Again, ladies and gentlemen for getting hijacked for a bit today. I'll make it up to you on Monday when I sit in on the Diary one more time.

With the market closed, before we bid adieu, let's turn our gaze to Friday morning and what's on tap. We've already covered the earnings front, so now for the economic one. We'll get the latest Empire Manufacturing Report, but the one I'll be more focused on is the May Industrial Production & Capacity Utilization Report, with a particular focus on the manufacturing line item. It's been a tad bouncy over the several months and following the healthy April print I'm looking for confirmation the manufacturing economy is continuing to hum.

With regard to the capacity utilization front, tightness in that components tends to signal a pick-up in capital spending and business investment. Year to date, that figure has been in a tight range between 75.5%-75.8%, which is well below the 80%-85% area in which we've seen a pick-up in business investment spending. With tax reform and reduced depreciation schedules, I suspect the importance of this data set is somewhat lower than in the past. Case in point, as the March-quarter earnings season winds down, data collected by Credit Suisse reveals spending on factories, equipment and other capital goods by companies in the S&P 500 is expected to have risen to $166 billion during the quarter, up 24% year over year. That would be the fastest rise in capital spending since 2011 and mark a March-quarter record since Credit Suisse started collecting the data in 1995.

Those findings are echoed by the year-over-year increase in the March 2018 quarter U.S. manufacturing technology orders according to data published in the U.S. Manufacturing Technology Orders report from the Association for Manufacturing Technology (AMT). Per AMT's findings, there was a 25% year-over-year pickup in those orders. For those wondering, that's one of the reasons why we're bullish on Rockwell Automation (ROK) shares over in the Trifecta Stocks portfolio.

The one stock to consider shorting if I were to...

I've been asked by many folks of late "What stock could I short?"

First off, it takes, in my view, a very risk tolerant person to short stocks -- it's not for everybody.

When I do so, I look for eroding business models preferably at high valuations, but I at least need the eroding business model. To me, the business model at GameStop (GME) has been and is increasingly broken. The combination of the various app stores and mobile gaming are two factors, but so to is the movement toward downloadable games and Fortnite is reminder of that in spades.

In many ways this looks like a repeat of Blockbuster when Netflix (NFLX) and its DVD service came on the scene, which eventually gave way to streaming and proprietary, original content. If we look at the App Store numbers from Apple (AAPL) or the demand for games when wanted on the device of choice, it portends the accelerating downfall of gaming cartridges and DVDs.

While GameStop is looking to now sell comic books to drive foot traffic, it's only a matter of time for this company.

I just previewed what I'll be looking for in tonight's earnings report from Adobe Systems (ADBE) , now let's take a look a who's reporting tomorrow morning. We have three reports and in my view all three should offer some insight. They are:

Blackberry (BB) - This has been an interesting transformation over the years from failed device company to one that is focused on the Internet of Things. That's an interesting market, that is expected to blow up in a good way with the commercial deployments of 5G. Based on what we've been hearing, it appears those deployments will begin later this year, gaining steam in 2019. For that, we've got Dycom Industries (DY) in Trifecta and AXT (AXTI) in Stocks Under $10, but tomorrow's report should shed some light about timing and on when Blackberry expects the Internet of Things to take off. Yes, I'll be listening.

Carmax (KMX)  -- While neither Stocks Under $10 nor Trifecta own this retailer of used cars, it's results will offer some perspective on the demand for used cars, the ability of consumers to incremental auto loans and the financial health of the consumer. Building on my comments earlier today about what I call the Cash-Strapped Consumer, this report bears digging into.

Finish Line (FINL)  -- It's all about the kicks better known as sneakers or, to some, athletic shoes. To me this report will tell us whether consumers continue to spend big on high price items or not, as well as if Under Armour (UAA) is turning the corner with its footwear or if it's falling behind Nike (NKE) and Adidas.

Back soon with what tomorrow's economic data could tell us.

