Media Takes Its Turn Imploding
Equities start the day flat as Media takes its turn imploding. You know what, if I dropped out of space and read about the carnage in Energy stocks and Media stocks I woulda bet the market was down 15% YTD. Is this gonna be a sector by sector crash? My boys at Disney reported yesterday and while expectations were thru the ROOF it was ESPN that sunk the boat. All kinds of concerns about the “cable bundle” have cropped up lately and Disney’s earnings didn’t help at all. The cable sports network is an absolute behemoth so when they mentioned “some subscriber losses” it opened the door for people to go all Jason Vorhees thru the sector. VIAB / CMCSA / AMC / DISCA / etc…I mean if you have a show that runs on cable bundles you are in the crosshairs right now. Which begs the question….is this an overreaction? Is the cable bundle really going away? Personally I think it is, and 2015 will be the year where it all tipped over. I’m not sure anyone in my family really watches TV anymore so I am witnessing it firsthand (certainly my kids don’t. I wish I could buy stock in just Youtube). That being said, the bundle isn’t going away anytime soon and these horrific moves are probably just weak kneed bulls leaving the sector. These been a lot of money made here so I sense a stampede for the exits. But can ANOTHER group of stocks melt down and have the overall market ignore it? Can we have DIS and everything cable related get crushed alongside every Energy AND Material name? No way right? With a Fed rate hike looming? Is it time to turn bearish?
After the open it felt like these names were going to lead us into a massive nosedive. DIS fell another 2% dragging stuff like FOXA, CVC, NWSA, and TGNA with it. At one point the entire media sector of the S&P was down 4%....you’d think they produce coal for cying out loud! No real economic data to speak of, weekly claims but that thing hasn’t changed in forever. We get the jobs report tomorrow so we’ll save our employment talk for another day. You know what bounced today? Energy…it happens. When CHK leads all gainers you know the world is turned upside down. Other big winners were RIG / HP / NFX / DO / SWN. GMCR brewed up a cup of lukewarm misery dropping 29% after another abysmal quarter. Remember when KO invested $1.25B in this company at $75 a share? Not an ideal outcome so far. WFM hit a new low because apparently Asparagus water isn’t selling well (there is an INSANE amount of whole food competition right now. I can get organic beet flavored syrup in about 82 different places). KORS and ZU actually did ok after reporting! ZU’s 13% gain managed to cut their YTD losses to just -42%! Boom shaka laka. Most of the chatter today was about media stocks though and by the end of lunch we sat on 2,076, down 1%. Fairly ugly price action in the first half, not a lot of positives my friends. Can I buy the Sommelier channel a la carte yet? Who’s gonna make that happen for me?
The rest of the day was spent in a quiet slumber as the S&P probed the depths of the day’s lows. Did you know we’ve crossed the 2,100 level 43 times in 2015? Can anyone remember the last time we traded as horizontal as this? It must be before my time because I started here in 2007, watched the market go down every single day for 3 years then watched it go up every day for the past 5. I can’t take all this treading water, it’s making me nuts. The million dollar question is this: can we really keep going back and forth with all this horrible internal action? I find it hard to believe the market can sustain new highs as the Fed Hikes and each individual sector has its moment in the woodshed. First it was Transports, then Energy, now Media. Something better change quick or the sum of the evidence will be impossible to ignore.
Final Score: Dow -67bps, S&P500 -76bps, Nasdaq -162bps, Rus2k -130bps
We’re gonna skip my fun time happy links today because my final video is that good.
Ever see a guy paraglide into a tram thousands of feet above the ground and almost miss it and plummet to his death? Yea me neither.
Have a good night.