Breaking Away

You may be surprised to know that shares of Starbucks are currently trading at the same spot they were five years ago nearly to the day. This is a consequence of the latest earnings gap down last evening, amid terrible comps. 

On the updated monthly chart for SBUX, below, you can see the monstrous breakaway gap lower--To see such a gap on the monthly timeframe is typically a big deal and noteworthy of a major regime change for the stock. 

Indeed, as we have noted here and with Members for a few years now, Starbucks was one of the signature names reflecting the mighty American consumer since the 2009 lows. The unstoppable consumer clearly developed a strong affinity for sugar-laden drinks with a bit of coffee mixed in, even after the pandemic. 

However, I strongly suspect sticky high inflation is finally taking its toll on discretionary income. And SBUX reflects that quite well indeed. Put another way, I do not see a buying opportunity in SBUX perhaps for anything more than a quick flip.

Instead, I continue to see substantial downside as I expect the consumer to be squeezed for the next few quarters, at least, with the worst of both worlds--A bifurcated economy (at best) and entrenched inflation. 

Elsewhere, I see uranium stocks getting a boost on news the Senate passed a uranium import ban directed at Russia. UEC and DNN look the best to my eye. 

Finally, we have the FOMC at 2pm EST. You do not need me to speculate on what will or will not be said and happen, since many others are doing that. I will simply look for any signs the market has lot its patience giving Powell and Yellen the benefit of the doubt.