December Bull and Baird Blog

December 23, 2013

Equities start the day higher as Santa Claus finally comes to town. This may very well be the last recap I write before Christmas. I know you are bummed out, sorry, you’ll have to fill the void left by a random guy in the Midwest with family, friends, and cocktails. Somehow I think no one will care. Anyway, here we are, two days before Christmas, 8 days before New Year’s, with a stock market that’s ripping and consumers that are consuming. I swear if you saw the mall near me on Sunday you’d be 2x levered on exotic bullish derivatives. 1,850 by year end? Probably. So what’s the main takeaway in 2013? What was the plot of this movie? Here it is: a return to normalcy. Walk with me here while I spin you a tale of years gone by. Remember 2009-2012? Remember how anytime someone spoke or a macro event happened the investing world would spin off its rocker and every asset would move together as waves rocked our little rowboat? That ended in 2013. We did have our fair share of events though, but this time the market showed unusual bravery. Cyprus blew itself up, Italy had another crazy political mess, the US Government tried to shoot itself in the foot, the word “taper” was used more than “green shoots” and feared more than Darth Vader, plus a couple other random market worries. In the past any of these would’ve destroyed the tape, literally shredded it like my new dog shredded our Christmas presents (who buys a new dog in winter...sigh). But this year, this time, we shrugged it off. The “battered wife” syndrome finally got exorcised, finally healed itself. Why? Well for one simple reason: because things are flat out getting better and no amount of doomsaying changes that. Claims are at 5yr lows, Retail sales are soaring, US Manufacturing PMIs are actually higher than China, and we have an incredible energy rennasaince that definitely doesn’t get enough press. Animal Spirits are everywhere; they permeate the air and snow. It’s time to put the past to rest, it’s time for you to embrace a new environment where fear and crises don’t dominate your decision making. Where you can do research on a company or an industry and not be afraid of what the Finance minister from Belgium might say. I truly believe the market has exorcised the ghosts of its past. So bring on 2014 and bring on a joyous Christmas holiday. Wait, there was a market open today, let’s talk about that for a minute shall we?

After the open we went nowhere on no volume, which is exactly what everyone expected. In fact this is the only time all year you can pretty much predict what will happen on a daily basis: small morning rally then sideways to the close. Couple decent tech movers worth mentioning. FB hit new highs after being added to the S&P and TWTR continues to defy people like me finishing the day with a market cap larger than ETN (which has revenues of 22B and $4 in EPS). Is it possible to consume a slice of frozen pizza without burning the roof of your mouth? There’s no way right? Frustrates me more than the Chicago Bears. What else….losers were KORS, TXT, MU, WAG, and WFM. But come on, no one really cares about market movement the week of Christmas so let’s talk about stockings for a second. The measure of a person’s Christmas spirit can be found in the stockings of their home. People who treat stockings like a sack for candy are the kind of people who give you sweaters or crock pots as gifts. Stockings are the appetizer for a great Christmas morning. Would you invite someone to your home for the nicest dinner of the year and serve frozen fish sticks as your starter? No way, you’d go all out. Stockings are the first thing people touch as they embrace Christmas morning so you have to make a good impression. You need one or two small wrapped gifts, a smattering of high quality candy (no whoppers or gum), a small gift card to somewhere like iTunes or Amazon, and a handwritten note that says “you mean something to me”. So put a little effort into those things this year, it really shows that you care about the holiday from start to finish. Anyway, by lunch we sat on 1,827 going nowhere fast.

The last hour brought nothing new so let’s finish our Christmas week recap in traditional style, with the great Dr. Seuss. In this day and age it’s easy to forget what Christmas is truly about so I offer you a passage to help you remember. A passage I read to my children every year so they never forget, so they hold the true meaning of Christmas in their hearts forever.

 

“And the Grinch, with his Grinch-feet ice cold in the snow, stood puzzling and puzzling, how could it be so? It came without ribbons. It came without tags. It came without packages, boxes or bags. And he puzzled and puzzled 'till his puzzler was sore. Then the Grinch thought of something he hadn't before. What if Christmas, he thought, doesn't come from a store. What if Christmas, perhaps, means a little bit more.”


Whatever holiday you celebrate I pray you hold it dear, and that you and your family are healthy and safe. If you have that then stop searching, stop yearning, because you are already standing beside your pot of gold.

 

Have a great holiday