Stocks Go All St. Elmo's Fire On Us

Equities start the day higher as stocks go all St Elmo’s Fire on us. My main man Doug Hafemann, top shelf Industrial trader, dropped some hot 80s beats on me this morning and I knew the recap had its theme. St Elmo’s Fire is one of those 80s songs you run across while driving to the supermarket and you sit there until it’s complete. The video is absolutely epic and the movie was filled with 80s icons. Who didn’t love those “coming of age” sagas where we root for the burnout to become something greater? Anyway…what does this have to do with stocks? The line goes “Soldier of…only you can do what must be done” (you sang it in your head didn’t you). How good is that!!  LET’S GO! These companies are the only ones who know what must be done: they have to report strong earnings, raise guidance and say “the economy is strong, we have a big tailwind from tax reform and we plan on spending some of this money to grow”. If they do that then all of us will be singing “I can hear the music playin’ I can see the banners fly” because we’ll finally have a real reason to rally. I mean check the facts jack: 51 companies in the S&P have reported so far and we’re currently rocking a 30% bottom line growth rate. 30%! If you’re looking for broad sweeping conclusions based on very little data you’ve come to the right place!! Oh and guess what, we haven’t even seen a single Energy company report and Crude just touched $68!! What if those guys start pumping out positive forward guidance because oil stopped being a train wreck? “I can see a new horizon…underneath the blazing sky” (love that part).

After the open we saw a big test of bullish sentiment as the market got whacked almost instantly. Two or three weeks ago that early drubbing would’ve been the start of a 1.5% decline but not on April 18th my friends, no no no, we saw dip buying show up and the market raced higher. #thingswewanttosee. Let’s put aside market commentary though and talk stocks and jocks. IBM reported last night, opened up another downside gap on their chart, and went on to be the worst performer on the day. Maybe these guys should just change their ticker symbol to UGH (h/t lindzon). Thing has more gaps on its chart than a 2yr olds mouth. AMZN announced they are going to sell a FIRE TV thru BBY and both of the stocks rallied.  How is AAPL gonna sit by and let AMZN take the smart TV space from them after they took the home speaker crown? AMZN is gonna lock in every millennial cord cutter into its TV app ecosystem for life. Feels like AAPL is missing out on a couple things that seem like no brainers (55mm cord cutters) and if you feel the same way hit up my boy @Colin_Sebastian on TWTR to complain like I do. A whole slew of transports did well today (UAL, CSX, AAL, R) and if you’re looking for things to root for this sector should be tops on your list. Losers other than IBM included LRCX, MO, AMAT, GPS, JNPR, and this guy who was naked punching cars in a Publix parking lot. I swear if I saw that headline and I didn’t know Publix was in Florida I still woulda said Florida. By lunch we sat on 2,714 up 0.30%.     

The rest of the day saw a small selloff and a close at 2,708 +0.08%. Now I’m on record saying the economy is late stage, probably like 7th or 8th inning, but I’m not a stock market bear. There’s runway left and if you ran for the hills today it would probably be a mistake. @andrewthrasher points out that Advance/Decline lines are making new highs and that’s just not the kind of thing you see in a downtrend so let’s stay constructive here, watch earnings come in, watch the yield curve and other macro indicators, and be satisfied with the notion that no one will ever call the top. I won’t, you won’t, no one on Twitter will, no equity strategist will, Trump won’t, but my Dad might because he’s the best fade of all time.  

News Highlights:

I have two end links for you tonight so pick your poison!

The first one will make you ooo and ahhh

The second one will make you angry at adults.

Have a good night

Why So Serious?

