Corruption Gets Swept Up All Over The Place
Equities start the day higher as corruption gets swept up all over the place. Talk about cleaning house…FIFA and Cersei Lannister in the same week? Epic stuff my friends. They were dragging soccer dudes out of the Baur Au Lac with sheets on their heads! I’ve been in that hotel and I bet those were 800 thread count Egyptian. Place is super swank. Hey, here’s a question for you, is the market still only concerned about the Fed? You’re darn tootin it is, when you see a 1% drop in the S&P because people bought more washers and dryers you know this thing is crazy obsessed with rate hikes. Bernanke is over in Korea telling people to chill out with commentary like “a rate hike means the economy is strong,” but here in equity land no one is listening. I mean why wouldn’t we want to flip out over rates going from 0.25 to 0.50. Half of 1 percent? Time to bunker up with Spaghetti’s O’s and cash. It is what it is though, so I guess we deal with it. Frankly if you want something to worry about worry about Transports. This chart is really starting to break down and there aren’t a lot of instances where a drop like this ended up being no big deal. So here we are, at the end of May, near the highs but still worrying about the same darn things. Greece and a rate hike. A rate hike and Greece. Pray for an alien invasion because otherwise it’s going to be a long summer of staring at Fed speeches and knee jerking to CPI reports. Fun times!
After the open, the market did its absolute best to wipe out yesterday’s selloff. Good earnings? Nope, unless you count TIF who managed to crush it. Dovish speech from the Fed? Nope, all quiet on that front. AAPL car? Please. All we had was a few random comments about a potential Greek deal and that seemed to be enough. Is this 2011? Did I just write that...again…for the 800th time? Yep, I sure did. Like I said before, there are very few things the market is concerned with right now and unfortunately Greece is still one of them. Maybe when my son is writing this recap in 16 years he’ll get to talk about Hellenic Pension reform and ELA expansions, I mean who doesn’t want to factor that into their investment process. The aforementioned Tiffany’s was the big winner because if anything screams economic recovery in the US it’s high end jewelry. Other than little blue bags winners were primarily tech names like JNPR, SNDK, SWKS, NVDA, and BRCM (WSJ reporting AVGO might be looking at them. This tech sector has gone full M&A Gaga right? I live for EBITDA…DA.DA..DA..DA…) Losers were KORS (-24%...man that handbag market is fickle), FOSL, COH, CVC, and NBL. By lunch the S&P was up a juicy 0.8% because apparently yesterday’s move was an overreaction so today we decided to overreact in the opposite direction.
The afternoon was like this for Bears (does that work? Does the video play?) as we stair stepped higher and higher. By the time the bell rang it was like Tuesday never happened: 2,125, up 1%. So yea, down 1% one day, up 1% the next…can you feel the conviction? I want to end on this quote by Fischer because I think it’s incredibly relevant (especially after yesterday’s tantrum). “There is so much importance given to the first move. But I think it’s misleading,” he said at the Interdisciplinary Center in Herzliya. “You say liftoff and you think of rockets” that go into orbit after 10 seconds, he said. “That’s not what we’re talking about.” I don’t know why the market keeps spinning off its top every time we get a good piece of economic data. These guys have said countless times that the tightening process won’t be a relentless hike in rates so maybe today was all about cooler heads prevailing. Maybe this 1% wasn’t about Greece and it was about people buying a ridiculously overdone selloff because the market continually screws up pricing a Fed move. It’s at least possible right?
Final Score: Dow +67bps, S&P500 +92bps, Nasdaq +147bps, Rus2k +126bps.
- Succinct Summation of the Day’s Events: well, we got a quote in here so let’s thank our friends at Bloomy with a few hits!
- And over at Real Clear Markets it’s just another “this is the top” kind of day
- Non market quotes that are adapted into market wisdom....just my kind of link! This one is my fave: “The only thing worse than not getting what you want is someone else getting it.” - Roger Sterling, Mad Men. It's one thing to miss out on a stock, but it's made a whole lot worse when others around you have capitalized on it (Apple comes to mind for me). Tip your cap to those who were successful and move onto the next idea.
- Summer holiday here?
- Mary Meeker’s Internet Trends is today’s must read. She is the best at this kind of stuff. You know what chart stood out the most to me? This one on marriage. I mean wow ( I also like the one where Millennials say they just want “meaningful work” and yet their bosses think they just want “higher pay”. Odd disconnect there.)
- The author of this article says to “chill out” on the Transports thing. What are the take aways? First, the transports have not rolled over yet. Watch to see all the SMA’s moving lower for the bias to change to a downtrend. Next, these points where the SMA’s get very tightly intertwined can be important pivots. But as show in 2011 and 2012 they can move either way. A turn up would shift the bias higher. Until then Transports are a sector to avoid, but hardly off the rails.
- They are rebooting Point Break. I’m speechless. Besides Gone with the Wind I can’t think of a movie that is in LESS need of a reboot. Keanu at his absolute peak!
- This story, plus the fact that I just loaded my family into a new home, absolutely means the top is in. I guarantee it.
- Should we pretend to know where the market is going or just trust what its telling us? Great post here on alhambrapartners. “In short, despite the problems I have with this economic expansion – and that is a pretty long list – there is nothing I can point to in markets that is consistent with the onset of recession.”
- This is me golfing.
- That is one nasty fall…
So we’ll end tonight with a fishing video. I’m not a huge fishing guy, something about hooks and bait and sitting around just doesn’t do it for me. This guy however, this guy must love it. My only question is…what’s next? What’s his next move here?
Have a good night.