Currently Obsessed With...Lululemon.

COMMENTARY FOR WEEK OF July 2, 2018


And we have been for quite some time. We love that Lulu (LULU) wants us to be paparazzi ready even at the gym which is one of the reasons why our love for the brand runs deep. Women get up every morning, put on their capes and boots, and with a baby in one arm and a laptop and cell phone in the other, walk out the door and take on the world. Lulu makes sure we look pretty, fit and stay motivated on our quest for world domination because they get that it’s not a task, it’s a vibe. Lulu stock is currently about $125.23 per share.

Oh, We're Halfway There...Living On a Prayer

U.S. and international stocks fell again this week as investors, still uncertain about a possible trade war, were skittish and wondering if they should lean in like Sheryl Sandberg or lean back like Fat Joe. The S&P 500 index and the Dow fell more than 1% this week and the NASDAQ dropped more than 2%. Remember, these indices are indicators of the overall stock market. Even though the week’s declines were minimal, the daily ups and downs (on Monday and Wednesday) had investors a little shook. July marks the official end of the second quarter (think of quarters like seasons in fashion).

So let’s take a closer look at what was hot and what was not year to date.

LET'S BE CLEAR...

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In 2017 the stock market was running through a glitter shower in the middle of Times Square singing “Nothing can stop me I’m all the way up.” U.S. stocks were up 22%, international stocks were up 25%, emerging market stocks were up 37%, and the BRICS (Brazil, Russia, India, China and South Africa) were up an oh so impressive 42%. But don’t get too excited. None of that was realistic. Normally, the market experiences a “correction” (a lux word for “decline”) of at least 10% in a year. 2017 was not about that life and investors were lovin’ it. But then, in February of 2018, “ish” got real. The market experienced a correction in the space of just two days. Since then, stocks have been fluctuating with record daily declines as well as record daily gains. Our take on words of wisdom from Maya Angelou have never been truer - when stocks show you who they are, believe them. The S&P 500 and the Dow delivered mixed returns in the first half of 2018, posting a gain of 2% and a loss of 2% respectively. However, the NASDAQ , like a Team Adam contestant on The Voice, emerged as a superstar in a sparkly dress, posting a 9% gain. The NASDAQ gave thanks and praise for its higher weighting in tech stocks (compared to the S&P and the Dow ) in its quarter-end acceptance speech, appropriately titled #Wining. The NASDAQ is the benchmark index for U.S. technology stocks and includes all the heavy hitters in tech such as Apple, Google, Microsoft, and Amazon. Tech and consumer discretionary (an economic sector made up of items people purchase when they have extra bread, dough or cheese) sectors were the only ones workin’ it in the S&P with double digit returns so far in 2018.

The stock market moves in cycles and since it has been flexing its upward mobility for the past 9 years, Wall Street experts are all trying to figure out if the days of poppin’ bottles in VIP are over for stocks and if we should all get used to the general admission section. There are four distinct phases in a full market cycle: the accumulation phase, when institutional investors (the big money) buy up large shares of stock and a not-so-lucrative time for everyday investors; the markup phase, when stock prices begin to go up and everyday investors can now get in on the action; the distribution phase, when stock prices break into another (higher) price range and the markdown phase when the highs of the stock prices get lower. Many experts are saying that the volatility of 2018 is actually a thing and we are probably in the late stages of the market cycle, but stocks will still keep their J-Lo glow for a minute.

PBDs (Pretty Big Deals)

  • Facebook (FB) and Instagram – As the two social media moguls enjoy their marriage, Sources close to the couple say IG is no gold digger. The company is estimated to be worth over $100 billion.

  • Amazon (AMZN) – Who runs the world? Apparently, Amazon. $4 of every $10 spent online in the U.S. is on Amazon.com. The number of its deliveries was over one billion last year. It is now calling on entrepreneurs of small delivery companies to help build out their delivery network.

  • Apple (AAPL) is coming for Amazon. The big A is considering introducing a Prime-like subscription service that would include magazines, original TV content, and Apple Music.

  • Lyft – The ride share with the glossy pink logo has raised $600 million which now values the company at $15.1 billion. Lyft is definitely making moves. Just 6 months ago the company was valued at $11.5 billion.

  • Bitcoin has been slippin’. Bitcoin fell for the fourth week in a row. The cryptocurrency is down nearly 70% from its record high of more than $19,000, reached last December.

  • Uniqlo inks a $300 million deal with tennis star Roger Federer. The superstar will rep the Japanese apparel brand. He will debut his new team affiliation at Wimbledon 2018. Uniqlo is owned by Fast Retailing Co. (FRCOY) which also owns Theory and J Brand.

The Lux List

  • The S&P Global Luxury Index (Yes, the lux life is tracked) is up 5.41% for the first half of 2018. Drivers of the performance were an increase in millennials willing to drop loot on personal luxury as well as tourist spending. And of course, the online market for lux goods is becoming a big deal.

  • Nike (NKE) – Our old faithful sneaker brand and lux lister seems to have been sittin’ back and taking notes from our most addictive athletic brand, Lululemon (LULU). The superstar athlete reign of Nike campaigns may be over. Research shows what StocSavvy, you and your bestie have always known, that “women are motivated by being part of a movement and participating in a lifestyle more than they are by the performance of top athletes.”

  • Men’s accessories company, Randa Accessories is submitting a bid to buy old school brand Perry Ellis (PERY) that would value the company at $444 million. If you are seasoned enough to remember, Perry Ellis was the thing in the 90’s but has since fallen off. They have not been able to ride the retro brand wave with companies like Champion and Calvin Klein who have been strategically poppin’ up on “vintage street style” Pinterest searches.

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Squad Goals

We Ask and Our Squad Answers
Our squad is comprised of ten Wall Street experts from the top asset management firms. Each week we ask them a question, and they poll in!

Do you think we are at the top of the market expansion?
100% of our Savvy Squad says NO.

80% explain that we have a little more expansion before the top.

Agree with the squad? Tell us on Twitter #SavvySquadPoll

Weekly Moves

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Heads Up

  • Tuesday – Vehicle Sales released, U.S. Department of Commerce.

  • Wednesday – U.S. Independence Day holiday, U.S. financial markets closed.

  • Thursday – ADP National Employment Report, ADP.

  • Thursday – Release of minutes from June 12-13 meeting of Federal Reserve Board.

  • Q2 (Second financial quarter) is officially over and you know what that means!!!! Earnings season! Stay tuned for the next few weeks as we Glamsplain™ our way through Q2 earnings.

Marlon Bovell