#$tol

UNLOCKED>>The following post was initially issued to The Lyons Share members on June 25, 2018.

Housing stocks are testing the major cluster of potential support that we have been stalking.

Back in January, we noted that one sector that had been on fire -- housing stocks -- was potentially at risk of cooling off. At least, that was our read on the group based on the chart of the PHLX Housing Sector Index (HGX). The HGX, at the time, had jumped more than 20% since breaking above its previous all-time high in late September. That high was set in 2005 near the 294 level. However, as we highlighted in the January post, the HGX had found its way up to 2 key Fibonacci Extensions near the 360-362 area:

The 127.2% Fibonacci Extension of 2005-2009 Decline

The 261.8% Fibonacci Extension of 2015-2016 Decline

In hindsight, we see that that juncture was indeed a good time to reduce exposure to housing stocks, as the HGX would top out just 7 days later, closing no higher than 365. And since then, it has been straight down for the HGX -- to the tune of about -18%, as of today.

But while the HGX hit the ceiling in January, it may well be reaching the floor now. We say that as the index is finally reaching the layers of potential support that we have been targeting for some time now in our Daily Strategy Sessions as well as our Weekly Macro Market Report. Those layers of potential support near the 295 level are headlined by that former all-time high from 2005 that was broken back in September. But it is hardly the only piece of noteworthy support in the vicinity.

Also near the 295 area sits:

The 23.6% Fibonacci Retracement of the 2009-2018 Rally

The 38.2% Fibonacci Retracement of the 2016-2018 Rally

The 61.8% Fibonacci Retracement of the Rally from the 2017 Breakout to-2018

The Post-2016 Up Trendline

Despite the recent carnage in the housing sector, this confluence of levels should provide enough support to at least stabilize prices, and likely generate a considerable mean-reversion bounce. If the index undercuts this 295 area, be on the lookout for a false breakdown and a prompt recovery of the level.

We won't necessarily be looking for new all-time highs into a potential bounce. But it should produce enough of a retracement, e.g., to ~325 (+10%) or ~340 (+15%) to make this a worthwhile trade from a risk/reward basis.

Our favorite ETF for taking advantage of this opportunity is ITB, or the iShares US Home Construction ETF. It is trading with a very tight correlation to the HGX and has a much cleaner chart than XHB. We are looking at support near the 37.00-37.35 area on ITB -- or, the rough equivalent of HGX ~295.

As always, stay tuned to the Daily Strategy Sessions and Weekly Macro Market Reports for updates as this attractive potential long trade unfolds.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. You can follow our investment process and posture every day — including insights into what we’re looking to buy and sell and when. Thanks for reading!

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A key index of housing stocks has finally made it back to the highs of last decade’s bubble.

One of the, in some ways surprising, achievements of the current bull market in stocks has been its ability to resuscitate former busted bubble sectors once left for dead. For example, early this year we saw the Nasdaq 100 finally break decisively above its dotcom-laden bubble top of 2000. This year has also seen a resurgence in bank stocks, with the dead cats jumping off the financial crisis mat to within spitting distance of their pre-crisis levels. And in this latest rally, we are seeing another former bubble poster child building its way back up to its former highs — housing stocks.

In fact, at the end of last week, the benchmark PHLX Housing Sector Index (HGX) made its way all the way back to its 2005 bubble top for the first time in a dozen years.

So golf claps and trivial tidbits aside, what are the investment ramifications of this achievement for housing stocks? Will the HGX prices have “memory” here near their 2005 highs and provide resistance? Or are 2005’s prices ancient history with no relevance given a wholly different fundamental backdrop for the sector?

Obviously no one has the answers to those questions, including us. I will say that the HGX’s recent breakout above the July-August highs and subsequent follow through has been impressive and the momentum may carry the index further.

However, I will also caution against dismissing the notion of price memory (in the form of resistance) stemming from the 2005 highs. Non-technicians and chartists may scoff at the possibility, but such major junctures on a chart can have a significant impact, even a dozen or more years later. Consider that the Nasdaq first encountered its 2000 highs in mid-2015. It took a full year and a half — and a bumpy one at that — before the index was able to sustain a move to new highs.

So while this rally in housing stocks may have further room to run in the near-term, don’t be surprised if the stocks’ charts are eventually forced to re-build.

