During the last year, I've received countless emails from people - subscribers to my investment newsletter PowerTrend Profits and others - telling me they are finding confirming data points for my eight great PowerTrends all over the place. As I mentioned to the audience at the recent Orlando MoneyShow, I'm a person who likes to sleep at night and, therefore, the more confirmation I get for each of my PowerTrends, as well as the stock picks in PowerTrend Profits, the better. Feel free to email me and tell me about your PowerTrend spotting experience at chris_versace@aim.com.
Just this past week alone, the Wall Street Journal ran a story on a next-generation library being built in Texas that will have no books. The reason it will have no books is it will be the first entirely digital public library. In the era of smartphones, iPads and other tablets, this reality is a new phase in the shift away from print to digital that is a part of my Always On, Always Connected PowerTrend. We've seen the magazine, newspaper and publishing industries get hit hard during the last few years as people shifted to reading their news, books and magazines in electronic form, whether online, on a smartphone or on tablet. As this trend shows, there is more to come in terms of how we access digital content. The seeds were arguably sowed when Amazon.com (AMZN) allowed for the borrowing of books from your local library through its Kindle.
My first reaction to this all-digital library was that it must cost a fortune, but it seems that startup costs are roughly $1.5 million, which includes a selection of about 10,000 titles, 150 e-readers that can be checked out, 25 laptops and 25 tablets for use on site, as well as 50 desktop computers. Building on that Amazon-Kindle borrowing program, this test library will also allow books to be accessed remotely. It's expected that all of that will result in lower operating costs compared to other libraries, but that also means an all-digital library will need fewer people to run it than a traditional library. Ah, the downside of Always On, Always Connected - productivity gains that result in companies and other institutions doing more with fewer people.
Given its position in smartphones and tablets, many investors consider Apple (AAPL) THE way to invest in the analog to digital conversion. It is one, but there are a number of other smart investments to be had. From chips and screen technology companies to the right data center and technology licensing companies, all of these investment opportunities fall under the Always On, Always Connected PowerTrend.
State of the Union Address This Week
Normally at the end of each PowerTrend Brief, I offer a list of the key economic indicators coming over the next several days, as well as a snapshot of those corporate earnings reports that will impact the stock market the most this week. Last week fueled the debate about the coming stock market direction following January's strong run and reminded us that the specter of uncertainty is poised to return. President Obama urged Congress this past week to pass a new package of spending cuts and tax increases ahead of the looming sequestration date of March 1. This Tuesday is the president's State of the Union address and the expectation is that he will discuss in greater detail the types of spending cuts and tax adjustments he is targeting.
As tends to be the case, this speech will reignite the political debate about what should or should not be done and remind investors about the political gridlock and dysfunction in Washington that has held the domestic economy in check during the last few quarters. If the president has his way and raises taxes yet again, it could very well be the straw that breaks the consumer's back. Remember that we are already contending with the jump in gas prices, steadily rising food prices and roughly 2% less in our paychecks this year, compared to last year. To me, it says the Cash Strapped Consumer is alive and well.
PowerTalk Jobs, the Economy & the Consumer with Tom Stemberg
As I mentioned above, one of the dark sides in the shift toward an increasingly connected society is the tradeoff between productivity gains and the need for fewer workers. It's no secret that job creation has been challenging - 155,000 per month on average over the last 25 months. As we learned recently, the January unemployment rate ticked back up to 7.9%. With the rising prices of gasoline and food, plus the expiration of the payroll tax holiday, the economic picture is not favorable for consumers, particularly those who have been part of the long-term unemployed. I delve deeper into all of that in the March 2013 issue of my PowerTrend Profits newsletter.
Joining me this week to talk about all of these issues for PowerTalk is Tom Stemberg, the founder and former CEO of Staples and the managing general partner of the $300 million Highland Consumer Fund. He's also a member of the Job Creators Alliance. During our conversation, Tom and I discuss unemployment and the January jobs data. We also take a look at why Congress and the president are struggling to create jobs (hint: they can't get out of their own way), the impact of regulation on small and medium-sized businesses, what to expect from consumer spending in 2013, the types of companies Tom sees delivering growth in this economy and more! Needless to say, this economic uncertainty is a solid vote for my Rise and Fall of the Middle Class PowerTrend and our position in McCormick & Co. (MKC).
