September Bull and Baird Blog

September 10, 2013

Equities start the day higher as the DJIA gets revamped! And what a vamp it is! Leaving the index no one follows are Alcoa, Bank of America, and Hewlett Packard. I guess materials, printers, and home loans aren’t that popular anymore huh? What’s going into this bad boy? Goldman Sachs, Nike, and Visa. Oh baby, that’s exactly what the doctor ordered! High net worth, $120 sneakers, and credit cards? Is there anything more American than that? Maybe apple pie and Norman Rockefeller but those can’t go into the Dow can they? Now that we’re past that little bit of news let’s talk about why the market is really up. In order to do that we’re going to play a game of “What if?” You ready? Here we go: What if China isn’t as bad as we think? China August Industrial Output rises 10%. What if Syria is about to go away? Obama sees potential breakthrough in Russia’s Syria proposal. What if everyone loves investing in Europe now? Europe’s investors return to long term funds. What if I told you the Nasdaq 100 is breaking out? What if I told you Global Growth is at a 2yr high? What if you bought this phone case? So all that leaves is the Taper right? Is that the bear case now? Something we’ve talked about for 2 straight months and been priced in for weeks? Yea, I think the runway is starting to clear up here people. And please, please don’t let anyone convince you the “debt ceiling” is going to be something. It won’t be, that’s not a reason to be bearish on stocks. In order to say the correction is over we need a positive close today, let’s see if it happened.

After the open we shot up to 1,681 where we stayed for most of the session. No news to push us there just a growing realization that Syria is probably another 1) Cyprus 2) Italian Election 3) Debt Ceiling 4) Alien invasion. A ginned up controversy where people flood onto Twitter calling “top” and “sell everything now because the game has changed”. Nope, looks like this is another rung on the wall of worry. Growth still remains THE dominant style as NFLX ripped to new highs. I talked about this in my last recap and I guess it’s still en vogue. TSLA / LNKD / NFLX / ANTON….if it has a high multiple it’s got buyers scrambling to own it. Other winners today were DAL (when’s the last time an airline was up 100% ytd?), MYL, MU, and GS (there’s all of no money indexed to the Dow. Efficient markets people). Losers were URBN (come on hipster shoppers, step it up here), PVH, CAG, and AAPL. Wait….AAPL? Yep, and they even announced a new phone today! It’s the 5S! Looks just like the 5 but it’s got CoreMotion APIs and 2x the gigaflops! Throw in a 64bit processor and Xcode support and this is the hottest thing since Gangnam Style! Holy cow, I gotta get me some of that on-board Open GL ES 3.0, I mean I can’t have my neighbor having more open GL than me (I’m officially bitter about my favorite stock. I might be the biggest lagging indicator in the world). By lunch I was chewing on Apple nostalgia with the market hovering around 1,680.

We kept going in the afternoon and managed to finish on the highs, 1,684, up 75bps. Today’s close almost certainly kills the correction as we are now up 5 days in a row and solidly back above the 50day. Did Syria worry you enough to sell stocks? I bet it didn’t, I’m not sure a single client of mine expressed concern about it. I even had one say “what a great buying oppty that was”. Who did it worry then? Well, I guess the bearish crowd, which continues to look for a way to fade #growthaccelerating. Why though? What if China, Europe, and the US manage to grow together? Is that so unreasonable?

Final Score: Dow +85bps, S&P500 +73bps, Nasdaq +48bps, Rus2k +92bps.

News highlights:

I found a link tonight that I feel should stand on its own. Nothing above it, nothing below it. I stared at this picture for a bit and found myself fascinated by the imagery. There’s something simple about it, something that speaks to all of us. We may not be able to recapture that time but we can relive it…on the face of a child.

http://i.imgur.com/JuGkClZ.jpg

Have a good night.