As one Matthew McConaughey would say, alright, alright, alright!

Thanks for joining me at the Diary today. Tomorrow you'll be in the more than capable hands of Bret Jensen.

Once again, my hat is off to the editors that help get my thoughts to you lickety split and also make sure to help me sound as smart as possible.

Let's do it again sometime, hopefully sooner than later. In the meantime, you can find me over at Trifecta Stocks and Stocks Under $10, and the periodic piece here at Real Money Pro.

Have a great evening!

With about 30 minutes until today's closing bell, let's take a look at what we have coming at us from an earnings report perspective after 4 p.m. ET: 

Bank OZK (OZK)

Bright Scholar Education (BEDU)

CSX (CSX)

People's United Financial (PBCT)

Progress Software (PRGS)

Now, it may be me but I'd be willing to wager the report among that bunch to garner the most investor interest will be the one from CSX. Consensus expectations are calling for EPS of $0.98 on revenue of $2.9 billion. 

What's going to make this report an interest one is the following data from the Association of American Railroads: 

U.S. railroads originated 1,224,477 carloads in October 2019, down 8.4 percent, or 112,703 carloads, from October 2018.

U.S. railroads originated 955,579 carloads in November 2019, down 7.5 percent, or 77,166 carloads, from November 2018.

U.S. railroads originated 928,102 carloads in December 2019, down 9.2 percent, or 93,788 carloads, from December 2018. 

Not exactly a barometer depicting a vibrant economy. But as we enter 2020 and given my comments on expectations to be double checked during the current earning season, CSX's outlook for the economy and rail traffic will be ones to factor into our investing mosaic.

For all you Bitcoin-ers out there, as Dougie would say, run don't walk to watch this video on the Bitcoin Halving Effect with long-time friend Jill Malandrino, here.

Interesting but not surprising given the need to expand his demographic reach. It will be interesting to see how other Democratic team lines are drawn before and after the Iowa caucuses on Feb. 3.

More at Politico, but I'd remind readers that all of the candidates are in campaign mode, which is to say they can espouse as needed to help win the nomination but as we've seen before it's a very different matter when facing Congress.

Per Bloomberg:

The U.S. Labor Department said it will ban computers from the room where journalists receive advance access to major economic reports such as employment and inflation figures, in an effort to ensure a level playing field.

Currently, the department hosts "lockups" in Washington for major reports lasting 30 to 60 minutes, where journalists receive the data in a secure room, write stories on computers disconnected from the internet, and transmit them when connections are restored at the release time. Other electronic devices such as smartphones were already prohibited.

Bureau of Labor Statistics Commissioner William Beach said in a letter Thursday that Labor agencies including BLS have raised concerns about data-security stemming from the lockups, and cited a 2014 report by the department's inspector general saying several news organizations that participate are able to profit by providing the numbers to algorithmic traders in a format that provides them an advantage.

I'm all for a fair playing field, and it might result in a few extra minutes for the data to be shared across digital and broadcast media, but it might also lead to more context and perspective as well when the data is published.

The last few days have seen the topic of brick & mortar vs. digital or e-commerce sales once again take center stage. We chatted on this very topic this morning... but we have yet another confirmation sign in the following headlines: 

Bose is shutting down all of its US stores as retail makes a 'dramatic shift to online shopping'

Bose is closing all of its retail stores in North America, Europe, Japan, and Australia

Bose To Shut Down Retail Stores, Focus On Online Sales

I have to say that when I've taken recent mall walks the Bose store near me has only been filled with tumble weeds and crickets. And I realize Bose is likely fending off not only the smart speaker market and competitors such as Amazon (AMZN) , Alphabet (GOOGL) and Apple (AAPL) , as well as Sono (SONO) , but it's another data point that confirms the ongoing shift to digital shopping. 

From The Verge article: 

"The company says consumer buying habits have changed over the years as people are increasingly buying things online rather than walking into physical stores. This is precisely the reason it is shuttering its retail presence in some markets, at least that's what it says." 