Click here to listen to my conversation with Tom Stemberg
In the coming week, we'll see how General Motors (GM) is progressing as it continues to overhaul its product portfolio and get an update on the benefits accorded to the automotive ecosystem when BorgWarner (BWA) and TRW Automotive (TRW) announce their results. Similarly, we'll see how well the ripple effect on the rebounding housing market is fairing for faucet and cabinet manufacturer Masco Corp. (MAS) and Furniture Brands (FBN), as well as coating and paint manufacturer Valspar (VAL). One other set of companies to watch in terms of paint points includes Henry Schein (HSIC) and GNC Holdings (GNC) that are a part of my Living Longer Lives PowerTrend.
To read my e-letter from last week, please click here. I also invite you to comment about my column in the space provided below.
Sincerely,
Chris Versace
Editor, PowerTrend Brief
Here's a more comprehensive look at which companies will report their results this week, as well as what economic data will be hitting the tape in the coming days:
Monday, Feb. 11
Lions Gate Entertainment (LGF)
Loews Corp. (L)
Masco Corp. (MAS)
Nielsen Holdings (NLSN)
Veeco Instruments (VECO)
Tuesday, Feb. 12
Treasury Budget (January)
Avon Products (AVP)
Brookdale Senior Living (BKD)
Buffalo Wild Wings (BWLD)
Fossil Inc. (FOSL)
Goodyear Tire & Rubber (GT)
Coca-Cola Company (KO)
Michael Kors Holding (KORS)
Martin Marietta Materials (MLM)
Blue Nile Inc. (NILE)
Reynolds American (RAI)
Rackspace Hosting (RAX)
Valspar Corp. (VAL)
Zebra Technologies (ZBRA)
Wednesday, Feb. 13
MBA Mortgage Index (Weekly)
Retail Sales (January)
Import/Export Prices Business Inventories (December)
Applied Materials (AMAT)
Angie's List (ANGI)
Comcast Corp. (CMCSA)
Cisco Systems (CSCO)
CenturyTel Inc. (CTL)
Deere & Co. (DE)
Dean Foods (DF)
Dr. Pepper Snapple (DPS)
Equinix, Inc. (EQIX)
Furniture Brands (FBN)
Hyatt Hotels (H)
Henry Schein (HSIC)
Lorillard, Inc. (LO)
Mondelez International (MDLZ)
NVIDIA Corp. (NVDA)
Rovi Corp. (ROVI)
Skechers (SKX)
Whole Foods Market (WFM)
Weight Watchers (WTW)
Zillow, Inc. (Z)
Thursday, Feb. 14
Initial & Continuing Jobless Claims (Weekly)
Agilent Technologies (A)
BorgWarner, Inc. (BWA)
Cabela's Inc. (CAB)
CBS Corp. (CBS)
General Motors (GM)
GNC Holdings (GNC)
Harsco Corp. (HSC)
Jarden Corp. (JAH)
PepsiCo, Inc. (PEP)
comScore Inc. (SCOR)
Strayer Education (STRA)
Molson Coors Brewing (TAP)
Vulcan Materials (VMC)
Friday, Feb. 15
Empire Manufacturing (February)
Industrial Production (January)
Capacity Utilization (January)
Michigan Sentiment Index (February)
Allete, Inc. (ALE)
Cott Corp. (COT)
Campbell Soup Co. (CPB)
Digital Realty Trust (DLR)
Kraft Foods Group (KRFT)
Pilgrim's Pride Corp. (PPC)
Ruth's Chris Steak House (RUTH)
The J.M. Smucker Company (SJM)
TRW Automotive Holdings (TRW)
VF Corp. (VFC)