If you’re interested in the “all-access” version of our charts and research, please check out our new site, The Lyons Share. Considering what we believe will be a very difficult investment climate for awhile, there has never been a better time to reap the benefits of our risk-managed approach. Thanks for reading!

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Each week we read dozens of transcripts from earnings calls and presentations as part of our investment process. Below is a weekly post which contains some of the most important quotes about the economy and industry trends from those transcripts. Click here to receive these posts weekly via email.

This week’s post has a slightly different format than usual because I spent this week at the LD Micro conference in LA meeting with the management teams of a few dozen Microcap companies. The conference is hosted by Chris Lahiji and his team. They always do a great job of putting together under-followed and under-loved companies with market caps less than $100m. The Macro part of the post still comes from the usual large cap companies, but everything else in the post draws from our meetings with the micro-caps.

It is always eye opening to meet with these small companies. The CEOs are scrappy and tenacious–always looking to sell investors on a dream. There is deep skepticism that most of these companies will survive and the valuations reflect that. There have also been structural shifts in the brokerage community that has made it particularly hard for these companies to raise money. That decreases the chance of survival, but also may create opportunities for savvy investors. Still, I’ll make the usual disclaimer that micro-cap stocks are highly speculative, so invest at your own risk.

The Macro Outlook:

Obviously the stock market has done unbelievably well since the election

“obviously, the stock has done unbelievably well since the election and I think it’s based upon the hope…that the Trump administration will be very good for kind of unleashed business per se and maybe improve the GDP and allow banks to do their lending and the banks will benefit a little bit both from higher rates and higher economic activity and possibly some reduced regulation. So, hopefully that will turn out to be true.” —JP Morgan CEO Jamie Dimon (Bank)

Even Italian elections couldn’t shake the market’s confidence

“I don’t think there is reason to talk about a euro crisis. The Italians have a lot of experience dealing with such situations and that’s why I’m not concerned.” —German finance minister Wolfgang Schaeuble (Government)

Donald Trump sounds pleased

“[The Washington post says companies are unnerved…well] they’re so unnerved that the stock market is at an all time record since I’ve been elected…after I won the election, you see what happened. In the history of our country, there’s never been an up this big after an election, so I don’t know how somebody says that people are unnerved, it’s just the opposite. And frankly I think we’re going to go up. We have tremendous room, tremendous margin in our country, but we have to do things right.” —President Elect Donald Trump (Government)

The business community is certainly more optimistic

“To start the third quarter up through the date of the election, global November new business remained slow. But after the date of the election, we saw new business ramp up in both North America and in Europe…November, in Europe, we had our best month of new business in probably two years. Asia was also incredibly strong…I would say that the conversation is certainly more optimistic than it was in May and June, no doubt about that. Now, we’ll see if that turns into increasing levels of business in early calendar 2017.” —Korn Ferry CEO/CFO (Executive Search)

Companies are getting down to business

“the feel before the election was — it was materially slowing out there…All the discussions I’ve had with customers, suppliers, and with everybody out there, there is a high degree of optimism, and certainly my fellow CEOs…look if we truly are going to have tax reform that is really good…And we feel like every customer we touched since…they’re saying it’s going to be easier to do our jobs and we can get on with doing our jobs and that’s the general feeling…it does feel like people are just down to business now and down to business is a good thought for us.” —HD Supply CEO Joe DeAngelo (Industrial Distributor)

The consumer is healthy

“We see a fairly healthy consumer. And so if you look at macroeconomic data, home prices, the consumer balance sheet, debt service ratios, the number of people working, wages going up, etcetera, we see that pretty healthy. We see a mirror of that inside JPMorgan. So we have reporting quarter-after-quarter, credit card sales, deposits, new household accounts, all those types things are doing quite well and we expect that to continue.” —JP Morgan CEO Jamie Dimon (Bank)

Millenials are buying houses

“With the millennial generation now entering their thirties and forming families, we are starting to benefit from the desire for home ownership from the affluent leading edge of this huge demographic wave. In fiscal year 2016, approximately 22% of our settlements included one primary buyer 35 years of age or under.” —Toll Brothers CEO Douglas Yearley (Homebuilder)

But other consumer spending may still be a little choppy

“the four weeks of November was choppy frankly, particularly the week of the election. I think it was worse than a snowstorm in terms of nobody wanting to go out and buy stuff and that’s what I read about other retailers as well. And again, over the last few months it’s been a little choppy a little more in November and a little weaker and so at least, what we can tell you at this point is the first couple of weeks have been okay. And again, traffic has seemed to have stabilized until something changes there, who knows” —Costco CFO Richard Galanti (Retail)

