got the better of them:

  Earnings per share: $1.59 adjusted versus $1.40 expected.

•  Revenue: $33.76 billion versus $33.4 billion expected.

Walgreens’ same-store sales in the U.S. also climbed 14.7% compared with year-ago figures, while Boots’ UK sales surged 22% year over year.

Better still, online sales grew 38% in the second quarter, signaling customers’ continued willingness to use Walgreens’ same-day pickup service versus waiting a millennium in those mile-long checkout lines.

While the jury’s still out on whether Walgreens will give its UK-based Boots division the boot — and instead focus its efforts on the U.S. health care market — WBA stock is looking surprisingly healthy for a company that’s specializing in treating people who’re down with the sickness.

Confidence: Worth More Than Kohl’s Cash

Great Ones… There’s just not enough Kohl’s (NYSE: KSS) cash in the world to keep activist investors off this mall retailer’s back.

This morning on When Activists Attack — a close-second sitcom to the ever-popular EV Days — Kohl’s all but begged its shareholders to cancel Macellum’s campaign to add new directors to the retailer’s board:

Macellum is promoting an ever-changing narrative, misinformed claims, and value-destructive proposals, all of which reveal a reckless and short-term approach that is not in the interest of driving long-term sustainable value.

That’s an awfully polite — though strongly worded — way of saying: You don’t understand our business enough to lead us out of the department-store-sized ditch we’ve found ourselves in lately.

While Macellum stayed mum on Kohl’s’ clapback … in this instance, I think the activist investor’s silence says more than any statement it could make.

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Going To The Mattresses  

This morning, mattress-maker Tempur Sealy (NYSE: TPX) said it’s hitting the snooze button on the international rollout of its Tempur products due to “geopolitical uncertainty in Europe” … making me wonder what sleepy Sealy knows about the Russia/Ukraine war that we don’t.

In Soviet Russia, the mattresses sleep on you… (Yeah… We’ll keep workshopping that one.)

Regardless, Russia’s reconnaissance isn’t the only thing keeping Sealy’s stock up at night … and down nearly 38% year to date. According to the company, COVID-19 concerns and crumbling consumer confidence have both pulled the stuffing out of Sealy stock too.

And to think, just a couple years ago, mattress companies’ biggest concerns were those Purple Mattress commercials tempting people to buy their beds on the onlines. Now they need to worry about coronavirus contagions too? The absolute nerve!

Thing is, I still think shifting shopping habits are to blame for the bulk of Sealy’s headwinds … and that global unrest is more of a cover for consumer disinterest.

After all, when you can shop for a mattress online from the comfort of your own home … and pay a pittance of the price compared to traditional mattress companies … why wouldn’t you at least explore these other options?

Either way, unless Sealy has some spare cash stuffed under its mattresses, it could be a painful couple of quarters for TPX investors. You know, until all this “geopolitical uncertainty” shakes itself out … and Wall Street wakes itself up from its coronavirus catnap.

What do you think, Great Ones? Are political and pandemic-era problems to blame for Sealy’s sleepless nights? Or is there something more pervasive going on underneath the mattress-maker’s manifesto?

Let me know:

Of course, if you have more to talk about than these mere mattress matters, by all means, tell us! You never know … your hot takes and spit takes could even be featured in tomorrow’s edition of Reader Feedback!

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Until next time, stay Great!

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