After the market close Adobe Systems (ADBE) will report second quarter results, and consensus expectations call for EPS of $1.54 vs. $1.02 in the year ago quarter on revenue of $2.16 billion, up 22% year over year. Aside from the insight to be had on its businesses, especially cloud, I'll be listening for comments on how it plans to integrate recently acquired Magento Commerce, a Shopify (SHOP) competitor, into its business model. I expect Wall Street to focus on Adobe's cloud business to revisit and reassess the speed of adoption and what it could mean for Amazon (AMZN) , Microsoft (MSFT) and others.

The one thing I will be wary of is sandbagging with its outlook. I say this only because the company has beaten expectations over the last seven quarters. Past a certain point, and I've seen this more times than I can count, management teams will lower the outlook bar only to easily walk over it later on. The problem is that softer than expected outlook can weigh on the shares in the short-term.

Apologies one and all - what was expected to be a routine call regarding my 86-year old father's help spun out of control into something much larger and longer. Again, I apologize. 

That said, what the call reinforced was the unprecedented demographic change we are seeing as the first baby-boomers are turning 70. Their needs and demands are changing as well, but that is coming into conflict with their wanting to remain independent. 

As I mentioned earlier, where there is a need or a pain point, solutions tend to emerge often times with a company behind them. In this case, it's looking at assisted living, and there is no shortage of companies to be had looking to target that market. One of the better known ones is Omega Healthcare Investors (OHI) , which also sports a dividend yield north of 10%.

This isn't the first time I've referenced the life developments of my father. Last fall he was the victim of identity theft, and that led me to recommend shares of ETFMG Prime Cyber Security ETF (HACK) at roughly $30. Today it's at $39.35 as I type this. As famed investor Peter Lynch and our own Jim Cramer have suggested, it pays to watch and invest in what's going on around us.

In my world, that focuses on a thematic perspective, we are seeing a number of companies contend not with positive tailwinds, but with mounting headwinds to their business. What's interesting is how they are responding... with CEO changes, and in some cases the backgrounds of these new leaders are different than what we've seen in the past. 

One of the higher profile examples of late was the CEO transition at J.M. Smucker (SJM) , which is contending with the growing preference by consumers for healthy, natural, clean food, drinks and the like. That same push by the way is also being witnessed in what I am calling "strawpocalypse" as plastic straws are increasingly being banned in favor of paper and metal ones. 

This morning there are reports of CEO changes at both Petco Animal Supplies and Rue21. Both businesses are in my view under attack from the likes of Amazon (AMZN) - and that means these companies are banking, literally and figuratively, on the new regime to lead its counteroffensive. Teen apparel Rue 21's new CEO, Laurie Van Brunt, is from Chico's FAS (CHS) and replaces a Michael Appel, interim CEO named in late 2017. Arguably that is a smart if not safe choice as Van Brunt presumably knows the apparel business. 

It's the move by Petco, however, that I find far more interesting. The reason is new CEO Ron Coughlin is coming from HP (HPQ) where he spent the last 11 years as president of the Personal Systems business. 

I'll be doing some more thinking on this, as well as other CEO moves. To me, it along with analyzing board member backgrounds and connections, can be an indicator of strategic moves to come.

As you sit down with your next cup of coffee, I'm pouring myself a wonderful bottle of Elixir Specialty Coffee, which I have to say is like nothing I've ever had before. As I get ready to take a drink, I'm pulling up some must read stories from around TheStreet and Real Money, and for those wondering here's what's catching my eye this morning: 

• Market Recon is a morning staple, and it's not because it's written by Sarge Guilfolye, my partner in crime for Stocks Under $10
• While I see the acquisition of 21st Century Fox (FOXA) as critical for Disney's (DIS) forthcoming Disney streaming service, Ed Ponsi makes the case that Disney will be fine regardless. With DIS shares in the Trifecta Portfolio, it's one I'll be reading closely.
• Paul Price is kicking the tires on Sally Beauty (SBH) shares, and says, it "offers the best risk/reward of almost anything I can find right now."

Other notables on my reading list include Microsoft (MSFT) developing its own automated cashier technology; Apple's (AAPL)  growing move into content; and Netflix (NFLX) quietly denying a move into gaming even as it brings an interactive "Minecraft" story to market - that sure sounds like some form of gaming to me, but then again I fondly remember playing Mega-Man.