Commercial Real Estate is late in its cycle

“The one area where you look at and you might say, oh my god, there is a little bit of issue, there is commercial real estate…We are cautious. It’s probably getting later in the cycle for some of that. And we don’t do what I would consider we don’t do now and we have never done the riskiest type of lending. So we have always been cautious in real estate.” —JP Morgan CEO Jamie Dimon (Bank)

[Note: now entering microcap land]

And markets can get ahead of themselves

Sometimes market excitement gets beyond clinical reality…(but that’s not the case with us!) —Vistagen Therapeutics (Pharma/Biotech)

International:

A Chinese steel distributor had interesting thoughts on China, but asked to remain anonymous

The Chinese real estate market will eventually have to correct

The Chinese government needs to sustain the real estate market but they cannot. Real estate prices in Shanghai are now higher than they are in New York City. That is unsustainable. Developments in 3rd and 4th tier cities are sitting empty. That is unsustainable. —Chinese Steel Distributor

Xi Jinping is looking to increase his power

Xi Jinping is a powerful guy, he could be as powerful as Donald Trump. He’s going to consolidate his government team. He already has been…The Chinese people have a love hate relationship with Xi. They love that he cleaned up corruption big time, but hate that because of it spending from corrupt officials got turned down big time. —Chinese Steel Distributor

Business leaders expect the RMB to be devalued by at least 25%

The Chinese government needs to deal with the currency situation. The currency will be depreciated. The government tried to put controls on the currency but they really couldn’t stop capital from leaving the country. The Central Bank did not really support the currency. Most people expect that the RMB will depreciate by at least 25% and so they are trying to get their capital out of the country. Public companies that are listed in the US are one way to do that. If you buy shares of a local subsidiary with shares traded in North America, you can get money out of the country —Chinese Steel Distributor

Financials:

The world has changed for microcap companies

The market is so different. Guys like you are so different than they were 20 years ago. The OTC, so many investors don’t want to invest purely because we’re OTC. Investors wont invest like they would before. You can’t even give your stock certificate to most brokers if you’re OTC. Investors themselves are far less willing to put money into a deal that is pre-profitable. —Pressure Biosciences (Laboratory Instruments)

Consumer:

These days the sexy growth companies generally aren’t public

Who is to say that there aren’t molecules out there that can be engineered that are more efficient at powering our bodies than today’s natural foods? —Soylent VP Brandon Mackie (Meal Replacement Drinks)

Microcap companies are swinging for their own fences

Cannabis companies have different strategies on how to cash in on the “green rush”

Our strategy was to design and build greenhouses to grow cannabis and rent them to licensed growers, but not obtain a license ourselves. We made the decision not to cross the “green line.” —Americann (Greenhouse Developers)

I had a partner who made a lot of money in a buyout who put all his money into gold in 1995. You know how much money he made on that? I always remembered that and said I wouldn’t let that pass by. When everything started happening with pot I said to myself gold rush, green rush. I’m in. I don’t know how to grow but I do know how to make mobile games. —First Harvest Corp (Mobile Gaming)

Technology:

Many companies were birthed in different market environments but are still standing

UGE was born in the “inconvenient truth” years to install solar on commercial buildings

In 2007 solar installation costs were $8-$10 per watt. Now it’s $1-$2 per watt depending on the market. Panels were $4 per watt back then compared to less than $0.40 now. —UGE International (Solar Panel Installation)

Some telecom companies are still living off capital raised in the late 90s

I call it the original sin of telecom. In the late 90s the industry became so overcapitalized and so many smart people came into the industry, attracted by salaries and government incentives. There’s still enough capital around to pay salaries, but it’s not what people expected. You’d be surprised how many PhDs are working in customer service today. —MRV Communications (Internet Infrastructure)

Healthcare:

Microcap biotech companies raise lots of money for expensive trials

The cost per patient for a trial in cancer is about $50-100k per patient. Cardio vascular is cheaper–$15-20k per patient, maybe $40k. It will cost you $1 million the minute you decide you want to do a clinical trial. —Gemphire Therapeutics (Anti-cholesterol drug)

The companies are all trying to prove that their molecules can hit their “end points”