Equities start the day higher but I’m grumpy as heck so I may need your help lifting my spirits. Why so serious? Well, two things got me all “I wanna move to Australia” 1) My state just had a blizzard on April 15. That’s right, early spring in Wisconsin includes 6” of ice and snow, 30 mph winds, and face numbing cold that makes everyone wonder why we live here. There isn’t a single leaf on any tree within a 50 mile radius of my home and this is what kids have to play on in April. 2) This stupid tweet that makes me wonder what the New Yorker was even thinking. It’s a CHICKEN SANDWICH people not another Crusades. Stop it, everyone just stop stuff like this. It’s divisive and dumb at a time when we need LESS division. This is a great country full of all types of people who just wanna work hard, have a family (or not), believe in what they wanna believe (or not), eat a chicken sandwich (or nuggets), and not have to shovel snow in April. Can’t we all just get along? Ok, where are we at with this here market? Still nowhere to be honest, really no rhyme or reason to price action of late. But we do have earnings on deck and Bespoke has a tidy list of the 40 biggest companies reporting this week so check it out. Can earnings be enough to lift us out of this ennui? Maybe, and think about this:  wouldn’t you rather have come at this earnings season from 2,650 than 2,850? Of course you would. Imagine how good these things would’ve had to have been in order to take the market higher from January levels? Forget about it. CAT would’ve had to say “we can’t possibly make enough tractor to fill demand” and AAPL would’ve had to say “we’re sold out of all of our phones” and DIS would’ve had to say “the Antonellis were just here, we’re raising guidance because holy cow”.

After the open, we entered a sleepy market driven higher by a complete lack of geopolitical headlines. I’ll tell you what, lack of headlines is the new hotness, you should be praying nothing happens overnight. When I sit down at my desk I’m hoping Bloomberg is running one of these goofy pasta type stories instead of something out of Washington because that means the market might actually go up. There were only a couple earnings reports pre-open so let’s chew on them: BAC was just whatever meh but JBHT beat and drove the Transports higher. Relief rally? Maybe, but Transports desperately need a good season like Allegiant Air needs new planes. Up and up we went all morning long led by Materials, Telecom, and Utilities. I mean that’s not exactly the “risk on” type of rally I like but it’s better than just FB, AAPL, and GOOGL leading the way. Let’s just focus on that transports action and ignore Utilities. Shhh, pretend I never said Utilities. Winners: JBHT, CVS, ULTA, MPC, WBA, and DAL. Losers BMY, NKTR, NOV, FL, VRTX, and SBUX even though the stock closed higher. You know what I’d love to see but I’m never going to? Devil’s Tower. So cool. Zero chance given where it is, makes me sad.

We continued our boring rally in the afternoon, on very little volume, but there’s a group of people who will probably consider April 16th 2018 one of the most exciting days in corporate history. It was reported that AMZN has “shelved plans to sell and distribute pharmaceutical products after considering it last year”. Hmmmm…..let’s say you are the CEO of CVS or ESRX or MCK and someone drops that news on your desk today..…are you doing this?  We closed at 2,677 up 0.8% and I’m LOCKED IN LIKE THIS FOR EARNINGS. I want to be the goto place when you have a question about who beat earnings and who missed and what CEO said “the weather was bad in Q1 so that’s why” because how often is the weather bad in Q1? I love reading thru conference calls, I enjoy the answers as much as corporate leaders must hate doing them. If you’re a CFO how badly do you wanna say “look, we missed very slightly on a number you guys made up, its one quarter among a thousand, go pound sand”  

Final Score:  Dow +88bps, S&P500 +81bps, Nasdaq +70bps, Rus2k +87bps  

News Highlights:

For tonight’s final link let’s go wing-suiting shall we?   Haven’t felt my palms sweat this much since I ate a Carolina Reaper pepper