As the saying goes, a picture, or in this case a chart, is worth a 1,000 words. And if you own Spotify (SPOT) shares or one of their competitors, this may be of interest to you.

Economic activity generally continued to expand modestly in the final six weeks of 2019. The Dallas and Richmond Districts noted above-average growth, while Philadelphia, St. Louis, and Kansas City reported sub-par growth. Consumer spending grew at a modest to moderate pace, with a number of Districts noting some pickup from the prior reporting period.

On balance, holiday sales were said to be solid, with several Districts noting the growing importance of online shopping. Vehicle sales generally expanded moderately, though a handful of Districts reported flat sales. Tourism was mixed, with growth reported in the eastern seaboard Districts but activity little changed in the Midwest and West. Manufacturing activity was essentially flat in most Districts, as in the previous report.

Business in nonfinancial services was mixed but, on balance, growing modestly. Transportation activity was also mixed across Districts, with a majority reporting flat to weaker activity. Banks mostly characterized loan volume as steady to expanding moderately. Home sales trends varied widely across Districts but were flat overall, while residential rental markets strengthened. Some Districts pointed to low inventories as restraining home sales. New residential construction expanded modestly.

Commercial real estate activity varied substantially across Districts. Agricultural conditions were little changed, as was activity in the energy sector. In many Districts, tariffs and trade uncertainty continued to weigh on some businesses. Expectations for the near-term outlook remained modestly favorable across the nation.

For those looking to read the fuller report, you can find it here. I'll be back with anything that jumps out at me in a bit.

Following up on my Coca-Cola (KO) Powerade comments earlier, the company is "adding two new zero-sugar products to its Powerade roster, the first additions to its sports drink category in more than a decade." 

Key words "zero-sugar," which suggests it is trying to pivot the brand to capture the tailwind associated with our Cleaner Living investment theme. 

For more, read this by TheStreet's Rob Lenihan.

As we transition into the afternoon, it's time to talk about the December quarter earnings season, and to do that I'll follow up on some things I shared in the Comment section below.

To set the stage, here are two graphs courtesy of FactSet from last Friday:

The top graph lays out S&P 500 EPS expectations for 2020 calling for a near 9.5% increase vs. 2020. As we know, annual expectations are broken down into quarterly ones hence the second chart. Some quick math shows that - again as of last Friday - December quarter EPS for the S&P 500 is/was expected to fall 2% year over year, but rebound to +5.5% in the current March quarter before strengthening on that basis in the coming 2020 quarters. 

Over the last few weeks a number of the issues facing the market fell by the wayside, and if we accept the argument the stock market is a forward looking entity when we look at the current S&P 500 P/E multiple of 18.6x expected 2020 EPS, it hinges on the S&P 500 companies growing their collective earnings 9.5% or better in 2020 (see the first graph). 

It all starts with that 5.5% increase in the current quarter... which means the current earnings season will be, at least to me, critical. With the passage of the Phase One trade deal, and the changes it will bring, the upcoming earnings related conference calls will also be ones to listen to as well as compare and contrast what is said between competitors, suppliers and customers. My comment goes for not only earnings but also drilling into the real speed of the domestic as well as larger global economy. 

For example, U.S. Secretary of the Treasury Steven Mnuchin sees the domestic economy growing 2.5% this year, but the Wall Street Journal's Economic Forecast Survey currently sees 1.8% in the first half of 2020 and 1.9% in the second half, which drives the 1.9% GDP forecast for 2020. 

No matter how you slice it the December quarter earnings season will likely tell us the next move to be had by the market. Now to listen to what gets said...

