The Market Continues to Embrace its Favorite Blanket
Equities start the day lower as the market continues to embrace its favorite blanket. Blanket you say? Yep, that’s right. The more I think about yesterday’s price action the clearer that analogy becomes. We had basically gone 12 straight sessions without a meaningful move in either direction and when it finally came it was lower. Now when markets go lower people look around for an excuse, it’s just human nature. But as they looked around they couldn’t find anything new, anything fresh and exciting, so they (it’s always they) defaulted to their favorite old blanket: Global Growth concerns. Ahhhh yes, the old “I’m worried that the world is slowing so I’m going to sell Starbucks and Disney and Intel and hold my money close to the vest”. The problem with that is 1) It’s August, no one is around, relax 2) There will never be a time when consensus is happy with global growth. I mean ever, and 3) Markets are prone to random price movements, let’s not assign a reason every time the S&P falls half a percent. When you hear that the market is worried about “Growth” or “European Banks” or “Oil” or “Earnings” do me a favor and remind yourself that it always will be and that these are not new concerns. Heck, the IMF lowers their growth forecasts every few weeks, I mean at this point Lagarde and her crew of Princeton economists should just set it to -10% so they can raise it every now and then. Check back in if we crack 2,135, otherwise let’s enjoy watching sailors carve through 3 inches of human waste and the majesty that is table tennis (you gotta watch table tennis during the Olympics, these people are Forest Gump good).
After the open it was nothing but sideways for the first half of the day. Looks like I picked a pretty crappy time to write back to back recaps huh? Oil was up 3% after DoE inventory data, Banks didn’t fall apart, Europe closed mixed, and Bonds caught a small bid. Does any of that matter at all? Not really, but I needed to fill space. The S&P traded between 2,156 and 2,161 for hours and hours so let’s talk individual names shall we? WMT fell half a percent after it was said they may be in talks to buy JET.COM. Anyone use this site? I’ve heard about it in the news but never tried it, apparently they sell stuff cheaply which, I guess, is a good thing. Is WMT trying to buy a junior AMZN? I’ll leave that up to the pundits to decide but.. I mean…Jet’s whole deal is “everyday low prices and fast free delivery to your door” so yea. What else? QRVO fell 10% because their name reminds me of a Peruvian appetizer, VRSK must have risk because it lost 5%, KATE lopped off 18% because I had no idea they still sold purses (I bought my high school fling one of these in 1989…it was huge in the day!), and CROX must’ve stepped in it because it lost 22%. I used to love my CROX until the 9yr old next door openly mocked me. Get out. Winners were GNW, DDD, MTOR, and AIG. By lunch we sat on 2,159, up 0.1%, praying something would happen in the afternoon.
The sad, quiet, final few hours brought nothing fresh and tasty and we closed basically where we were at lunch. 2,163, up right around 0.3%. So yea, yesterday was all about the same old stale concerns that have been with us for months, arguably YEARS. Down 50bps yesterday, up 30 bps today. What changed? Nothing. Someone hit the buy button more than the sell button I guess. Anyway, fairly quiet session that put us right back into this range, wish us luck tomorrow where maybe someone will worry about Central Banks losing control? How about insider selling, that’s always a fun one. Oh and fund flows….YES! Fund Flows, always the best reason to sell.
Final Score: Dow +23bps, S&P500 +31bps, Nasdaq +43bps, Rus2k +86bps.
Volume was average. Our desk was better to sell. Buying in REITs and Consumer. Selling in Drugs and Media. Shorting in Retail.
- Succinct Summation of the Day’s Events: Oil was up 4%, that’s about it. Market decided to eek out a small gain because apparently “growth concerns” weren’t a thing today.
- Wait….Wait….the market is ABOVE a consensus of year end price targets? Does that ever happen?
- The Great Howard Lindzon (follow him @howardlindzon) reminds us that it’s a GREAT time to be in Active mgmt! “Active works and alpha is everywhere. For instance: Coal is up 70 percent in 2016. Gold miners are up 100 plus percent. Zillow is up 16 weeks in a row. Yelp was left for dead but up over 50 percent this year. Etsy is up 50 percent…”
- I’d never want to leave this place.
- As long as this wasn’t the boat to get there.
- Nice deep dive on Q2 2016 GDP details here. As a housing bull this one is a keeper: "However - even though investment in single family structures has increased from the bottom - single family investment is still very low, and still below the bottom for previous recessions as a percent of GDP. I expect further increases over the next few years”.
- Lessons to be learned from YHOO. Good link for any corporate readers out there
- What Millionaires wont’ tell you. Good link for ANYONE out there. Oh and #5 my friends…#5.
We are going to end tonight with people being awesome because they are. You are, I am, we all are! Boom!
Have a good night