Well My Friends It’s Simple, The Market Is SALIVATING For Ways To Invest In Crypto.
Equities start the day higher because come on; no way this puppy is going down two days in a row right? 16bps yesterday because China is gonna park their dollars somewhere else (there is literally nowhere else), the US might leave NAFTA (I hate politics), and rates are rising (10 year hit 2.58%). Look, those are all things people banter about because there’s nothing going on right now but a loss of 16bps after the market went up 6 days in a row is random…completely random. To be honest the best thing about yesterday was KODK trading 107mm shares which was more than SPY and QQQ combined. Yep, you read that right, a dead company that said they might crypto something photographs machine whatever traded more than the two most liquid ETFs in the world. Why you ask? Well my friends it’s simple, the market is SALIVATING for ways to invest in crypto. Not “hey let me jump thru 100 hoops to trade crypto on some exchange server in Tazmania” but “I want to open my stock acct and be able to get legitimate crypto exposure without worrying about crashes and moving money.” For better or worse crypto is the hot new jam because stocks are boring af. All they do is go sideways or up with little to volatility so investors, day traders, and fast money junkies have moved on to the funky world of Dogecoin (literally a dog meme coin. Much profits, very crazy). Hey, hey, wanna do a little experiment with me? I’ll take under 150 days for Sears to announce Searscoin. Bookmark this email my friends, I just predicted the future. Man…that whole paragraph is so late stage bull market isn’t it?
After the open we were back to a full blown bull market in everything and anything. Oil hit $64 and it sure looks ready to go. The Rus2k jumped 1.5% to a new all-time high silencing all the critics who said “but but small caps”. Breadth expanded, WMT raised their wages, DAL beat earnings, Discretionary ripped, Sams closed a bunch of stores so COST ripped, TSLA was up (our analyst on Tesla is so good and handsome and witty, I hope he tells my bosses I wrote that), ATVI popped after 300k people watched Overwatch on Twitch, heck even UAA was up, I mean what more can I say here? The only stuff that traded lower was Real Estate and Utilities but that’s what happens when risk is on. Look, we have no idea what the effects of this tax reform plan are going to be but some of the immediate effects are wage hikes and $1000 checks. With crude rising and all that fresh money sloshing around the system if we don’t finally get some inflation then the way we measure it is completely broken due to AMZN and the internet. By lunch we were churning on the highs, 2,761 +0.50%. Have I mentioned that Bill Gross said “men are in a bear market”?
We saw fresh highs in the afternoon, fresh as the mountain air above Zermatt, as every index raced to new levels. By the time the bell rang we landed on 2,767, up 0.7%. 3.5% YTD on TOP of last year’s 20%+. You know I think I’ve run out of ways to describe this multi-year run we are on. I think, one day in the future, we’ll look back and say “My God did I take that entire thing for granted”. This bull market is remarkable in every single way something can be remarkable. I hope you have good advisor (if you don’t call us up, we have a ton) or you’ve stuck with a plan you created for yourself because these are the kind of markets where wealth is truly created. And you know what? You won’t sell the top, neither will I, but that doesn’t matter in the long run. If you avoid the pitfalls that destroy returns (high fees, over trading, jumping in and out, getting scared of your own shadow, poor asset allocation), then you are indeed a wise investor and should reap the benefits of this bull market no matter when it ends.
- Succinct Summation of the Day’s events: Lots of random news stories like wage hikes and bonus checks, couple good earnings reports, and a return to the market that never stops going up.
- Look, if you ‘re a financial advisor (I count many of Baird’s as my friends) you have to give this piece of advice constantly: Most people should ignore these types of short-term narratives because waiting for the market to boom or bust is an inherently short endeavor that will only create conflicts between your financial needs and your behavioral profile. Instead, establish your financial needs, find a realistic profile, construct the appropriate portfolio and stick with the plan through melt-ups and meltdowns. In the end you’ll guarantee that you save money on taxes and fees all the while adding the only type of alpha that matters – behavioral alpha.