We've covered a bit of ground this morning, so as I grab some lunch and recharge for the afternoon ahead, here are some of the articles I'll be reading and watching: 

Inside the Feds' Battle Against Huawei (Wired)

Powerade is launching 2 new product lines as consumer exercise habits change (CNBC)

Senators to Be Sworn In as Trump Impeachment Trial Begins (WSJ)

Germany strikes €44bn deal to phase out coal use in energy supply (FT)

A14 chip could make the iPhone 12 as powerful as the 15-inch MacBook Pro (9to5 Mac)

Two-Thirds of Semiconductor Companies Plan to Pass Tariff Costs on to Customers: Survey (TheStreet)

XPO, Apple and Morgan Stanley: How Investors Should Approach the Markets (TheStreet)

This last one features Jeff Marks, Senior Portfolio Analyst with Action Alerts PLUS, speaking with TheStreet's Katherine Ross - always insightful comments to be had from Jeff.

Pretty soon we'll start to hear quite a bit about the upcoming NFL Super Bowl, with no shortage of it on the commercials. As we know, those tend to cost quite a pretty penny. Variety reports a 30-second commercial will fetch $5.6 million this year, which is why it's rather interesting to see the following from PepsiCo (PEP) , which between its beverage and snack businesses, has been a staple of Super Bowl commercials right alongside Anheuser-Busch InBev's (BUD) Budweiser. 

This year PepsiCo has unveiled it "will give everyone in the U.S. a free Pepsi Zero Sugar (via refund) if the final score of either of this year's Super Bowl teams ends in a zero."

What's interesting about this is in roughly 25% of previous Super Bowl games, at least one team finished with a score ending in zero. Of course there will be all sorts of "if" scenarios to run before deciding how big of a blow this marketing scheme to PepsiCo, but it could very well cost the company less than $5.6 million and it will get a ton of exposure for the Pepsi Zero sugar beverage. And as we know, consumers are leaving sugary beverages in search of better for you drinks that spurn artificial sweeteners. 

And for those that are getting ready for the big game on Feb. 2, I'd suggest visiting Bull Market Fantasy with Jim Cramer. In case you hadn't heard, Jim is as passionate about football as he is about stocks, and that's saying something.

In full disclosure, over at the Stocks Under $10 Portfolio, we trimmed back our exposure to Farfetch (FTCH) shares after the open. Why? The shares have had a great run near 30% and from a portfolio management perspective, it pushed the position size well past the 4% level. A good problem to have no doubt, but as we have all seen before being disciplined is critical. 

Now I realize this is going to result in some questions:

- Do you still see more upside in FTCH shares? Yes, which is why we only trimmed back the position size modestly. Ideally, we'll do what we've done in the past with shares of USA Technologies (USAT) , Habit Restaurants (HABT) and others - continue to trim back the position, booking profits as the shares move closer to our price target. And if the data allows, we'll boost that target as needed.

- What are we doing with the proceeds? We've opted to put it into the shares of RF Industries (RFIL) , a company that is poised to benefit from the 5G network buildout in the coming quarters.

- Any other stocks you are warming up to? We recently added shares of MobilIron to Stocks Under $10 as well as Qualcomm (QCOM) and United Technologies (UTX) shares over at Trifecta Stocks.

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Stocks Under $10 is Long FTCH, USAT, RIFL, MOBL shares. Trifecta Stocks is Long QCOM, UTX shares.

Kathy Jones, Chief Fixed Income Strategist at Charles Schwab (SCHW) , sums things up rather nicely...

Checking in on the IPO market, here are the new issues expected to be had. We'll want to watch the pricing relative to expectations to see if the December quarter trend of lower than expected continues. 

- Clinical stage biopharmaceutical company I-MAB (IMAB) will offer 7.4 million shares in the $12-$15 range and trade on the NYSE.

- China-based mobile app developer LIZHI (LIZI) targets a 4.1 million share offering in the $11-$13 price range. After the IPO, the shares are slated to trade on the Nasdaq.

- Vertically integrated real estate finance company Velocity Financial (VEL) will look to offer 7.3 million shares in the $14-$16 range and trade on the Nasdaq. 

And because I'm likely to get the question, I tend NOT to buy newly issues stocks, preferring to wait until after the IPO lockup expires.