Have a good night

For All This Sound And Fury We Sure Aren’t Going Anywhere

Equities start the day lower because, I kid you not, I sat down to a tweet about “nice, new, ‘smart’ missiles”. I’ve been writing recaps for 8 years now and this is the first time I sat down to something so wonky that I felt compelled to write almost immediately. Nice new smart missiles? Is this an ad for Raytheon or something? Ok, yea moving on, futures were down 1% after being up 1.6% yesterday but that’s par for the course. 1% moves are the new unchanged; wake me up when the market moves 2%+. Man I can’t even remember the last time I looked at an intraday move and said “yep that’s safe”. Up 1.4% at 3:30pm ET? High probability we close flat on the day, things have gone bajungi tilt in the stock market. But for all this sound and fury we sure aren’t going anywhere. We’ve had a record EIGHT 1% moves in the past two weeks yet the total range is <5% (h/t @jlyonsfundmgmt). Why has the trend abandoned us? Why can’t this puppy get going in EITHER direction? Well my friends you’ve come to the right place. Not only can I tell you why but I’ll also drop a gif recipe alongside a fail video at the end. Now I’m going to preface all this with the notion that nobody knows why the market does what it does, you come here to learn a bit and be entertained so don’t @ me saying “mike thinks he knows everything but he really doesn’t”. Here’s my take:  we’ve priced in all the things that can make the market go up. Tax reform, earnings, economic growth, an easy Fed, the Cubs winning another World Series, a business friendly administration but what we are left with offsets all of that: Quantitative tightening, rising rates, a late stage economy, high valuations (including a euphoric Jan top), 30 degrees in early April, talk of smart missiles flying around like confetti, a new Fed Chair, the tech wreck, and midterm elections. Tailwind meet headwind equal this. Do I think the bull market is over? No, but we could chop around for a while here.

After the open the market immediately began to rally because if there’s anything I’ve learned in my years of trading it’s “sell missile news overnight and buy it in the morning”. That’s just a hard and fast rule to live by people.  Zookerberg came back for a second day of testimony but you know what I realized after watching The Social Network for the 15th time? This guy has been apologizing for reckless privacy breaches since he was a freshman in college! We are basically mad at Wile E Coyote after his hundredth attempt to kill the Road Runner. That being said, $FB stock has rallied over the past two days so maybe the market likes this dog and pony show he’s been on. We got a fresh look at inflation with March CPI and would you be shocked to know it came in around 2.4% YoY? You know what the arithmetic average of CPI has been since April 2000?  2.2%. But yea Chairman Powell, I’m sure “low inflation” is only transitory. Actually the big story today was Crude Oil touching its highest level since 2014 (67.45). Remember how low energy prices were indicative of a slowing World economy? How long until the first piece is written that “high energy price are a threat to corporate profits?” 2 weeks? 3? You know I just realized that I’ve been ranting for this entire section so let’s look at the winners HLT, MAT, FLS, HLT, EVHC, RTN (good smart missiles) and the losers FAST, GWW, INCY, RSG, UAL, AAL. By lunch we had recovered most of the overnight losses but sat just shy of green numbers 2,651 down 0.19%. How about this amazingly insightful comment by Rep Billy Long to the Zuck?

The back half of the day brought literally nothing. We spent the last 3 hours going sideways between 2,645 and 2,655 with a close at 2,642 down 0.55% which, admittedly, was a nice break from the roller coaster price action of the past few weeks. Look, things are just crazy right now. If I read a headline that a purple elephant riding an M1 Abrams tank smashed into the NY Stock Exchange wearing a MAGA hat it wouldn’t even phase me. We are in some wonky crazy territory but you know what? I’ll take this over those boring 2017 sessions where vol got crushed and writing about the market was near impossible. I can’t wait to see what tomorrow brings!! 

Final Score:  Dow -90bps, S&P500 -55bps, Nasdaq -36bps, Rus2k +22bps. 

News Highlights:

Tonight we’ll end on a People are Awesome vs Fail video which gives us the best of both worlds like peanut butter and chocolate, avocado and toast, my waistline and stretch pants.

