GDP Revises Itself Into Candy Land!
Equities start the day higher as GDP revises itself into candy land! The first look at 2nd Quarter GDP came in 2.3%, today we got the 2nd look at it came in 3.7%. So you know where I’m going with this…that’s right…USA USA USA! By the way, how odd is it that the economy is doing better than the financial markets, it’s been the other way around for a long time. There’s lots of reasons to be worried about equities but is U.S. macro data one of them? So this week I had planned on writing every single day because the market has gone Crazy Eddie (I used to love those commercials) but it’s been so insane on an hour to hour basis that I’m struggling to even drink water during the day. Remember how I used to complain that it was slow and the market was going sideways? Not anymore my friends, this is like going from an all vanilla diet straight into Chubby Hubby (it’s the best Ben and Jerry’s flavor hands down). So where are we in this correction thing? I was quoted as pretty bearish in Marketwatch so you can thank me for ringing the bell at the bottom. I suck. We are a whopping 7% off the all-time highs and I’m reading about people calling for QE4 and Janet to cut rates. Is that really where we’re at? Have we become SO ADDICTED to central banks that even the slightest weakness brings out calls for stimulus? My God, I didn’t realize the drug was that powerful. I don’t think we’re going to have a V shaped recovery like last October, this is a real macro earthquake (that one was dumb, people thought we were all going to a die from a random disease). What would signal an all clear? I’m not sure to be honest, we’d need a couple days of huge up volume to start (we got one yesterday at least). Anyway, let’s see what Thursday brought.
After the open it was Rip City baby and we’re not talking about my 2nd home of Portland Oregon. Up 4% on Wednesday? Bah, that’s not enough. Another 2% this morning to 1982. Hungry like the wolf, hungry like the wolf. Crude surged, Yen surged, and everyone who dip bought on Tuesday finally took a breath. If I told you this was the cover of the next Bloomberg Mag would you laugh? I love it. Energy and Materials were the big winners, utilities the big losers (relatively). FCX was up 30%. 30. CNX was up 13%. These moves are just ridiculous. Did you know someone bought 11k shares of AAPL at 92.21 on Monday a mere fifty two seconds after the open? Closed today at 112. Efficient markets. Volume was good too, the big index ETFs didn’t do as much as they did on Monday but they still did a ton so don’t let anyone say volume was poor. There were two losers of note, PDCO and WSM both on earnings. This morning was definitely interesting…for crying out loud oil was up 10%. We live in a world where GE can fall 20% and oil can rally 10% for no reason at all. I love it! It’s as crazy as this guy right now!
The afternoon saw a huge selloff and then a huge rally to close the day. 1,987, up 2.4%. No joke, it feels like everyone is lost right now. 1-2% swings intraday are becoming ho hum at this point. Why did the market rally? No one knows. Why did it selloff? No one knows. It’s acting on pure emotion and that’s dangerous in either direction. We did get another big up volume day so the Monday low is starting to firm up a bit. It’s still hard to say whether the worst is over, I’ve seen more intraday Vs and…whatever the opposite of V is...lately than I have in the past few years. It’s hard to have firm convictions here. Is it too much to ask for a quiet Friday?
Final Score: Dow +227bps, S&P500 +243bps, Nasdaq +245bps, Rus2k +188bps.
- Succinct Summation of the Day’s Events: Epic early morning commodity squeeze led to a huge rally. Then afternoon profit take. Then rally to close the day. So a roller coaster, yep, that’s what we have right now. Who else is excited for football to come back!!
- A….MEN…. I am certainly not against the rise of the robots and the technological progress we’re making, but some of the developments of the last few years do make me wonder if we’re relying a bit too much on the robots at times….
- David Merkel, one of my favorite writers, wrote today: “One of my clients asked me what I think is a hard question: When should I deploy capital? I’ll try to answer that here.”
- How the Navy SEALs train for leadership excellence. Good stuff in there. “Webb explicitly emphasized four transformational training themes. They’re neither obvious nor cliché. Unfortunately, I rarely see them in Fortune 1000 training programs/executive education or elite MBA programs.”
- Memoirs of the World Fastest Man. Chapter 1: I used to be able to run like the wind…
- So…how well does working for UberX pay? As a full-time job, however, uberX is maybe less attractive. Given that there are diminishing marginal returns to working more hours, let’s say that a full-time worker grosses a bit less than Monahan was pulling in. Call it $25 per hour. In that case, a driver grossing $75,o00 in San Francisco would be working 3,000 hours per year. That isn’t a 40-hour week, it’s a 58-hour week. Which in turn is a lot of time to spend in the decidedly unhealthy activity of sitting in traffic, behind the wheel of your car.
- Speaking of UberX, here is a fascinating article on the taxi king of NY and what most people think was another classic bubble: “There are parallels between the medallion bubble and the housing bubble of the mid-2000s: way-easy credit, credulous borrowing, everybody in debt. Freidman, in asking for a bailout from the city, even compared himself to too-big-to-fail American International Group. But he’ll take the comparison only so far. Ask him about the lawsuits and the missed payments, and he’ll tell you Citibank, Uber, and Capital One are in bed together. (He just sued Capital One, citing a credit card promotion it struck with Uber.) The self-made Freidman, by contrast, is forever outer-borough, forever scrappy.”
- San Fran…I could put an article like this in my recap every single day. Three days after the Sunday open house, the Genslers received two offers, one for $1.57 million and another for $1.62 million with a large down payment, no inspection or loan contingencies, a 21-day closing window and a four-paragraph personal letter with a photo of the buyers, a young couple relocating from Seattle. They accepted the higher offer, which was $70,000 over their asking price. The home went into contract nine days after it was listed. Dear sellers, we are desperate to come to San Fran and overpay for your home. Here is a picture of our dog, take pity on us, we are levering up 20 to 1 to live in 1500 sq ft and dodge tatto’d hipsters while drinking fresh squeezed IPA. Love, your buyers.
- These are probably $7k a month in the Mission District.
- How is this even possible?
- They got this place on LOCKDOWN
- How bummed would you be if you were this guy. You found the world’s most remote beach and some lady with her son is headed your way. Level 20 angry.
- I’m getting this for my designer cocker poodle thing that my wife foisted on us. I’ll report back with pictures.
So we’re gonna skip the usual funny link and go with a bit of inspiration. It’s a 4 minute video so all you ADD types will probably close the link after a few seconds. But I promise you, you’ll miss out on gold.
Have a good night