Stocks are at new highs, but where are the bargains? Amid a fairly lackluster trading day on Wednesday, we saw big financials mount an impressive rally.
With the S&P 500 up 0.7 percent this week, some of the major banks have really separated from the pack:
BofA up 4.4 percent
Morgan Stanley up 3.8 percent
Goldman Sachs up 3.3 percent
JPMorgan up 2.4 percent
This is important, because banks have been considered relative bargains, at least until this week. Once more, investors seem to be buying into banks— and discounting the slower macroeconomic story we have seen so far in 2014.
After a sluggish holiday season, retail business seemed to be picking up in second half of February. One bright note in a disappointing retail landscape this morning: it looks like traffic did turn around a bit in the second half of last month, with L Brands, Cato, Zumiez all said sales had improved a bit in the second half of February.
L Brands said business improved around Valentine's Day; separately, Cato said sales "were negatively impacted by winter storms the first two weeks of the month. However, that impact was offset by strong selling in the last two weeks of the month driven by warmer weather and tax refund spending."
In the words of Zumiez CEO Rick Brooks: "Sales trends improved for the month driven in part by increased traffic as we cleared excess inventory carried over from the holiday season."
Otherwise, retail was a disappointment. Costco misses. Children's Place saw a sales miss on a highly promotional environment. Staples misses on revenue and will close 200 stores by the end of the year.
The company tried to put the best spin on grim news. "With nearly half of our sales generated online today, we're meeting the changing needs of business customers and taking aggressive action to reduce costs and improve efficiency," said Staples CEO Ron Sargent.
The key theme here is ongoing margin pressure. Costco is seeing margin pressure during the holiday season, because they had to compete with the likes of Wal-Mart and others. Same store sales numbers for the 20 or so companies that still report were up 2.6 percent, roughly in line with expectations, according to RetailMetrics.
One things for sure: promotions will pick up if the cold weather continues. Walk the malls, because spring (and even summer) merchandise is already out. You can see patio furniture at BJ's. Shorts and t-shirts and bathing suits are all over the place.
1) Is a tech IPO bubble inflating? Yes and no: it's a bit different this time.
A tsunami of tech offerings are set to price in the next two months, leading to the usual cry that we are about to enter a new bubble era. Bloomberg, citing research from University of Florida professor Jay Ritter, noted that public floatations today are older and offer shares at a much more reasonable valuations than the last tech IPO bubble in 1999-2000. At the height of that bubble, new issues were sold at a median price-to-sales ratio of almost 6 times last year's level, Ritter said.
2) The poor productivity numbers for the fourth quarter (up only 1.8 percent) is a disappointment, but it's bullish for employment. We keep hearing about how technology advances are fueling big increases in productivity, but there are limits. We may be starting to reach them.
Going back to 1999, the average gain in productivity has been about 2.3 percent. A gain of 1.8 percent indicates that we are reaching the limits of what we are getting out of the work force—namely, that it lacks "oomph" from the labor force.
I met with the CEO of an S&P 100 company recently, and I asked about his productivity. "About two percent," he said. Does he intend to increase hiring? No, he said: "because two percent productivity growth is not great, but it's not bad in the current environment. We don't need to hire more people yet."
If productivity drops, and we get any pickup in demand, that might change.
—By CNBC's Bob Pisani