Have a good night

Another Masters Come To An End

Equities start the day higher as another Masters comes to an end. I don’t know, this one really didn’t do it for me, to be honest this kid inspires me more than Patrick Reed does. What is the Masters (and golf in general) going to do about its age problem? How many people under the age of 45 even watch golf anymore? 6? 7? Way too slow of a sport for an era where attention spans are 1 minute or less. Speaking of short attention spans how are you enjoying the stock market over the past few months? Not very much? Me either. Who on this planet has a feel for what’s going on right now? I’ve never felt so lost with respect to price action. I swear one day we’ve put in a meaningful bottom and the next we’re reenacting the opening to Wide World of Sports (here’s a link millennials). Can we stop with this “worry / no worry” over trade wars and tariffs please? It’s not like Trump doing random things should surprise anyone at this point, that’s just how it’s going to be until his final day. That being said, we did get a very stock market friendly tax package from this administration but that feels like a million years ago. I wish we were coasting on that instead of jumping up in down in the boat screaming about 35% tariffs on soybeans and 737s. What a mess, total soup sandwich. I spent Friday trying to think of a new acronym for a basket of stocks to watch during these here trade wars. The best I could come up with was ABCD (ADM, Boeing, Caterpillar, and Deere) but if you guys have any ideas about stocks starting with A, L, and L I could run with BAD CALL. Come on dear readers don’t let me down!!

After the open you’d think Trump walked back every tariff tweet he’d ever written because we blasted off into the stratosphere. Up 1% in the first hour but you know what? IM NOT BUYING IT. Fool me once, shame on me, fool me twice….we won’t get fooled again! I’m not getting excited about market rallies until earnings hit and we stop seeing Larry Kudlow on TV walking back random administration positions. So yea, the market was higher this morning because our daily echo chamber wasn’t filled with scary trade war talk but there really was no meaningful news. Health Care bounced the most, with Materials and Tech right behind. Winners LUK, NKTR, MRK, AVGO, and MON. Zookerberg’s Congressional testimony hit and it had all the corporate blather you’d expect from a company on its heels 1) Our fault 2) We need to do better 3) I started the company it’s on me 4) we owe it to our users to be better than this. Look, I said it before, this too shall pass for FB but the company needs to take a hard look at their place in the world. They are arguably more powerful than any nation on the planet and like Peter Parkers Uncle said “with great power comes great responsibility.” Losers were UA, KMX, NEM, LOW, GPS, and ACAD. Speaking of losers, how in the heck was Tiger Woods the odds on favorite to win the Masters? Guy hasn’t won a tournament since the London Olympics, Vegas sure sucked a bunch of square money out on Sunday. By lunch we were up a whopping 1.6% in the S&P (2.07% in the Nasdaq) but if you look at the big picture we’re kinda in no man’s land. Like our strategist Bruce Bittles said “we have to break this downside momentum for me to get excited again.” (I’m paraphrasing, he’s always exciting)

The rest of the day saw that downside momentum rear its ugly head again. Up 1.6% turned into up 0.33% because you can’t build a meaningful intraday rally off no news at all. China’s Premier Xi is due to speak tomorrow morning so let’s see what tone he strikes because that COULD build a meaningful rally. If he can reduce trade tensions between our two countries it’ll go a long way towards easing the S&Ps pain. Look, the more we test that 200 day to the downside the higher chance it breaks and the market really falls apart. Something needs to change fast otherwise I fear that’s in our near future.  

Final Score: Dow +19bps, S&P500 +33bps, Nasdaq +51bps, Rus2k +8bps (these all fell 1%+ from their highs)

News Highlights:

We’ll end tonight with a guy I’d love to have a beer with.  His accents from all over the world are amazing!

