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from Counterparties:

MORNING BID – Retail therapy

All that’s left for investors now when it comes to earnings season is the shouting, but if the rest of the retailers post results anything like Kate Spade did on Tuesday, the shouts will be screams of terror rather than anything that assuages investors over the state of the overall economy. Kate Spade’s executives went into some detail on its conference call as to the nature of its margins shortfall – which Belus Capital chief equity strategist and longtime retail analyst Brian Sozzi said are not likely to improve until the middle of 2015 – and the company then did itself no favors by declaring that it wouldn’t be discussing the margin issues any further on the call. (Craig Leavitt, the CEO, violated that rule to some degree, but basically, investors don’t like it when you tell them flat-out that you’re not going to talk about your problems, and when you’re a company with a forward price-to-earnings ratio of 77.5 and a price-to-book value of 119, that’s going to be particularly true.)

Other luxury retailers have noted their own problems with attracting customers at this time, including Michael Kors Holdings, which saw its own shares stumble of late after also warning of margin pressures due to expansion in Europe, but at least Kors has a forward P/E ratio around 19, which puts it in line with peers like Coach and Ralph Lauren.

After Macy’s, which reported this morning - and put some ugly numbers out there

Wal-Mart has trailed the S&P for the last several years.

Wal-Mart has trailed the S&P for the last several years.

- the next big retailers out of the gate are Kohl’s, Nordstrom and Wal-Mart, and of course they’re all over the map when it comes to big retailers; Nordstrom profiles a bit more like Coach and Kate Spade in terms of clientele, but they’re a big department store, so not really comparable at all. Nordstrom’s growth, though, is expected to come from the Nordstrom Rack outlet stores, with same-store sales estimates for the entire company at 3.3 percent, but a 1.2 percent decline expected in the full-line sales, according to Thomson Reuters data.

from Counterparties:

MORNING BID – Margins, China and whatever else

We’re deep into a period where the earnings calendar has basically dried up and the news flow overall is pretty slim, so the market will hang whatever gains it can on thin reeds – deals involving master-limited partnerships here, results from the likes of Sysco (the food services company there), and maybe Priceline.com in the mix too. The broader economic signals remain the more important ones for markets right now, and while they’re not uniformly outstanding, there are some hopeful signs for those finally looking for an acceleration in activity.

The earnings situation has been better than anticipated – Goldman Sachs notes that margins broke out of an 8.4-to-8.9 percent rate in the second quarter, ticking up to 9.1 percent, and the firm’s corporate “Beige Book” – a compendium of company comments – shows that the concerns the C suite has looks more like the concerns of those seeing accelerating demand and rising prices, and not slack demand and weak pricing power. They cited a strengthening corporate outlook, margin forecasts coming under pressure as a result of inflation expectations, and a combined focus on spending money on both buybacks and capital investment. Furthermore, companies have been less negative than in the recent past when it comes to revisions, and guidance for the fourth quarter of this year and first quarter 2015 was revised higher.

from Counterparties:

MORNING BID – Once Upon a Dream

Disney is expected to report third-quarter results after market close and is likely to beat average analyst estimates, according to StarMine. The media company's results could get a boost from "Maleficent", its revisionist take on "Sleeping Beauty" featuring Angelina Jolie, but the company’s prowess doesn’t end there, not with “Captain America: Winter Soldier” also a box-office champ in 2014 – which was also released during its most recent reporting period.

The studio budget for Maleficent was said to be somewhere around $180 million, so it’s not as if this was a cheap one, but consider that it posted worldwide grosses of $727 million, ranking it third for 2014, with the fourth-place film being Captain America (which cost $170 million), and also came through through Disney’s Buena Vista studios, per BoxOfficeMojo data.

from Counterparties:

MORNING BID – Recipe for a correction

The ingredients have been in place for some time for a correction - it's only taken some kind of spark to ignite them, and yes, it's a bit early for such mixed metaphors. The market has dipped 3.2 percent from its highs, and while that's not all that much, it's enough, as Dan Greenhaus of BTIG puts it in late Sunday commentary, to generally result in a bit of dip-buying. That said, the softness of late in auto sales and some really ugly housing data does point to the possibility that the economy's direction is just squishy enough to warrant a bit more of a pullback, and Greenhaus, one of the Street's more reliable bulls right now, says even his firm doesn't "have high conviction right now" as far as a rally.

With the Russell 2000 having given up a more significant portion of its gains -- this small-cap index was a super underperformer throughout July and hasn't really distinguished itself for all of 2014 -- and the earnings season for the most part starting to wind down (particularly for bigger names) there doesn't end up being a lot of real good reasons to take the market higher right now. Sure, investors on some levels may start to put money to work, but given the thin volumes the appetite for additional risk is probably going to be muted. The one exception may be from foreigners, who will probably keep pushing money to the U.S. market, in part because of favorable interest rate differentials.

from Counterparties:

MORNING BID – On GDP, the Fed, Argentina, and lots of other things

To paraphrase Kevin Costner in Bull Durham, we’re dealing with a lot of stuff here. The U.S. economy did end up rebounding in the second quarter, with a 4 percent rate of growth that’s much better than anyone anticipated – and the first-quarter decline was revised to something less horrible, so investors worried about the economy are a bit less freaked out at this particular moment.