“25% of Americans have a diagnosed mental disorder. 16% will go through a major depressive disorder in their lifetime” —MYND Analytics(Pyschiatric Testing)

“For years addiction was treated as a personal failure. Today addiction is treated as a disease that can be compared to diabetes. It is not curable, it has to be managed for the time of a person’s life.” —BioCorRX (Anti-Addiction Drug Delivery)

“The leading cause of birth defects in the United States is CMV, higher than down syndrome, but not many people know about it” —VBI Vaccines (CMV Vaccine)

“I hope that the incoming administration lives up to its promise to help vets return to civilian life” —Tonix Pharmaceuticals (PTSD drug)

Industrials:

There aren’t as many small manufacturing companies as there would have been in past eras, but that could change

“The Trump thing was nothing more than something that was happening anyways. Manufacturing was coming back anyways. Today the labor cost advantage in China is being offset by the benefits of local production for US markets” —Uniroyal Global CEO Howard Curd (Synthetic Leather Manufacturer)

Materials, Energy:

There are lots of junior mining companies looking to finance exploration projects

“In mining, you have operations guys and project guys. Project guys want a crisis and if they don’t have one they’ll create one.” —Uranium Resources (Uranium Miner)

Capital is scarce for pretty much everyone in the space

“Public capital markets have been closed to shipping for at least 2 years” —PYXIS Tankers (Product Tankers)

Miscellaneous Nuggets of Wisdom:

If you want to succeed with limited capital, the key is to focus

“The best way to succeed in business is maniacal focus, not a shotgun approach” —Pure Bio-science CEO Hank Lambert

Your employees depend on your success

“At Westpoint they teach you a concept of no excuse. There’s no excuse for not taking your hill because troops’ lives depend on you doing what you say you’re going to do. In business it’s not lives that depend on you, but it is livelihoods” —New Age Beverages CEO Brent Willis

Autozone (AZO): A large portion of its growth has been driven by improvements in both the retail and commercial businesses combined with increasing store counts and regular buybacks. That said, Autozone should expect to see expenses rise as it plans to open 2-3 new distribution centers over the next three years. They also continue to see increasing competition from Advanced Auto Parts, PepBoys and even Walmart and Costco. Walmart and Costco’s business as a one-stop shop for all consumer needs might deter traffic to a highly focused store like AutoZone. Meanwhile, currency headwinds related to Mexico and Brazil along with President-Elect Trump’s hardened stance on the region, could spell trouble for future quarters.

Toll Brothers (TOL): Despite beating analysts’ estimates for 3 consecutive quarters, the stock is still down 10% in 2016. The broader housing recovery should continue to support financial performance for the upcoming report. Housing starts and permits were both recorded at 9 year highs for the month of October, reflecting a ramp up in residential construction and a favorable sign for construction companies. Nonetheless, robust growth hasn’t resulted in favorable share price movement. Shareholders typically drop the stock by about 2% throughout the month following a report.

Dave & Busters (PLAY): Dave & Buster’s has been one of the few recent IPOs whose rapid growth has translated into market gains. Shares are up 16% in 2016 and 21% from a year earlier as the chain continues to exceed expectations. Management’s commitment to opening new stores will be the key lever that drives future growth. In the second quarter the company increased its new store count in the range of 10 - 11 in fiscal 2016 from 9-10 previously guided. Given its recent string of success it's not surprising that the stock typically jumps by 3% immediately following a report.

Bob Evans (BOBE): Shares of the casual dining chain are up 18% in 2016 despite sales growth remaining challenged for multiple quarters. BOBE kicked off its fiscal 2017 with better than expected figures on the bottom line but missed its sales target by a wide margin. Key same store sales metrics dropped 4.3% due to 5 restaurant closures during the period. Financial performance should face some of the same near term headwinds including compressed margins from higher labor costs. Analysts at Estimize are calling for a 10% increase on the bottom line to go with a 2% decline on the top ahead of tomorrow’s report.

Yahoo Finance is tracking the stocks you’re following, based on your Yahoo Finance ticker searches.

Best Buy (BBY) – The electronics retailer reported a surprise climb in comparable sales in the second quarter and gave a better than expected outlook for the third quarter. Best Buy now expects revenue of $8.8 billion to $8.9 billion and profit of 43 cents to 47 cents per share. Analysts were expecting revenue of $8.77 billion and earnings of 45 cents per share.

