We are Watching a Room Full of Sleeping Cats Lounging Around a Rocking Chair.
Equities start the day higher as everyone “re rotates” after they rotated because everyone else was rotating. Remember last week when I mentioned the stock ALGN? The San Jose based manufacturer of these dental things you wear to pretty up your smile? Recall that everyone was dumping the stock because “up big YTD” went out of style for a hot minute. Guess what? The stock is nearly back to where it was before the great dump and if you don’t sit back and laugh you are missing the best parts of human psychology. A random machine woke up one day and decided to take profits which caused other people to take profits which caused media outlets to wonder what’s wrong with the market which caused other stocks to go down which caused the naysayers to say “see I told you so” which caused a couple day dislocation which caused smart people to say “what is this nonsense, I’m buying”. The one thing that has been persistent thru this entire bull run is an elevated level of skittishness. The best analogy I can think of is this: we are watching a room full of sleeping cats lounging around a rocking chair. The MOMENT that rocking chair moves the cats freak out and dart around the room. Then the chair returns to its original position and all the cats go back to dreaming of killing humans and puking up hairballs on new furniture (god I hate cats). This is nothing like bull markets of the past, euphoria about stocks is a millimeter deep and any event that looks suspicious sends people running for cover. Josh Brown talked about it here and I couldn’t agree more. Quants rule the world right now and when their machines do something there is no story behind it. It’s just a machine making a machine decision. One of these hiccups will be the final straw but we’ll never know it until it’s too late. Until then let’s celebrate all the stuff going on around us and make a bit of money while we can. AMZN and WFM? Brilliant, God I love it. Let’s chat on that one later.
After the open that un-rotation continued (is there an uglier word than that? Maybe grexit I guess) as both Financials AND Tech rallied. In fact about 30 minutes into the session we made a new all-time high and never looked back. You know what makes me laugh about this whole “Trump rally” as if that was ever a thing? The fact that absolutely nothing has happened in Washington DC and yet here we are at 2,450 on $SPX. Tax reform? Nope. Infrastructure bill? Zip. Health Care reform? Please. Is the current administration “business friendly”? Sure, and maybe that’s worth something in the near term but all those big fat “game changers” are stuck on the sidelines. So what’s the rub? What’s the lesson gleaned from all this? That you should never let politics affect your investment decisions. Ever. The economy and earnings are what matters not lofty promises and “transformational candidates”. What a joke. Winners PKI, NAVI, BIIB, AMD, and MU. Losers EQT, TRIP, KIM, RRC, and REG. Ok AMZN for WFM here’s my two cents. I think it’s awesome that tech companies are tired of waiting for retail / vision-less companies to figure themselves out. AMZN, TSLA, companies like these aren’t content with status quo. Musk isn’t going to sit around and let the world stagnate, that dude wants to send people to Mars and change the face of driving forever. Bezos is about to transform a quality brand into the next generation of grocery stores. How about free instant delivery from your AMZN wand? How about distribution centers all over the country? How about a bunch of new Prime pickup spots? The list goes on and on. The best article I’ve read on the deal is here, don’t miss out. “unlike Whole Foods Amazon has no desire to be a grocer, and contrary to conventional wisdom the company is not even a retailer. At its core Amazon is a services provider enabled — and protected — by scale. Indeed, to the extent Waterloo is a valid analogy, Amazon is much more akin to the British Empire, and there is now one less obstacle to sitting astride all aspects of the economy.”
The final hour saw another fresh high and a close in record territory! I mean you’d think it was party hats and ‘79 Dom but trading floors look like this nowadays. Oh well, no complaints here, we be shrugging our shoulders while the world gets richer. We are still solidly in a “don’t fight the tape” world and brick by brick the Wall of Worry heads towards the sky. Fed rate hikes? Yep. Vicious rotation? Yep. Ebola? Yep. Debt Ceiling fights? Yep. I could go on and on but you get my point. This will end when it ends and not before. Yogi Berra? Nope, Michael Antonelli circa 2017. Final Score: Dow
We’re gonna skip these and head straight to the big finish.
Tonight I have an awesome end video that gives you “Instructions for life”. I thought it was witty, funny, made some great points, and is well worth 5 minutes of your time (especially the Whisky one). Now look, there’s a few swear words in here so if you are easily offended by the random F bomb in a comedic setting feel free to click this link and ponder the beauty of France. Ooooohhhh. Ahhhhhh. I don’t know, I’m not sure I can be friends with someone who doesn’t laugh at the random F bomb.