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Nordstrom bucked the trend of lower sales in department stores. The retailer reported better-than-expected results, but the real standout was strong comparable store sales up 3.9 percent, better even than the strong 3.3 percent rate in the second quarter. The off-price and online businesses continue to grow.
Restaurant firm Cosi reported earnings below expectations, blaming the miss in part on higher food costs, particularly in poultry and dairy products. I have noted a long list of food suppliers and restaurants that have pointed to higher costs last quarter, including Pinnacle Foods, Dean Foods, El Pollo Loco, Sprouts Farmers Market, Wendy's, Sysco, Texas Roadhouse, Red Robin Gourmet Burgers, Papa John's, Noodles & Co., and Chipotle.
Read More Retail sales up 0.3% in October, versus expectations for 0.2% gain
That's not clear, but one thing's for sure: This is one of the side-effects of lower oil prices. It will accelerate industry consolidation.
When oil prices go down this much, it means the pie is going to shrink and there is going to be a food fight for the smaller pie.
The oil service guys like Halliburton know the oil companies are going to drive a very tough deal when it comes to their 2015 budgets.
When you have two big oil service companies that come together they have a much better chance of being able to push back and become a more formidable company.
Since the markets have pushed back into record territory at the very end of September, market volatility has dropped dramatically. For the last eight or so trading sessions, the S&P 500 has often been in a narrow 10-point trading range.
These flattish/slightly up days may not be exciting, but they are great news for the bulls. Think about it: When was the last time we were down one percent? Way back on October 13. If this is what passes for consolidation, this is pretty good.
This "green light for risk" comes with a number of caveats:
First: Traders seem willing to ignore weakness in Europe as long as ECB head Mario Draghi is strong--specifically, that Draghi will not be thwarted by Germans or others who do not want him to expand the stimulus program.
In other words, belief in the "Draghi put" is very much alive. If Draghi's influence is curtailed, markets in Europe and the U.S. are likely to react negatively.
U.S. stocks opened lower on negative sentiment in Europe. The Shanghai Composite, however, closed up 1 percent to a three-year-high. There is considerable discussion about the potential increase in trading activity among mainland Chinese stocks when the Shanghai-Hong Kong stock exchange link goes active on Monday, which I discussed in my Trader Talk on Tuesday.
The Hong Kong-Shanghai stock exchange link-up is one of the biggest developments in years for investors in international markets.
I told you this morning that beginning Monday, November 17, foreign investors will be able to directly buy individual shares of 560 Chinese mainland stocks. They will be able to do this because there will be a direct link between the Hong Kong Stock Exchange and the Shanghai Stock Exchange.
Bottom line: Anyone who opens a brokerage account with a firm in Hong Kong will be able to own a vast swath of mainland Chinese shares.
U.S. investors have already been able to buy some of the mainland shares through ETFs like the Market Vectors China ETF (PEK) and the Deutsche X-trackers (ASHR), but these are baskets of stocks pegged to indexes, not individual shares. Until now.
Why do we care about this? Because prior to today, the Chinese stocks that were available to U.S. investors—those that listed in Hong Kong, or those that dual-listed in the U.S. and China—were mostly big, state-owned enterprises. Mostly big banks and commodity companies.
Another day, another new high. Ebola, Ukraine, ISIS—nothing has killed this rally. It's the 39th time this year the S&P 500 has closed at a new high.
We also have record earnings, near-record profit margins—9.7 percent for the S&P 500, well above the 10-year average of 8.5 percent—and declining unemployment.
Several beaten-up sectors have rebounded nicely. Housing stocks in particular have been on a tear recently The SPDR Homebuilders ETF is above its highs in the late summer and not far from an historic high.
China stocks rallied, with the Hang Seng up 0.8 percent and the Shanghai Composite up 2.3 percent overnight. After years of discussion, the Hong Kong Stock Exchange and Shanghai will finally open a formal stock trading link on Nov. 17.
Many mainland China firms already dual list in Hong Kong, mainly large state-owned enterprises, but this trading link will open up many more smaller companies.
Hong Kong investors will be able to buy and sell an additional 568 Shanghai-listed equities. Mainland investors will be able to buy and sell 268 Hong Kong-listed stocks. This opens up many domestic Chinese stocks for the first time.
Some fund managers were already allowed to invest in Chinese stocks through a quota system that was capped at $105 billion. But the new system will allow most investors to buy shares on the Shanghai Stock Exchange, opening up the $2 trillion market fully to foreign investment, though there will be some quotas on inflows into China that will still be applied.
Too many people think the stock market moves only on the Fed, but we have:
And this with a government that can't get anything done!
As for the markets at new highs, that's good news, but there are signs that we have moved from bargains to "Not much is cheap" really fast. Like, in less than a month.
What's cheap? Not much. Gold miners are absurdly oversold. They bounced yesterday, and that's a good sign.
But much of the rest of the market has bounced back, in some cases dramatically.
It's downright pathetic. IBM has gone from a monster after the Financial Crisis (it doubled in a couple years) to a loser, down 14 percent this year. True, it hasn't done much in the last two years, but it has simply collapsed since it's disappointing earnings report a few weeks ago.
It dropped from $180 to $169.10 the day of its earnings (October 20th), but then continued to drop for the next two days.
It rose modestly over the following days, but this morning, it drifted lower again, to an intraday low of $160.05, a three year low.
I don't like spending a lot of time on technicals, but more than one trader has noted that when a stock drops big on bad earnings--and then follows that up by making ANOTHER "lower-low" after a "dead-cat bounce"—that is a sign that investors are throwing in the towel.
It's often said that IBM's problem is that it is so big it is difficult to grow. But that's only part of the problem.
Dow Industrials and Transports and the S&P 500 reached new highs Thursday. U.S. stock futures popped ahead of the bell as weekly jobless claims came in lower than expected, suggesting we could have upside to Friday's non-farm payroll report.
Dovish comments from European Central Bank head Mario Draghi also helped.
The euro dropped like a rock and European equities moved up, as Draghi said ECB officials were unanimous in their position that they would use more stimulus if conditions on the continent call for it. Draghi said the ECB is committed to expanding its balance sheet and to continuing to use unconventional methods.
The question is how "unconventional" Draghi is willing to be. What's in his bag of tricks that will not cause blow back from the Germans?