Square (SQ) – Investment banking firm Stifel Nicolaus raised its rating on Square to buy from hold with a $27 price target.

Toll Brothers (TOL) – The homebuilder reported a rise in revenue for the fourth quarter in a row as it sold more luxury homes at higher prices. Toll Brothers reported earnings per share of 61 cents and a 23.5% jump in revenue to $1.27 billion. The company also said that orders, which are a key metric for future revenue, climbed 18.2% to 1,748 units.

Monsanto (MON) – Negotiations between Bayer (BAYRY) and Monsanto are reportedly advancing and moving closer to a deal. According to Bloomberg, citing “people familiar with the matter,” a merger agreement could be reached in the next two weeks. Monsanto rejected Bayer’s $55 billion bid in July after calling the proposal “financially inadequate.”

Here are some of the stocks the Yahoo Finance team will be watching for you today.

Best Buy (BBY) shares soared in early trading. The consumer electronics retailer reporting a beat on both its top and bottom lines for the second quarter. Quarterly same-stores sales came in better than expected thanks to strong demand for appliances and consumer electronics.

Amazon (AMZN) plans to roll out a new monthly music subscription, according to Recode. The service will cost $5 a month. That’s half the price of what Spotify and Apple Music charge. However, the service will not work on any smartphones, but will only work on Amazon’s Echo hardware.

Mobileye ‘s (MBLY) US listed shares were sharply higher in early trading. This follows news that the Jerusalem-based car technology company is teaming up with auto parts supplier Delphi Automotive (DLPH) to develop systems for self-driving cars. The Wall Street Journal reports the two companies are investing hundreds of millions of dollars in the project. The companies say they aim to have the autonomous driving systems ready for production by 2019.

Toll Brothers (TOL) share fell this morning. The luxury homebuilder delivered earnings that matched estimates while revenue topped analysts’ expectations for its fiscal third quarter. Profit jumped 58% from a year ago as it sold more homes at higher prices. However, the company narrowed its revenue outlook for the year.

Best Buy (BBY): Online growth has largely offset losses from lower in store and international sales. Strength in wearables, home theater and appliances have kept growth afloat while mobile phones and tablets continue to suffer. Best Buy is seeing weakness as a third party seller of iPhones and iPads, a sentiment echoed in Target’s recent report. This quarter is likely to be par for the course, but the real question will come from forward guidance. Third quarter earnings will include two key shopping events: Best Buy’s 50 year anniversary sale and back to school

Toll Brothers (TOL): Toll Brother’s stock is down nearly 28% from a year earlier but has started to show signs of life. Shares are up 15% in the past 6 months carried by 3 consecutive quarters of beating on the top and bottom line. The broader housing recovery can be largely credited with the recent bounce back. Tomorrow’s results should largely maintain the upward momentum with earnings projected to grow by 43% and sales by 21%.

The J.M. Smucker Company (SJM): Strong organic sales growth, product innovation and constant efforts to expand through acquisitions have led to robust quarterly results over the past year. Last quarter was perhaps the most surprising, beating on the bottom line by 66 cents and nearly $70 million on the top. This has contributed to the stock’s 40% jump in the last 12 months. The acquisition of Big Heart Pet Brand, launch of Dunkin K cup pods, and expanding distribution of key pet brands will contribute to tomorrow’s results.

Each week we read dozens of transcripts from earnings calls and presentations as part of our investment process. Below is a weekly post which contains some of the most important quotes about the economy and industry trends from those transcripts. Click here to receive these posts weekly via email.

This Week’s Post: The Sky Isn’t Falling

Earnings season slowed down a lot this week, but conference presentations took the place of earnings. Presentations at conferences are a nice change of pace because they tend to focus more on strategy and long term plans. There was some macro commentary though, which was positive in that conditions haven’t changed much in May.

In addition to the transcripts we read online this week, we also attended the B Riley Conference in Los Angeles. At B Riley we got the opportunity to meet one on one with a number of management teams and ask our own questions. Notes (usually paraphrases) from our meetings are included in this week’s piece. Thanks to the team at B Riley and especially Ken Tang for hosting us.

