The market was set up yesterday to test the desire of investors to buy-the-dip, and it fell short, although there was nibbling. There was a defensive nature to the buying, although Consumer Staples (XLP) struggled, and that is very telling.

The notion of pricing power is critical for these names, bringing up the strength of consumers and adjustments they will make, with or without any additional pricing pressure from tariffs. People will certainly trade down this year as they work to repair household balance sheets and increase their savings.

Technology (XLK) continues to struggle to find its footing as the momentum pendulum has moved against investors.  This is largely behavioral and the opposite of the manic ride higher.

Heat Map

The good news is there weren’t any blow ups.

Fundamentals Not Tariffs

The question is: when are fundamentals kicking in?  They are, but mostly, correcting share prices. This brings me to two earnings releases last night that were devasting, but not surprising.

I’m not talking about the Wall Street earnings consensus game - bad news can be good news if they thought the bad news would be worse.

That scam is great for moving stocks higher, but sometimes reality overshadows Wall Street’s gimmicks.

Just Do It, Nike

Nike (NKE) laid an egg after the close with the shares initially higher.

Then the earnings call began, and it was an unmitigated, tone deaf, nightmare.  First the facts:

Revenue: -9%

• Direct: -12%
• Wholesale: -7%
• China: -17%

Gross Margin: -330bps

Quartey guidance was weak. 

This is not about tariffs, even if you hear someone say that on television or read it online. The stock was already down more than 40% from the all-time high.

The chart shows two massive gap downs in the past 52 weeks.

The company went woke, it was only part of a calamity that often meets great companies and nations – they got too cocky.

Fedex (FDX)

Fedex (FDX) is also getting hammered today.  I’ve read and heard “tariffs”, but then again it is simply an underhanded way of expressing political beliefs.  This largely domestic company has struggled for some time and still can’t get it right.

The new CEO is streamlining the business. There is serious competition, as Amazon (AMZN) morphs from a great customer to a formidable rival.

Conclusion

The market is struggling, most of the blowups are not from policy, but poor or degrading fundamentals.  The good news is the board market is getting cheaper every day, and already there are many stocks that will be higher a year from today.

We have to cool our heels for the moment.

Comments

Right about anti-Trump media trying to talk us into recession using suspect soft data and ignoring hard data with a psychopathic disregard for how recessions destroy the working man and widen the wealth gap. August Belmont on 3/21/2025 10:53:12 AM

I’m cool with it. Trying to buy the dip in the right places. Being patient! George H on 3/21/2025 11:47:17 AM

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