Apologies for the brief interlude as I had a radio interview with Bill Meyer at KMED in Oregon that came in over the transom at the last minute. Bill wanted to talk about the news yesterday that the Fed will raise interest rates another two times this year. I had been expecting that "news" following the growing number of inflationary data points and price increases from the likes of Starbucks (SBUX) , Cracker Barrel, Stocks Under $10 holding Habit Restaurants (HABT) and others.

On the one hand it can be argued the economy is picking up enough to withstand these rate increases. The other, however, is tied to what these interest rate increases could mean to the consumer and the level of disposable income her or she has. It's a great question, and it ties into my Cash-strapped Consumer or Middle Class Squeeze theme.

What I mean is, at the margin, rising interest rates will raise interest costs for consumers that have roughly $1.5 trillion in student loan debt, $1.1 trillion in auto loans and $1 trillion in credit card debt at a time when robust wage growth remains elusive despite the falling unemployment rate. With the consumer being directly or indirectly responsible for some two-thirds of GDP, unless we do see robust wage growth to be had consumers will be grappling with higher interest payments and higher prices for what they are buying.

Not to beat a dead horse, but this likely means more consumers looking for deals, sales and other bargains. As I shared in Cocktail Investing: Distilling Everyday Noise Into Clear Investing Signals for Better Returns that I co-authored with Lenore Hawkins, most every pain point brings about a solution, sometimes innovative, sometimes not. In my view, the need for consumers to stretch the disposable dollars they do have to spend is a driver for Amazon (AMZN) , Costco (COST) , TJX Cos. (TJX) and others. And that doesn't even take into account Amazon's Amazon Web Services, which is also thriving on cloud adoption AND it's a key differentiator for Amazon vs. other retailers AND a key source of its profits and cash flow.

I'll be back shortly with more on the major developments of the morning.

So what did we talk about on Cheddar just now... funny you should ask! 

Earlier this week, a court ruling paved the way for at least two things that are poised to alter the entertainment/media industry. I'm talking about the victory had by communications company AT&T (T) over the US Department of Justice in its bid to acquire content company Time Warner (TWX) . The gist of the merger between these two companies is that it brings together one of the biggest programmers of movies and television with one of the biggest mobile carriers in the US. From a thematic perspective, this combines our Connected Society and Content is King under one roof, and the result is likely to be rather disruptive.

Those are two legs to a combination that I am increasingly referring to as the Digital Lifestyle, which also includes our Cashless Consumption investing theme - a powerful three-legged stool that reflects the consumer digital footprint. Consumers will not only be able to get content when, where and from whatever device they want, but AT&T will now have a content moat around its business. We've seen this strategy in play before, most notably when Comcast (CMCSA) acquired NBC Universal from General Electric (GE) , but also in the combination of Disney (DIS) and ABC/Capital Cities in the mid-1990s. We've also witnessed the power of captive content in Netflix's (NFLX) business model, and we're seeing companies from Amazon (AMZN) and Facebook FB to even Apple (AAPL) tapping into it, igniting a would be arms race for content.

This means the competitive lines are being redrawn, and in our view serves to confirm something I have been saying for quite a while - sector investing is dead. A simple question proves the point - what sector will the new AT&T-Time Warner be in? Communications? Media/Entertainment? 

That brings us to the second thing - this court ruling and potential combination of AT&T with Time Warner will more than likely send shock waves throughout these industries leading to the usual copycat merger and acquisition activity that we tend to see. Much like a game of musical chairs, companies will look to partner up in one form or another so as to avoid being out in the cold by themselves. Of course, in this game the longer one takes to partner up, the lower quality partnership choices one faces. 

Odds are this means we will see a pronounced pickup in content acquisition activity. Aside from AT&T-Time Warner, we are seeing another M&A attempt heat up between Disney and 21st Century Fox (FOXA) as Comcast (CMCSA) has re-entered the bidding fray. We'll see how this resolves itself, but odds are the company that loses the bid will look to shore up its content position. It takes time to build one's own content library and character pool, which is another reason to expect a pickup in M&A activity, and again competitors will not want to be caught flat footed especially after the AT&T- Time Warner ruling. 