The Macro Outlook:

Visa and Mastercard both agree that there hasn’t been any dramatic change in the consumer in May

“what we are seeing…it’s very much more of the same…We don’t see that weakening environment, but in the same respect we also don’t see a strengthening of commerce and obviously that’s something that we’d like to see. But I would say in every developed market around the world volumes continue to perform at levels like we saw last quarter.” —Visa CEO Charles Scharf (Payments)

“I don’t think we see anything different really than what we said back when we had our last earnings call in our first quarter earnings call in April, right, I guess. So from a U.S. perspective…We don’t see that the consumer had a step-down in spend.” —Mastercard CFO Martina Hund-Mejean (Payments)

Costco is encouraged that discretionary categories performed relatively well

“Okay. Well, in terms of the customer, so far so good. We don’t see any dramatic change…Interestingly, when you look at nondiscretionary items…versus discretionary items…including big-ticket items like furniture, electronics and the like, we’ve actually had, relatively speaking, a little more strength in some of those nonfood categories. So that I think allays some of any concerns that some people have had. But generally speaking, I’d have to say our customers are still pretty healthy” —Costco CFO Richard Galanti (General Merchandise)

Toll Brothers still loves the luxury housing market

“We don’t agree that there’s weakness at the high end. I think our results and our commentary confirms and supports that…I would not accept the thesis that the high end has a bid ask issue. We don’t have buyers coming in that are looking to negotiate. We are very comfortable with the business. There are plenty of buyers and we love the luxury end.” —Toll Brothers CEO Douglas Yearley (Homebuilder)

There continue to be companies that see some weakness though

Demand for farm equipment is pressured

“Low commodity prices, stagnant farm incomes, and elevated used equipment levels in U.S. and Canada are continuing to pressure demand for farm equipment” —Deere Investor Relations Joshua Jepsen (Ag Equipment)

Jewelry sales are soft

“We attribute the overall lower sales to softness in domestic customer spending in many U.S. markets as well as lower spending by foreign tourists of many nationalities in New York and other high tourism markets.” —Tiffany (Jewelry)

And IT spend is muted

“And by geography and by segment and by technology, our view is, all of that feels muted right now…muted is not necessarily a bad thing, it’s just the reality that we don’t see the strong growth that has existed in the IT spending environment” —Tech Data CEO Bob Dutkowsky (Technology Distributor)

But overall the sky isn’t falling

“I travel around the world a lot with our customers and I have seen nothing personally or heard of on my team that makes me think the sky is falling again anywhere but Brazil.” —Linkedin Head of Sales Mike Gamson (Social Network)

Financials:

Some financial engineering tricks may be reaching their limits

Companies can’t borrow and buyback forever

“We are very committed to shareholders returns, cash returns in fact in the last year we have returned 250% of free cash flow so we can’t stay at that level.” —Applied Materials CEO Gary Dickerson (Semiconductor Equipment)

And GAAP profits are important

“Yes, listen, we’re very focused on GAAP profits, and I think all companies in our space who use both stock and cash are focused on it. And I think we’ve got a very clear commitment with our compensation committee about the goals that we’re moving towards and I think so far so good on tracking towards them.” —Linkedin Head of Global Sales Mike Gamson (Social Network)

If the financial engineering doesn’t end, regulators could flex their muscles

“The power has shifted towards regulators in this country. And I think that’s a risk for the economy. I don’t think that’s a coincidence that we’re seeing sub-par economic growth, I think it’s a burden. Doesn’t matter if you talk to healthcare executives or bankers.” —Chevron CEO John Watson (Oil and Gas)

Blockchain is something financial companies are spending a lot of time thinking about

“blockchain is it something I think that from our standpoint we certainly spend a lot of time thinking about and we have our own investments in companies where we’re developing prototypes…I think if you just ask me what the impact will be I think the short-term on payments not tremendously significant” —Visa CEO Charles Scharf (Payments)

An increasing number of people are filing tax returns via mobile phone

“the number of completed returns through the mobile app and through mobile browsers doubled.” —Intuit CEO Brad Smith (Personal Finance Software)

Consumer:

Flat is the new up for many old-line retailers

“In our domestic business, we delivered better-than expected, essentially flat comparable sales, versus our guidance of 1% to 2% decline.” —Best Buy CEO Hubert Joly (Consumer Electronics)

Retailers are having to defend expansion plans

“So we still believe in new stores, I mean I think they create an incredible place for our customer to touch and feel the product, they make our digital platform more competitive and ultimately they create brand awareness. I think we have opportunities to leverage them perhaps differently than we do today to create different and unique experiences” —DSW CEO Roger Rawlins (Retail)