- FOMO right now is real, which is why you need to memorize the previous link: For now, FOMO is the biggest fear investors need to grapple with. That could change quickly, and anyone with the gumption to think they can time the market will need to be on alert. Fear, like love, has inspired much great work—and a lot of mediocre results—from poets and investors alike. For investors, the best advice about today’s market comes from the 19th century poet Ralph Waldo Emerson: “In skating over thin ice our safety is in our speed.” —With Lu Wang
- LPL looked at what happens after low vol years (i.e. 2017): We looked at years with some of the smallest intra-year pullbacks ever and found that the average gain was nearly 26%. The next year, however, saw an average pullback of 12.1%, while the average number of 1% moves (closes either up or down 1%) spiked from under 13 to over 30. But the good news is the S&P 500 managed to gain a respectable 8.5% on average.
- Do me a favor, open this link just to look at the name of the Fund
- This has to be in Australia right?
- For sure this is America
- I have no idea where this is or what the guy was thinking
- I’d rather sleep in the tub of a Motel 6 than here
- I’d rather sit in Penn Station for 2 days than sit here
- You’re telling me the Pacific NW isn’t amazing?
Tonight we are going to look at the best use of a Celine Deion song since that movie where the old lady died in her bed at the end. Fun fact: My wife, until about a week ago, had no idea she died in the final scene. I mean WHAT???
Have a good night
Might the First 5 Days of 2018 Be Green?
Equities start the day lower as the Great 2018 surge takes its first pause! Up every single day to start the year, I mean who could possibly hate that? Not me, I hope it’s up every day until December, will make Ripple look like child’s play. So prices keep rising…what about breadth? Well amigos, breadth is there too, this isn’t just FB, AAPL, and GOOGL. Take a look at the cumulative A/D line for NYSE stocks along with the Valueline Geometric avg. Winner winner chicken dinner. Let’s get real here for a second: breadth expanding is not the kind of thing you see at market tops. We are still in the middle of a full blown bull market that is charging into the history books. So what are the big winners to start the year? Bespoke shows us that most of them were gigantic losers in 2017. See all those energy names? What if I told you Crude oil was approaching $62 and we could get a huge tailwind from these names, is that something you’d be interested in? Of course you would because you’re smart and savvy and you ignore all the doomsayers and focus on your goals with relentless precision. It’s a bull market and you ride bull markets because that’s how we create wealth. There’s still plenty to worry about (flattening yield curve, slowing employment growth, Fed hikes, Crypto) but as of right now none of them point to an imminent top. Could I be wrong about that? Sure. Am I always right? Nope (I am right about The Last Jedi being mediocre). Might the first 5 days of 2018 be green? I hope so because @ryandetrick tells us that “when the first 5 days are up >2% Since '50, S&P 500 is higher for the year 15 out of 15 times. Average return is +18.6%.” Hoo boy let’s go people! Get excited!! Plus the Pats are going to lose to the Jaguars in the greatest upset since the Battle of San Jacinto (0.01% of people will get this).
After the open we saw the lows of the session within the first 8 minutes. Up 4 days in a row? I guess trading in the red for a couple hours was a sufficient pullback. I debated making up some “I survived the 2hr, 0.19% dip of January 2018” t-shirts but that joke is getting a bit old. Ok, there’s a few names we need to talk about before we move on so let’s get to it. Jana Partners and CALSTRS sent this letter to $AAPL the other day basically asking the Board of Directors to install better parental controls on iPhones because they are “addicting”. Look…look…Apple might be able to install some kind of ticking clock that shuts a phone down but honestly, can’t parents just take it away if their kids are using it too much? Or, I don’t know I’m just spit balling here, maybe don’t give an iPhone to a 10yr old? Quick, someone call Frito Ley and tell them to install parental controls on Doritos because my daughter eats a bag a week. Sigh. Shifting gears here, GoBroke fell 12.5% after laying off 1 in 5 people and shuttering their drone division while basically saying “selling cameras on sticks is hard”. Then they said the company was for sale and the stock ripped off the lows because, while the people who invented the darn thing and took it public can’t make it happen, maybe someone else can. Sigh. Winners STX, WU, KSS, ALB, NVDA, and ALGN. Losers GPRO, BIIB, ALXN, LB, and ULTA. By lunch we were solidly in the green up 0.13% to 2,746.