I'm not sure if this is a thing, but today 3D Systems (DDD) announced Figure 4 Jewelry, a specially designed and optimized solution for the burgeoning 3D printed jewelry market, "which is expected to grow 26% over the next four years, according to Technavio."

The real question when we see something like this is from what base. As I discussed on Twitter the other day, there is little reason to get excited about a company's business that is sub-10% of its revenue no matter how fast it is growing, especially if it dilutes the company's margins.

Is it something to keep an eye on? For sure, but it's not a focal point just yet no matter how much someone tries to make it.

If you follow me on Twitter (and why aren't you? #sarcasm), you know I tend to sport Crocs (CROX) when I do my video interviews with TheStreet and elsewhere, much to the chagrin of Katherine Ross. Yet, CROX shares have soared of late so clearly I'm not the only one buying/wearing them.

I'm not sure if the company is looking to cash in on any particular movement, but today it is launching the fourth year of its "Come As You Are" global marketing campaign that will showcase new product designs for the spring 2020 season. As part of the campaign, actresses Priyanka Chopra Jonas and Yang Mi join U.S. singer/actress Zooey Deschanel, South Korean singer/actress Kim Sejeong and Japanese actress Suzu Hirose as global ambassadors for the Crocs brand in 2020. 

I just like them because they are comfy, easy to slip on and take a pounding. That said, the above chart is a good reminder to pay attention as we move around in day to day life and observe what and where people are doing, eating and the like. Sage advice from legendary investor Peter Lynch in his book, One Up On Wall Street.

This week at Real Money Pro I've been talking about several pending special dividends. Some, like the hefty one from NortonLifeLock (NLOK) , are the result of a company selling a business and distributing a portion of proceeds to shareholders. Others, like my forthcoming piece on MSC Industrial Direct   (MSM) and its soon to be paid $5 special dividend, have companies borrowing to fund the special dividend payment - not exactly what we want to see from a company. 

Before that MSM pieces is published, be sure to take a look at the one about Dividend Champion Tanger Factory Outlets (SKT) , and its too good to be true dividend yield of 9.1%. 

And a quick hat tip to subscriber Paul Church as his eagle eyes spotted the MSM special dividend before I did.
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NLOK shares are a constituent in the Foxberry-Tematica Research Cybersecurity & Data Privacy Index.

Following my trade deal comments on Visa (V) , American Express (AXP) , and Mastercard (MA) , Oppenheimer affirms their Outperform ratings for Mastercard and Visa, and raises their respective targets to $345 (from $312) and to $210 (from $202). 

I strongly suspect this is just the beginning of what will be a herd stampede of the same. Bob Lang and I will sit back and enjoy it over at Trifecta Stocks.

December Retail Sales ex-autos rose 0.7% vs. November, and 6.3% year over year. Excluding gasoline, however, December Retail Sales rose 0.1% month over month and 5.3% year over year. 

Quickly looking at the data from a year over year viewpoint, which is my preferred way of assessing it since companies tend to report same-store comps on that basis, we find the following:

- Motor Vehicles and Parts Dealers: +4.1%

- Furniture & Home Furnishings: +3.1%

- Electronics & Appliances: -0.7%

- Food & Beverage Stores: +3.7%

- Health & Personal Care Stores: +3.8%

- Gasoline Stations: +11.3%

- Clothing & Clothing Accessories: +0.1%

- Department Stores: -5.5%

- Non-store retailers: +19.2% 

Without question the report confirms what we've been hearing the last few days - the accelerating shift toward digital shopping. As I discussed on air with Matt Ray, if Signet Jewelers (SIG) saw all of its holiday comp store increase from e-commerce, there is little question about the structural shift underway in how people shop. 

I repeat - I remain bullish on Amazon (AMZN) and Farfetch (FTCH) shares, and today's report likely spells good things for UPS (UPS) as well. Packages need to get to the intended one way or another.

