The December quarter earnings season is upon us, and those reports have started on a decidedly mixed front. We’ve gotten more data pointing to a slowing economy, and the government shutdown continues. As we wait for the pace of earnings reports to move into high gear, the second half of 2018 was home to a number of thematically inspired M&A, and odds are more will be had in 2018. We add back USAT shares to the Tematica Select List and review several of the Thematic Leaders.
The December quarter earnings season is upon us, and those reports have started on a decidedly mixed front. We’ve gotten more data pointing to a slowing economy, and the government shutdown continues. As we wait for the pace of earnings reports to move into high gear, the second half of 2018 was home to a number of thematically inspired M&A, and odds are more will be had in 2018. We add back USAT shares to the Tematica Select List and review several of the Thematic Leaders. We also add a call option play on USAT shares.
We are adding a defensive consumer play to the Tematica Options+ trade blotter to capitalize on the “retro” trade for inelastic consumer products, better known in thematic-speak as Middle-class Squeeze centric products and retailers.
As expected economic reality is catching up with the stock market, leading to another volatile week as investors reset expectations. With more of the same likely on tap next week, I’m sitting back and collecting earnings-related data points to update our investing mosaic using our thematic lens as the risk to reward in stock prices becomes more favorable.
Costco shares have been on a tear, leading us to book a big win on one call position as we add another one to the mix. We’re also adding a new call position in Altria and boosting the stop loss for our existing call position in Chipotle Mexican Grill.
We had another bout of pain in the market as we entered February. While the market seems to have moved off oil prices for the moment, it remains concerned. Key reasons are slowing economic data (including the recent ISM Manufacturing and ISM Services reports and the Employment Report, all for January) and weaker-than-expected outlooks this earnings season from a growing number of companies. All of this has led to a rethinking of growth expectations and valuations, with growth stocks the hardest hit, as evidenced by the year-to-date move in the Nasdaq Composite Index, which is down almost 13%, compared to dips of 7% and 8% for the Dow Jones Industrial Average and the S&P 500 respectively.