Bull and Baird Blog – January 10, 2017

Equities start the day nowhere as the Great Stall continues. Some ups, some downs, some lefts, some rights, a whole lot of back and forth yet we haven’t traded outside of a 1% intraday range in 16 sessions. Earnings start soon so that’s something, Trump gets inaugurated soon so that’s something (imagine the Tweetstorm), YHOO gets a new name soon so that’s something (albeit as dumb a name as I’ve ever heard), the Packers will lose soon so that’s something, and finally we might get Dow 20k soon so that’s something (that no one should really care about so I’m not sure why I brought it up. Meh). Hey let’s talk volume shall we? Volume is the lifeblood of an institutional equity business so obviously we’d like to take a look at trends from time to time. Luckily the good people at KCG produced this lovely chart so take a look then come back! My initial reaction is wow, I guess the death of “stock trading” might be a little pre-mature. All we hear about is ETF this and passive that so to see the average shares traded in a single day RISING is obviously a welcome sign. What people forget is that the argument really isn’t about “passive vs active” it’s about fees so anyone telling you that active management is “going away” is just flat wrong. Per share volume has been rising for 3 years now, that’s not something you’d expect if the world was going all ETF / Index fund. So stock traders of the world rejoice, it looks like the secular low in “shares per day” was made in 2013. Altaba…are you freaking kidding me? That might be worse than Mondelez to be honest. Apparently it’s a combination of “alternate” and “Alibaba”….sigh. How about Baba Oreilly or Babtastic? What consulting firm crammed full of people from Kellogg came up with this one? (yea I went there)  GSB GSB GSB.

After the open we got a  nice rally led by Financials, Health Care, and Industrials. Have you seen the Airline index lately? Take a look at this gorgeous looking thing, I mean who knew airlines could actually look this good! I guess that’s what happens when you charge $20 for a bag and serve those horrible blueberry cookie things for breakfast. Hey, what do you know about the NFIB Small Business Index? Nothing? Nice, neither do I, but LOOK AT THIS JUMP my friends, this is usually the kind of thing you see after a stock trading 400x earnings beats but in this case it’s how optimistic Bob the breadmaker and Sally the sewing shop girl are. How can you not be excited when small business is this jacked up? The 28 million small businesses in America account for 54% of all U.S. Sales and provide 55% of all jobs. Take that Bezos. Winners were SRPT, ILMN, W, CMG, and FCX. Losers WMB, ENDP, WDFC, VTR, CF, and the Alabama Crimson Tide. Who can stay up until midnight watching two southern football teams play for the title? Was there anyone north of the mason Dixon line watching at midnight EDT? Kick that thing off at 5pm ET on January 1 please.  By lunch we were going nowhere fast.

Which is exactly where we ended…nowhere! 2,268.91, up a whopping 0.01 PTS, which doesn’t even show up on percentages. Wow, can you feel the excitement pulsing thru the market? Its electric…boogie woogie woogie (you’ll sing it all day). Bring on earnings so we can see if the bull case makes sense (an acceleration of eps that was kicked off last quarter). Hey….you ready for my lock of the week? Packers baby, CANT LOSE WONT LOSE IMPOSSIBLE TO LOSE.

Final Score:  Dow -16bps, S&P500 flat, Nasdaq +36bps, Rus2k +99bps.  

News Highlights:

  • Succinct Summation of the Day’s Events: a few single name stories but nothing new in the market.  Just waiting.
  • I just.. I mean I can’t…
  • It sure seems like Value is about to come roaring back: “This relationship has gotten a little out of balance lately because many banks were lumped in with value stocks. You can see how value did very well when the Tech Bubble burst (making up for their lagging performance). But value never had its day in the sun following the financial crisis. Value peaked against growth in May 2007, and bottomed out last January”.
  • Fighting the enemy between your ears: “No matter what you do, never stand still. Staying still is the same as moving backward. Because life doesn’t wait. Mental toughness is created by always plowing forward. By facing your adversity head on”.
  • Yea that’s a rough neighborhood.
  • 5 economic metrics you should know ( I’d add weekly claims in here too.) "When it's gone negative – the 2-year is higher than the 10-year – that's often been an early warning sign of a recession," says Eddy Elfenbein, author of the Crossing Wall Street blog. "It's been a much better forecaster than a lot of highly paid Wall Street economists."
  • By the way, long financials is now consensus. You know what they say about making money on Wall St being in the crowd right?
  • Man these tube strikes are really causing the crazies to come out
  • Honey, we’re gonna needs more towels, the water is everywhere again. I mean come on, how stupid

Tonight we’ll end with our first Fail video of the year!   Let there be plenty more!

https://www.youtube.com/watch?v=0iHL8UbhYQI#t=0m12s

Have a good night.