As we wait for the December Retail Sales report, here are some headlines catching my attention this morning: 

Shares of PPG Industries (PPG) are down in pre-market trading following December quarterly results that missed EPS expectations despite reporting in-line quarterly revenue. In its 2020 guidance, the company shares its Performance Coatings business "will be impacted due to lower production rates by an aerospace customer." If we break out our decoder ring, odds are that customer is Boeing (BA) . 

In somewhat related news, Southwest Airlines (LUV) has joined a growing number of airlines that have extended the removal of Boeing 737-MAX flights. Southwest has removed them from its schedule through June 6. 

Global automotive supplier Magna International (MGA) expects its 2020 revenue to be in the range of $40.5 billion-43.5 billion with light vehicle production of 16.3 million units in North America and 20.8 million units in Europe. 

JP Morgan Chase (JPM) reported its December credit-card charge-off rate rose to 2.28% from November's 2.20% and the three-month average of 2.03%. Meanwhile, its delinquency rate ticked down to 1.13% in December from 1.17% in November, but continues to hover near the three-month average of 1.15%. 

Shares of XPO Logistics (XPO) jumped in after-market trading last night following the announcement its Board authorized a review of strategic alternatives, including the possible sale or spin-off of one or more of XPO's business units.

MoneyGram International (MGI) announced a return to global transaction growth for the month of December. The company reported a 2% year-over-year increase in number of transactions, driven by "strong performance from both its global consumer direct digital business and its international walk-in business."

One day after the U.S. and China inked their Phase One trade agreement, Asian equity indices finished on a mixed note. European equities are also mixed, while U.S. equity futures point to a positive open as investors dig into and attempt to digest the eight-part, 96-page agreement.

Much will be made of the agreement, what's good and what falls short.

The long and short of it is that there are several positives to the agreement, including China committing to $200 billion in additional purchases of U.S. goods plus "enhanced" intellectual property protections and enforcement mechanisms. However, the agreement has left in place U.S. tariffs on about $370 billion in Chinese goods with possible reductions subject to coming negotiations that are expected to tackle Chinese subsidies to domestic companies and Beijing's oversight of Chinese state-owned firms. The next round of trade deal negotiations was expected to begin immediately per comments from President Trump, but China has yet to confirm that timing, which alongside lingering intellectual property concerns is leaving some observers thinking the agreement is a half-step measure.

Over the coming days we expect more analysis as well as follow-up comments, which should offer more clarity to investors on the puts and takes of the agreement.

One positive from the Phase One agreement is that Visa (V) , Mastercard (MA) and American Express (AXP) will get access to China's payments markets. This is a long time coming, and an opportunity that all three have been targeting. As the companies report their December quarter earnings we'll be listening for timing and impact, both from their revenue/earnings opportunities as well as from an investment perspective.

Signet Jewelers (SIG) has reported same-store sales that rose 1.6% for November and December, led by North American same-store sales that rose 2.0%. Digging into the details, we find a familiar pattern -- the company's e-commerce sales rose 13.5% during the holiday period while its brick and mortar same-store sales were down 0.2%.

Same pattern as Target (TGT) , and this speaks to the structural shift in how consumers are shopping. I continue to be bullish on Amazon (AMZN) and Farfetch Ltd. (FTCH) shares.

More after my forthcoming radio hit.

Okay folks, here we go and welcome to today's Daily Diary. As Doug mentioned, I'll be taking the helm today -- and to get us started we'll have several financials issuing their quarterly results. We've also got several pieces of economic data coming at us, including the December Retail Sales report.

Following a number of disappointing December same-store-sales report, including yesterday's one from Target (TGT) , investors will be thumbing through the report trying to determine where consumers parted with their shopping dollars in December. If you missed my conversation with TheStreet's Katherine Ross on Target and its announcement yesterday, you can watch it here.

We've already heard that brick & mortar retail was challenged this holiday shopping season, while digital shopping once again soared. Now to see which retail sales report categories benefitted. A betting man would likely wager continued declines at department stores, but that's an easy one.

Grab some coffee while I visit with my pal Matt Ray and his radio show, America's First News. I'll see you back here shortly after I top off my cup of java.