Have a good night



Easter Monday...What An Amazing Idea

Equities start the day lower as half the world could care less. Easter Monday…what an amazing idea. How is it that Europe and Australia can so much more civilized than the U.S.? Not only do they take the day after Christmas off they also take the day after Easter…sigh. Oh and the UK makes sure that all their banking holidays are on a Monday. We suck. Futures were down 8 pts as I sat in my seat next to the 3 other people not on Spring Break and the headlines remain the same: “Tech stocks stumble on their giant ego’s”. TSLA, FB, AMZN, NFLX, all of them are retching with flu like symptoms. You know this FB thing will blow over right? It always does, in fact all we need to do is look to The Who for wisdom: “shares crash, hopes are dashed, people forget”. That being said, the solution to privacy issues doesn’t just lie in their hands, the U.S. Gov’t could easily intercede to protect people from themselves. Wait...themselves? What do you mean Mike? I asked 10 FB users I know whether they care about the current privacy hub bub and only 2 said they did. In the end I think the vast majority of people don’t care that FB is selling them out to the World….at all. They just wanna post pictures of their food and rage against the political issue of the day in blissful ignorance. Our government could set guidelines on what can and can’t be sold with respect to user data and they could also make it so we opt in / out every single time we log in. Look, they made it so telemarketers can’t call us every 5 minutes at night, social media can’t be that much harder to deal with. Anyway, let’s see if these here equities find solid footing on the 2nd day of April.

After the open tech got absolutely annihilated like it was a pack of Reese’s Peanut Butter Eggs tossed into a group of 6 year olds.  All the high flyers are acting like their wings have been sheared off and one has to wonder when this tech wreck ends. Let’s look at TSLA, a great company run by a visionary leader who is doing his best to change the world. It was down $20 at one point because it looks like they can’t make Model 3’s fast enough, someone’s Model S hit a concrete barrier on autopilot, and their aforementioned fearless leader joked about bankruptcy on TWTR (ill admit this one was odd). That’s a LOT of negative headlines for a company with a gajillion PE that burns cash like my 12 year old buying skins in Overwatch. Of course the stock is gonna get pummeled, all the momentum “I’m here for the nonstop new highs” people are leaving it in droves. That doesn’t mean the company is broken or Musk has lost his magic touch. Operational issues plague tons of companies, it’s up to the guys in Palo Alto to fix it otherwise the investor riot will continue (late in the day it was announced Musk would personally takeover Model 3 production). As we approached lunch the Nasdaq gave up all its 2018 gains and only 12 stocks in the S&P were green (HUM and UNH the big winners off the WMT chatter).Other than those 12 it was red as far as the eye could see as we cracked the 200 day and headed for the abyssal plains (any oceanography nuts in here?). I never would’ve thought that the market would act this poorly with so many people on vacation. Brutal.

The rest of the day looked like a Saw movie. I haven’t seen that much red since Jigsaw made the guy cut open his buddy to grab some key to unlock a trap. Holy implosion Batman. Every sector minus utilities was down 1-3%. Tech was down over 2.7%. A wholesale rout my friends as the S&P has now fallen 11% from its high and sits in correction territory. Volume wasn’t crazy though, it’s not like everyone was selling nonstop, it felt more like a buyers strike than anything else (could be holiday related).  Oh and guess what time of the year it is? Buyout blackout time!! That’s right, corporates are in their quiet periods before their earnings so buying demand is naturally reduced. As you sit here wondering why the market is going down nonstop I want you to read Barry Ritholtz article here. News isn’t driving stocks lower….stocks are DRIVING THE NEWS. We are all trying to come up with a reason the market is weak when really no one knows because so many things are happening all at once: tech blowups, tariffs, trade wars, late stage economies, and the end of Easter candy. We’re in a storm right now people, I know it seems dark but storms don’t last forever (and neither do bull markets…). Remember one thing about stocks markets before you go: chaos creates opportunities. Final Score:  Dow -190bps, S&P500 -223bps, Nasdaq -274bps, Rus2k -241bps

News Highlights:

So not only did the market plummet today but it snowed in NYC on April 2 (being from the Midwest I get a little joy out of hearing that).   I managed to find an end link that incorporates both snow and a big DROP!

Have a good night