Do you like to walk a car lot in 25-degree weather? How much free time have you had as of late for weekend activities after snow removal was checked off your “honey-do” list. Got a lot of spending cash after paying the heating bill? Do you like to drive on black ice? Yeah, me neither.
If you went out and shorted consumer stocks into their earnings report thinking disappointment and then expected them NOT to blame the weather, that was foolish. Other issues abound that are hurting these names to be sure, issues that aren’t going away over the next three months. But if you didn’t at least entertain the thought that many companies might be given a “Hail Pass” (see what I did there) then you haven’t really been paying attention. Welcome to the bull market, just like the last, same as the future where everyone gets the benefit of the doubt.
I also find it hysterical that people are poking at CEO’s who are playing the “blame game”. Wouldn’t you have to be a special kind of stupid NOT to blame the weather as you’ve seen many of your competitors be given a pass or pop on less than impressive reports? Would you want to be long a stock with management so ambivalent to the market? I wouldn’t.
Just take PNRA, which i’ve been wrong to be bearish on, it’s approaching an all-time high after a quarter that to me, demonstrated that they’ve yet to solve many of their problems. In their defense, an admission of weakness and a possible solution was evident on the call, but all they had to do was say the weather ruined their quarter and SSS for January and boom, shorts came out to cover.
Make no mistake, the companies that have structural or secular issues will be punished, but clearly it won’t be this quarter, Causal dining is going to see their margins squeezed thanks to drought conditions in California (produce, vegetables) and past drought conditions in Texas (beef). There will be no avoiding it.
Domestic car sales are probably peaking, if they haven’t already. Therefore, Latin America, Europe and China need to start cranking again before autos will rev up and challenge new highs. One could argue that GM and F are not expensive and have priced this in. I agree, just don’t expect a move without a February sales surprise next week. Parts companies may have another leg up thanks to.......the weather! (think damage caused by potholes.)
Retailers, there’s too many, everyone knows this. We know the winners, M, COST, KORS, the losers are not really a secret either, think WMT, TGT, JCP, at least for now. As far as specialty or teen retailers, just throw a dart at a board, who knows what will happen there?
Finally, the same food prices that should affect BLMN or YUM or MCD, will also hurt mom and pop as will a bigger heating bill. You sort of have to be living under a rock not to come to this conclusion. For now, Mr. Market’s mailing address is Boulder, so why not wait until these sectors start to truly break down before placing too many bearish bets .
Always remember, no position IS a position.
LONG F OTM calls
LONG PNRA and JCP OTM PUTS