Meanwhile Amazon is making an even bigger push into fashion

Amazon definitely wants to be seen as a place where a customer can get fashion —Steve Madden Director of Finance Derek Browe (Shoes)

But the returns can kill you in online apparel

In the online channel, it’s the return and refund costs that kill you because of the high cost of shipping versus the ultimate price of the order. About 20% of overall apparel orders on e-commerce are returned —Destination XL CEO David Levin (Big and Tall Apparel)

It’s a great time to be a content creator

“there are so many different buyers out there for content. It’s a great time to be a content creator.” —Comcast EVP Mike Cavanagh (Media)

Millenials want to own homes

“As millennials mature, studies indicate that their appetite for home ownership is consistent with past generations, which is of course encouraging for our industry.” —Toll Brothers Chairman Bob Toll (Homebuilder)

Technology:

Jeff Bezos said that we’re entering a golden age of machine learning

“It has been a dream for so long, a kind of science fiction scenario, the things we’re solving with machine learning today are extraordinary. We really are at a tipping point where the progress is accelerating. I think we’re entering a golden age of machine learning. We’re still along ways away from being able to do things the way humans doing things. Human like intelligence is still pretty mysterious even to the most advanced AI research. If you think about the way humans learn, we are incredibly data efficient.” —Amazon CEO Jeff Bezos (E-Commerce)

This isn’t the first time that things like AI or IoT have been talked about though

I was around for the first AI wave…AI was a dirty word for a long time…grad students avoided the subject because you’d have your funding pulled right away —Digimarc CTO Tony Rodriguez (Digital Watermarks)

“So look we’ve been talking about IoT, I think we talked about this a little bit at dinner last night, back in the late 80s when I started to get involved in cellular we used to talk about IoT being a huge revenue driver. I finally think we’re on the cusp of that, but on the meantime the industry is exploded.” —Verizon CEO Lowell McAdam (Telecom)

IBM sees cognitive technologies as complementary to human workers

“we don’t see the application of cognitive technologies as replacing or automating anything away. What it really does is it provides a better basis by which people can make decisions” —IBM CFO Martin Schroeter (Enterprise Technology)

The cloud allows companies to update applications with more agility

“there’s certainly an economic element to this. But it’s really about agility…with our clients and the hybrid environment, we’re delivering new functions every day. And that’s why clients find that cloud that model so appealing.” —IBM CFO Martin Schroeter (Enterprise Technology)

Email can be a sticky product

“There are still 700,000 subscribers to legacy Earthlink. There are a lot of people who in 1995 got an email like “[email protected]” who love their address and don’t want to give it up.” —Earthlink Treasurer Trey Huffman (Internet Service Provider)

Healthcare:

More physicians are becoming employees of hospitals as hospitals consolidate

“over the last couple years a significant amount of consolidation in hospitals, and that will probably continue. We’ve also seen that the physician, more and more physicians are becoming employees of the hospital than they have been in the past.” —Johnson and Johnson EVP Sandra Peterson (Diversified Healthcare)

Materials, Energy:

Energy companies are running out of liquidity and will likely default despite higher oil prices

“further deterioration in the oil and gas producer portfolio occurred during the quarter…This trend was expected as leverage borrowers exhaust available sources of liquidity…The recent increase in oil prices, while encouraging, is not likely to have an immediate positive impact.” —Toronto Dominion CRO Mark Chauvin (Bank)

Miscellaneous Nuggets of Wisdom:

Bring your team together

“I’m always making sure it’s a special event and that people understand the importance of getting together. My point is that it’s important to me that people feel connected to something more than just their desk and computer. That they understand the purpose and have a sense of their role and how they contribute to things.” —Liberty Global CEO Mike Fries (Cable)

Be adaptive to change

The world is changing and you have to understand what’s around you, what you can and can’t control. If not you’re not long for this business or any business really —Perry Ellis CEO Oscar Feldenkreis (Apparel)

Know your purpose

“Life is what you make of it. You are dealt a pot of cards. Your DNA is fixed by your mother and your father. Your job is to make the best of the cards that have been handed out to you. What can you do well? What can you not do well? What are you worse at? If you ask me to make my living as an artist, I’ll starve; because I just can’t draw. But if you ask me to argue a point out, I’ll get by. Those are the cards I was handed out, and I make use of them. Don’t try and do something you are not favored by nature to do.” —Lee Kuan Yew, Former Prime Minister of Singapore