While there are several content companies out there including CBS (CBS) and Viacom (VIAB) , the vast majority of them have market capitalizations over $20 billion, which can make for an expensive proposition. Well below that threshold, however, is AMC Networks (AMCX) , which is home to AMC, WE tv, BBC AMERICA, IFC, and SundanceTV and boasts a growing roster of original content, including The Walking Dead franchise, Love After Lockup, Killing Eve, McMafia, Brockmire, Dietland, Better Call Saul, Nosferatu, and others, under its AMC Studios business. That businesses' content library also includes Mad Men and Breaking Bad, as well as its burgeoning gaming business. 

To me, all of the above makes AMC Networks a likely takeout candidate as this content arms race heats up.

With the May Retail Sales report in hand, let's take a look at what it means shall we? 

Right off the bat, the headlines point to a stronger than expected result with May Retail Sales ex-auto +0.9% month over month vs. +0.5% consensus. That's the sequential view, but I also like to look at the year over year one as it helps track relative to company revenue and earnings expectations. In that case, May 2018 retail sales rose 6.0% vs. May 2017 - a pronounced pick up from the year over year increase of 4.9% in April.

Digging into the data, it comes as no surprise the biggest contributor to that year over year growth in May was gas station retail sales, which gapped up 17.7% vs. May 2017. That too was a pickup from the 11.7% year over year jump in April. Here's the thing, while this props up the report Retail Sales figures, it also serves to take a greater bite out of consumer disposable income, which as recent data has been telling us already has been under pressure. If there is any doubt, you should check the multi-year lows in the savings rate we saw in the latest Personal Income & Spending report.

To me, this means what I call Cash-Strapped Consumers are apt to look for ways to stretch the remaining disposable dollars they do have. Great for Amazon (AMZN) , Costco (COST) , TJX Cos.  (TJX) and the like. Needless to say, the Trifecta Portfolio will continue to hold its positions in Amazon and Costco.

Back to the data, the accelering shift toward digital commerce that helps power what I call the Digitial Lifestyle continued to take consumer wallet share in May. That was confirmed in the May line item for Non-store retail sales, Census Bureau speak for e-tailers, that rose 9.1% year over year in May.

The report also showed a somewhat surprising jump in Clothing and Clothing Accessories, up 5.9% year over year, one of the stronger showings in months, and it's a positive for stand alone clothing retailers that resemble the Gap (GPS) and Abercrombie & Fitch (ANF) and branded apparel companies like Nike (NKE) and Ralph Lauren (RL) .

Department Stores did see a pickup with sales rising 2.1% but compared to overall retail sales growth they continue to lag behind, likely meaning they are losing consumer wallet share. I continue to be concerned for the likes of J.C. Penney (JCP) and even Macy's (M) as Amazon continues to move into private label clothing and apparel.

That's a quick look at the report, and I'm off to Cheddar to talk Disney (DIS) -Comcast (CMCSA) -21st Century Fox (FOXA) with a helping hand of AT&T (T) -Time Warner (TWX) . I'll be back with more shortly.

Good morning traders and investors alike!

Today, I have the pleasure of manning the Diary for Doug Kass, and to kick it off we've got the May Retail Sales Report coming our way at 8:30 am ET, followed by the Business Inventories report at 11 am ET.

On the heels of the Fed's FOMC meeting yesterday, in which it confirmed a step up in rate hikes - no surprise given the growing number of inflationary data points, including a new price increase at Starbucks (SBUX) , we are hearing the European Central Bank taper its bond purchase purchases by EUR 15 billion in September and then end purchases in December.

Grab that cup of coffee, it's going to be a busy day indeed. I'll be back with more after I top off my own mug as we put some context around the upcoming Retail Sales report. My gut says it will continue to be a positive not only for Amazon (AMZN) , but also Costco Wholesale (COST) - two companies that Bob Lang and I have in the Trifecta Portfolio.