How Fast is This Summer Going By?
Equities start the day higher as Fall begins! Did I just ruin your day? Maybe, maybe not. Actually getting this email probably ruined your day so don’t hate on me more. Just yesterday I was crushing hot dogs and cold beer on the 4th of July and now it’s freaking August? What? When August hits a couple things come to mind 1) Football is imminent. Which means the Bears are about to get pounded by the Packers. Sigh. 2) Summer is winding down, have back in school kids. HAHA. 3) Earnings are in full swing. Doing good too. 4) people start to call for “seasonal weakness” and 5) everyone wonders why it’s so quiet. Same story every…single….year. Oh trading is slow in August? Please tell me more Nostradamus. 600+ companies report today and tomorrow so if you are looking for analyst reports at midnight with quotes like “we are cautiously optimistic” this is your week baby. Speaking of earnings things are still going great so Bears really don’t have much to hold on to other than CAPE and Valuations and “Long in the tooth” and other ways to say “I missed the whole thing so now I have to scare everyone else.” AAPL reported last night and the company appears to be well on their way to Dr. Evil type billions in the bank. I mean at this point if they hadn’t returned cash to shareholders via dividends they’d have nearly half a TRILLION sitting in checking accounts in Dublin and that random tiny office in Nevada. Does anyone think AAPL won’t have a $1 trillion market cap one day? Seems inevitable. Anyway, am I still bullish? Heck yea I am, so is Josh Brown and I agree with everything he says in this link. Are there concerns, worries, various indicators and charts to fret over? Yes, always, there will always be things to wring your hands about but you can’t miss out on years like this (+10%) because you’re scared of your shadow. What’s my favorite random stat right now? This one: the low of 2017 is the first trading day of the year. Let that sink in.
After the open, AAPL’s 5% gain should’ve driven every single index to new highs but it didn’t and that’s ok. The DJIA hit 22,000 for the first time ever so all the people playing at home got excited however the Nasdaq and S&P both sold off most of the session. Why you ask? Let me tell you since that’s the reason you came to this fine recap. Because it’s August and no one is paying attention right now. Look, the Nasdaq is up something crazy like 17% YTD, there’s going to be random August days where it goes down for no reason because a bunch of computers hit the sell button. Apple should’ve ripped it higher but the other FANG stocks flirted with red the entire morning and that was enough to counteract Tim Cook’s magnificent quarter. Let’s talk some other names shall we? AMC fell 24% because apparently all the movies this summer suck. Wait, how can that be, Wonder Woman was amazing and Dunkirk blew me away. Maybe people aren’t buying the $9 sodas anymore? Other losers were COHR, UIS, RRC, and CAH. Winners were the aforementioned AAPL along with ILMN, FMC, HUM, LOPE, and GRMN. By lunch we were back near unchanged because a few buy programs kicked in. August 2nd…looks like I picked the wrong day to write a recap. Did you see that #HipsterShowerThoughts was trending on TWTR today? Some of the funniest tweets I’ve seen in a long time, make sure you go check it out. Here are two that cracked me up while I watched the market go nowhere: “I wish my glasses didn’t steam up in the shower” and “Is this Mango conditioner locally sourced?” So good.
The rest of the day was sideways on unchanged but a close in positive territory so the good guys did win out by the end! Ok so yea, it’s August, we can’t really take price action seriously when half the world is on a beach or in the Hamptons. There are a few things going against us right now that make me somewhat nervous about the next 30-45 days. 1) The chart of transports looks like death. As my friend Helene Meisler says “ignore Transports at your own peril. 2) Sentiment is frothy. Most of the popular metrics show way too much bullishness. 3) There have been literally no significant pullbacks in 2017. Come on, is that really gonna last until Dec 31? and 4) Cash allocations are at some of the lowest levels since 2000. Now you guys know me, I’m not an alarmist or a bear or a top caller or any of that nonsense. I think earnings will continue to grow and that the bull market has gas left in its tank. But August can be dicey because not a lot of people are paying attention so tread carefully. Hey, what are the odds Danerys attacks that gold Jaime and his boys stole from Highgarden? She better or else the dat Iron Bank is gonna switch sides pronto tonto. Final Score: Dow +23bps, S&P500 +4bps, Nasdaq FLAT, Rus2k -108bps
Volume was average. Our desk was better to buy. Buying in Retail and Energy. Selling in Retail and Energy. Shorting in REITs. News Highlights:
- Succinct Summation of the Day’s Events: AAPL reported a blowout quarter, stock ripped. The rest of the market flip flopped around unchanged. We are in the final stretch for earnings.
- These charts are downright bullish !! (in the long term anyway….which is how everyone should be)
- Three things Cullen thinks. Love this one: Robo Advisors are not Advisors.They’re just automated investment services that are implemented and managed by human beings. And the more successful ones have teamed up with humans to provide the actual advisory service using real humans. But we should be even clearer about this. The actual asset management side of a Robo Advisor is just an investment product. They’re an automated way to own a tax efficient low fee set of index funds.
- Yes, stocks are expensive. So what? That doesn’t mean you should rush out and sell. The corresponding table below shows that that Mega-Cap group has only been more expensive, based on a TTM P/E, 1.8% of the time going back to 2005 and the 1.8% of the time happened just last month when Mega Caps sported a TTM P/E of 23.
- I absolutely love this “millennial rebuttal” to all the articles about how they don’t invest very much in equities. Guess what, they all wants kids and homes too, they are NO DIFFERENT than we were. “how the hell can you draw conclusions about one specific generation simply through comparative date? It is a given that the older generations are going to tilt more toward investing because they are the ones that have substantial reasons for doing so. What would be interesting instead is to compare millennial interest in stocks to Generation X’s interest in stocks when they themselves were in their twenties. The comparison as it sits now is completely irrelevant”. Who else struggled to put a lot into stocks when they were making $45k a year? *raises hand*
- How good does this French Toast look? Is it bizarre that I’m 43 years old and my favorite cereal is Fruity Pebbles? Come at me.
- Shoe Sushi!
- Imagine doing calisthenics 500 feet above the ground
For our end link we’ll look at the longest pedestrian suspension bridge in the world. Which just so happen to be the biggest “nope” in the history of “nopes”. I mean I love Switzerland but dem swissys are crazy.
Have a good night