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"Continent Reversal"

02-20-2018

The market started off on the weak side, then tried to squirt higher, with the semiconductor stocks -- and tech stocks in general -- leading the charge. Despite that attempt at the upside, by midday the Dow/S&P were flat to lower, while the Nasdaq sported a 0.75% gain. However, with an hour to go, when I had to leave, the Nasdaq was flat while the other two inidices were solidly red. Please check the box scores, as a lot may have changed by the close.

Away from stocks, green paper was the star of the show today, for no particular reason, oil was flat, fixed income was heavier, and the metals lost 1.5%, plus or minus.

Wall Street WMT Rollback Today's action in Walmart is to some degree a poster child for the current stock market environment. Everyone knows what Walmart does as a business, but most people are not aware of the fact that there really hasn't been much earnings growth there to speak of for quite some time (which is not shocking, given the size of the company). Nonetheless, the stock price has seen a spurt higher in the last group of months, although I have no idea why.

I bring this up because today Walmart announced results and they were slightly disappointing, although not exactly awful, yet the stock price was hit for about 10%, which is not something I expect to see with a company like WMT. (Please see Mr. Skin's comments on the "continent reversal" in Ask Fleck today.) On the other hand, I'm not sure it is smart to pay north of 20 times earnings for a company with the difficult growth problems a company of its size faces. (To be sure, we could say the same thing about many other companies, but that is not the point.)

You Never Know When They'll Pay Attention Due to the environment we are in, the price action in WMT has been what it has been, but it just goes to show you that while it doesn't take much to really crunch something, figuring out in advance which somethings are going to be crunched continues to be difficult.

Positions in stocks mentioned: none.