Easter Monday...What An Amazing Idea
Equities start the day lower as half the world could care less. Easter Monday…what an amazing idea. How is it that Europe and Australia can so much more civilized than the U.S.? Not only do they take the day after Christmas off they also take the day after Easter…sigh. Oh and the UK makes sure that all their banking holidays are on a Monday. We suck. Futures were down 8 pts as I sat in my seat next to the 3 other people not on Spring Break and the headlines remain the same: “Tech stocks stumble on their giant ego’s”. TSLA, FB, AMZN, NFLX, all of them are retching with flu like symptoms. You know this FB thing will blow over right? It always does, in fact all we need to do is look to The Who for wisdom: “shares crash, hopes are dashed, people forget”. That being said, the solution to privacy issues doesn’t just lie in their hands, the U.S. Gov’t could easily intercede to protect people from themselves. Wait...themselves? What do you mean Mike? I asked 10 FB users I know whether they care about the current privacy hub bub and only 2 said they did. In the end I think the vast majority of people don’t care that FB is selling them out to the World….at all. They just wanna post pictures of their food and rage against the political issue of the day in blissful ignorance. Our government could set guidelines on what can and can’t be sold with respect to user data and they could also make it so we opt in / out every single time we log in. Look, they made it so telemarketers can’t call us every 5 minutes at night, social media can’t be that much harder to deal with. Anyway, let’s see if these here equities find solid footing on the 2nd day of April.
After the open tech got absolutely annihilated like it was a pack of Reese’s Peanut Butter Eggs tossed into a group of 6 year olds. All the high flyers are acting like their wings have been sheared off and one has to wonder when this tech wreck ends. Let’s look at TSLA, a great company run by a visionary leader who is doing his best to change the world. It was down $20 at one point because it looks like they can’t make Model 3’s fast enough, someone’s Model S hit a concrete barrier on autopilot, and their aforementioned fearless leader joked about bankruptcy on TWTR (ill admit this one was odd). That’s a LOT of negative headlines for a company with a gajillion PE that burns cash like my 12 year old buying skins in Overwatch. Of course the stock is gonna get pummeled, all the momentum “I’m here for the nonstop new highs” people are leaving it in droves. That doesn’t mean the company is broken or Musk has lost his magic touch. Operational issues plague tons of companies, it’s up to the guys in Palo Alto to fix it otherwise the investor riot will continue (late in the day it was announced Musk would personally takeover Model 3 production). As we approached lunch the Nasdaq gave up all its 2018 gains and only 12 stocks in the S&P were green (HUM and UNH the big winners off the WMT chatter).Other than those 12 it was red as far as the eye could see as we cracked the 200 day and headed for the abyssal plains (any oceanography nuts in here?). I never would’ve thought that the market would act this poorly with so many people on vacation. Brutal.
The rest of the day looked like a Saw movie. I haven’t seen that much red since Jigsaw made the guy cut open his buddy to grab some key to unlock a trap. Holy implosion Batman. Every sector minus utilities was down 1-3%. Tech was down over 2.7%. A wholesale rout my friends as the S&P has now fallen 11% from its high and sits in correction territory. Volume wasn’t crazy though, it’s not like everyone was selling nonstop, it felt more like a buyers strike than anything else (could be holiday related). Oh and guess what time of the year it is? Buyout blackout time!! That’s right, corporates are in their quiet periods before their earnings so buying demand is naturally reduced. As you sit here wondering why the market is going down nonstop I want you to read Barry Ritholtz article here. News isn’t driving stocks lower….stocks are DRIVING THE NEWS. We are all trying to come up with a reason the market is weak when really no one knows because so many things are happening all at once: tech blowups, tariffs, trade wars, late stage economies, and the end of Easter candy. We’re in a storm right now people, I know it seems dark but storms don’t last forever (and neither do bull markets…). Remember one thing about stocks markets before you go: chaos creates opportunities. Final Score: Dow -190bps, S&P500 -223bps, Nasdaq -274bps, Rus2k -241bps
- Succinct Summation of the Day’s Events: Cracked the 200 day, tech remains in freefall. There’s a lot of reasons why this is happening but no single reason. We know that, on average, the S&P falls 10% once a year so look, it can and does happen.
- What Josh says in this article is exactly why I created this recap. I just wanna have fun talking about markets because literally NO ONE KNOWS what’s going to happen and if they sound confident that they do you should run: “You will meet all sorts of people bearing rules, formulas and equations for why this thing should most assuredly follow that thing – as though there is some fundamental, physical law that can merely be looked up in a library and adhered to by anyone who bothers to search. Be terrified, for you are in discussions with the delusional and the deranged”.
- This article is must read, I’m serious. Read every answer to this question because it’s something you need to have an opinion on (especially if you are an advisor) “Question: Assume you are advising a pension fund, endowment or foundation. What is a reasonable long-term expectation for real returns for a well-diversified portfolio?”
- How are you building trust? “Be yourself. To earn trust, sometimes you have to show trust in others by opening up and being yourself. There will be plenty of robots and algorithms in the years ahead so being authentic will go a long way towards building lasting relationships”. (another good one tonight)
- Why / How did I lose the creativity that college kids seem to have?
- Look, if you live in MD maybe a cutting board isn’t for you
So not only did the market plummet today but it snowed in NYC on April 2 (being from the Midwest I get a little joy out of hearing that). I managed to find an end link that incorporates both snow and a big DROP!
Have a good night