HERE’S ONE ASSET BUBBLE THAT IS POPPING!

SOURCE: https://www.bloomberg.com/news/articles/2017-03-22/global-art-sales-fall-11-to-lowest-point-since-financial-crisis

PRE MARKET

Futures flat! We would like to tell you something good but best guess, we are on wait and see with the healthcare bill. We are not 100% but there is a chance a yes to the vote can get things going again…a no causes issues because it could affect tax legislation. Yes…we are on news-driven watch. We suspect if they figure out the vote won’t pass, they will pull the vote. We think they have done a horrible job of timing this vote. They should have taken their time. They should have recognized there were different factions but as usual, egos and stupidity get in the way. Also, we do not understand why they did not do tax legislation first…which would have been much easier.

Our favorite walk in London is on the Westminster Bridge, the place where the latest terror attack occurred. It is the bridge you walk over from the London Eye to Big Ben. On that bridge, many tourists walk. On that bridge, double decker buses pass throughout the day. Towards the end of the bridge are purveyors of all kinds of things. It is truly one of the great sites to behold. On that bridge, a coward took innocent lives yesterday!  We just cannot imagine!

THE CLOSE

We don’t think you can take too much out of today’s action. Yes, the NASDAQ-types again led but that’s all we will give it. We suspect, absent a surprise news event, we can get some upside testing but there have been a decent amount of near-term chart breaks, especially in the financials. Financials were much worse off early before bouncing but seems like the air has come out of them for now. Of course, that can change with some political votes but that’s just guessing.

We are going to get a vote on healthcare. We are not so sure it matters much but we shall see. We hear that there are not enough votes to pass. If that’s the case, we ask why they even put it up for a vote. Tomorrow could be interesting.

The SEARS HOLDINGS MONEY QUOTE:

“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,”

SEARS HOLDINGS SAYS:

“We acknowledge that we continue to face a challenging competitive environment and while we continue to focus on our overall profitability, including managing expenses, we reported a loss in 2016 and were required to fund cash used in operating activities with cash from investing and financing activities. We expect that the actions taken in 2016 and early 2017 will enhance our liquidity and financial flexibility. In addition, as previously discussed, we expect to generate additional liquidity through the monetization of our real estate and additional debt financing actions. We expect that these actions will be executed in alignment with the anticipated timing of our liquidity needs… We also continue to explore ways to unlock value across a range of assets, including exploring ways to maximize the value of our Home Services and Sears Auto Centers businesses, as well as our Kenmore and DieHard brands through partnerships or other means of externalization that could expand distribution of our brands and service offerings to realize significant growth. We expect to continue to right-size, redeploy and highlight the value of our assets, including our real estate portfolio, in our transition from an asset intensive, historically “store-only” based retailer to a more asset light, integrated membership-focused company.”

We have been saying for a long while that there was an eventuality with Sears and K Mart. Whoever has been running the company seemed to be on a suicide mission as nothing was done to fix all the issues and problems. We think that the eventuality is nearing as the words “going concern” is now starting to be pondered. Add in the fact that other retailers who actually take care of their business are also being crushed by the new retail paradigm.

PRE MARKET

That was one heck of a body blow yesterday…not because of the drop but because of what dropped. The financials have led since November 9th, simple as that. So the question must be asked whether if this ugly continues, will they lead down? Back in early January, we thought the financials were being distributed…but after a few days down, they rifled off the 50 day average and turned up. This time is different as support and the 50 day average have been taken out and on very big volume. Some names like an FITB have given a ton back.

You ask whether this is all about Trump and possibly not seeing proposals going through. We would suggest some of it is…but this was real ugly. If tax and healthcare proposals do go through, will the financials just run right back up and everything will be fine? We are not so sure of that.

In any case, pay heed. We finally got the 2% off the highs but we do know normal corrections go farther than that. You do remember corrections do happen?

Real weakness can be seen in the small caps vs large caps and the TRANSPORTS continue deeper into correction and are now trading below January support. All the areas we have been telling you to avoid get worse…retail,energy,commodities and the like. Money flows moving into defensive utilities and some consumer staples.

Futures flat this morning after being down overnight.

FEDEX (FDX) gaps up on missed numbers. NIKE (NKE) down a wee bit on numbers.