Fellow investors,

Thanks for joining on this edition of PowerTalk, where I, Chris Versace - editor of the PowerTrend Profits investing newsletter, dish with good friend Keith Bliss of Cuttone & Co. from the floor of the NYSE. Each week we’ll be breaking down the latest goings on in the market and talking about what’s moving it. We also share what data and events we’ll be keeping our eyes on next week. 

This past week was an interesting one to say the least. From the Italian elections and sequester to the essentially flat 4Q 2012 GDP revision, it paints a picture of increasing risk. Yet, the major indices continued to move higher and in some cases closing in on all time highs. As we saw with today’s Personal Income and Spending data, however, we are only beginning to see the impact of the payroll tax exemption expiration and higher gas prices. With gas prices continuing to climb, it’s a pretty good bet that the consumer and retailers like J.C. Penny (JCP) and casual dining restaurants like Red Robing Gourmet (RRGB) and others will feel it on the chin in the coming weeks. 

For the stock market, while most pros expect a pullback in the coming weeks, don’t expect a massive correction as the Fed has overtly stated that they will keep the ‘punch bowl’ filled for as long as it takes to get unemployment down below 6.5% (February employment situation will be reported on March 8th); which has the effect of keeping asset markets frothy.  But beware, at some point weak economic data will begin to trump fed action.  A weaker consumer may just be the first indication that there is danger ahead for the U.S. economy…and the U.S. equity market.

While the sequester is on investor minds this week -- and it should be given that those automatic cuts are set to take effect at 11:59 PM tonight -- there is another shoe to drop. That is the March 27th deadline to raise the country’s debt ceiling. Put it all together and March is shaping up to be a far more volatile month than January or February combined. 

Listen to Keith and I break all this and more down - 

  • A number of companies announced higher dividends this week, like The TJX Companies (TJX), and that follows big dividend increases from the likes of Walmart (WMT) and Coca-Cola (KO) last week. 
  • The 2013 Mobile World Congress was held and a number of new mobile products and services were announced. One of the most interesting ones to me was Qualcomm’s (QCOM) Wi-Fi enabled coffee pot. Talk about a compelling set up for the connected home. 
  • This morning we learned that factory activity in China slowed during February as the official PMI reading slipped to 50.1 from 50.4 in January.
  • Apple (AAPL) held its annual shareholder meeting and to much chagrin the company did not announce any new initiatives to use is $137 billion cash war chest. 
  • Struggling daily deal company Groupon (GRPN) announced the departure of CEO Andrew Mason. Even though the shares rallied after the announcement, Keith and I both agree this was a decision that was long-time coming. 
  • There were some bright spots in the domestic economic data this week. There was strength in housing and below the durable goods headline -- machine tool orders up 13.5% in January. That means good things for homebuilders like Toll Brothers (TOL), Ryland Group (RYL) and others as well as key suppliers, such as USG (USG), Sherwin Willliams (SHW),   and service providers like ADT Corp. (ADT). 

Be sure to come back next week, when Keith and I will be break it all down again as we wrap the week and look ahead. 

Disclosure: Subscribers to PowerTrend Profits were alerted to add shares of USG (USG) and ADT Corp. (ADT) at $29.19 and $46.54, respectively.

Direct download: Versace_Bliss_03012013.mp3
Category:general -- posted at: 9:51am EST