Of course, that still means that the economy only grew 0.9 percent in the first half of the year, and that’s not all that amazing, but the economy in the second quarter grew in areas that matter the most – business spending, consumer spending and to a lesser extent government, which was such a drag on GDP for a good long time that can’t be just ignored. In tandem with the GDP figure, the ADP report said 218,000 jobs were added for private payrolls for July, another strong month that portends a good showing out of the Labor Department figures on Friday. That’s all at a time when the housing indicators continue to weaken, which is still a concern, and some even believe that auto sales have probably hit their apex as well for this cycle, given so much of the buying was based on incentives, but we’ll get better clarity on that on Friday.

from Counterparties:

MORNING BID – Herbalife and the options market

One of the market’s more well known short bets, Herbalife, reports earnings after the close on Monday. The company is most notable as the target of activist investor Bill Ackman, who has had plenty of choice words for the company and yet has not been able to make good on his short position just yet, despite his fervent belief it is defrauding investors and taking advantage of poor people.

That’s a hefty set of accusations for anyone to deal with, but the stock’s 25 percent one-day surge last week just after Ackman’s presentation turned into a big loser for folks who were betting on big declines by the end of last week.

from Data Dive:

Pepsi pops, Coke fizzles in Q2

The two giants of the beverage empire reported earnings this week, with PepsiCo outperforming estimates and Coca-Cola missing them.

For Coke, global sales volume rose 3 percent, but beverage sales were flat in North America. This is partly because Americans are drinking fewer diet sodas, Reuters reports. Interestingly, sales of regular Coke rose 1 percent in North America, which the company attributes to “demand for smaller packages of the product, which Coke has found to have generated more ‘brand love.’”

from Counterparties:

MORNING BID – Waiting on volatility

The day brings another run of earnings reports in what’s overall been a steady and admittedly staid earnings season – many of the high-fliers that investors counted on for volatile trading post-earnings haven’t delivered on that promise, an angle we’ll be exploring in more detail later in the day. Facebook went out with results that weren’t terrible or even all that amazing and shares meandered their way to a 2 percent gain in post-close trading Wednesday (it has since risen and is up 8 percent in premarket action Thursday, so that one has at least panned out for some). Shares of Gilead Sciences bucked the trend among more volatile biotechnology shares and really didn’t do all that much at all.

The big-cap stocks have been similarly unexciting, and the equity market gets a ton of them before and after on Thursday, including heavy equipment giant Caterpillar, the two car companies (Ford and General Motors). There’s also Post-It maker 3M, online retailer Amazon, payment processor Visa – another good consumer spending barometer, and the likes of PulteGroup and DR Horton, a pair of larger homebuilder stocks.

from Counterparties:

MORNING BID – The consumer outlook, out of earnings

The next several hours will bring a handful of important consumer names that may give investors some idea of the progress the consumer economy is making. This only works as a barometer to some degree. Sales at S&P 500 companies far outpace the growth of the overall economy, which in part explains why the market itself is doing as well as it is (we’re in the 1980s now on the S&P, so crank up the Def Leppard) and the rest of the economy is lagging behind.

And mass market consumer-facing names like McDonald’s and Coca-Cola disappointed investors with their results on Tuesday, so it will be interesting to see whether others, like Whirlpool - which has tended to buck the general trend - will fare a bit better with their results. (Whirlpool, for its part, cut its outlook amid weak results, but North American sales were up 4 percent excluding currency effects, so score that one on the positive side of the ledger.)

from Counterparties:

MORNING BID – The quiet days for Apple

Apple’s been the two-ton behemoth of the stock market for so long that it is going to be surprising, in a way, to see that the company isn’t really pulling its weight anymore when it comes to its percentage of S&P 500 earnings. This sort of thing can be a bit silly, but Howard Silverblatt, the index guru over at S&P Dow Jones, points out that Apple right now is about 3.2 percent of the total market value of the S&P while at the same time accounting for an expected 2.8 percent of earnings in the S&P – the first time since 2008 that Apple hasn’t delivered a percentage of S&P earnings equivalent to its market value.

In the past few years, Apple has tended to carry much of the S&P on its back, such as in the fourth quarter of 2011 and first quarter of 2012, when it accounted for 6 percent and 5.2 percent of the index’s earnings – compared with accounting for about 4.4 percent of the market’s value at that time. In the last quarter of 2012 the stock was 6.3 percent of the market’s earnings and was less than 4 percent of its market value.

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