We spent the rest of the day grinding higher, again, and closed at 2,747 up 0.17%. 5 days in 2018, 5 days green. Check out these insane stats: The last >2% decline in SPX was in August 2017. The last >3% decline was in October 2016. The last >5% decline was in June of 2016 and it lasted all of two days (h/t @sharkbiotech). Relentless….absolutely relentless. Is it warranted though? Maybe, corporate guidance is at its best levels since 2010 and macro data is rock solid so you can’t say this is happening in a vacuum. Look I’ve been bullish for what…6 years now? Nothing out there screams “Sell” to me…nothing. Final Score: Dow -6bps, S&P500 +17bps, Nasdaq +29bps, Rus2k +11bps.
Volume was average. News Highlights:
- Succinct Summation of the Day’s Events: GPRO news, a crazy letter to AAPL, yield plays led and we closed in the green again. Just bull market things
- Man are we overbought: The S&P 500 Index, MSCI Asia Pacific Index, MSCI World Index, Nikkei 225 Index, and MSCI Emerging Markets Index are all in overbought territory, while the Euro Stoxx 600 Index lingers just shy of such a level.
- Just 2018 things here: “Encrypted messaging startup Telegram plans to launch its own blockchain platform and native cryptocurrency, powering payments on its chat app and beyond. According to multiple sources which have spoken to TechCrunch, the “Telegram Open Network” (TON) will be a new, ‘third generation’ blockchain with superior capabilities, after Bitcoin and, later, Ethereum paved the way.”
- Working on your resume? Need a few tips? This link is all world good
- Great quote by Josh: “In fact, it can be argued that the ability to be bullish on something long-term but wary in the short-term – or skeptical of one’s own ideas in general – is one of the highest planes of enlightenment an investor can attain.”
- Think you’re tough because you do Cross Fit? Try this
- I love irony
- Honestly what is wrong with people
We’re going to end tonight with my favorite new genre of video: Fail + Awesome!
Have a good night
A Market Lesson from The Last Jedi: Spoiler Edition
Equities start the day higher because Tax Reform is going to pass and we’re all gonna be rich and the S&P is going to the moon. Now that we have that out of the way we need to talk about The Last Jedi and the lessons we can learn from it with respect to the market. If you’ve been with me over the years you know there’s a few things I hold dear to my heart: the Cubs, the Bears, travelling to London, Patagonia, making fun of stocks, but most of all I love the Star Wars franchise. It has its up and downs, Vader is the best villain of all time and Jar Jar is the worst character of all time, but if we take a step back and look at it as a whole it is undoubtedly the defining mythos of the late 20th Century. I’d argue Star Wars has had a greater impact on our culture than the iPhone (come at me bro). I went into the Last Jedi with SKY HIGH expectations, Rotten Tomato reviews were off the charts and word of mouth was strong (I had heard it was better than the ESB). **spoiler section** But the moment Luke Skywalker chucked that lightsaber over his shoulder the weight of disappointment overwhelmed me. I mean WHAT? A scene that should’ve had immense gravitas, a scene that literally ENDED the previous installment with dramatic tension was summarily destroyed by a lame gag. And as the movie dragged into Space Leia, horse racing, and income inequality in the Outer Rim I could only taste bitterness in my mouth. Why? Why were there so many things that felt out of place? (Finn’s ENTIRE story) So Mike….what does this have to do with markets? Well I’ll tell you, because people often don’t understand this nuanced point: There are times when a stock or an index falls after what appears to be “good news”. AAPL beats earnings yet falls. Jobs data is better than expected yet the stock market falls. It’s because of the very same thing I experienced in the movie. A level of excitement that cannot be met, a bar set so high that nothing could jump over it. If you take one thing away from my recap it’s that emotions are LITERALLY the day to day driver of what we do. It’s not news, or earnings, or macro data it’s emotions, and those emotions are hard to measure because inside everyone’s head is a movie where Master Luke is as wise as Master Yoda and Poe Dameron doesn’t make a stupid joke about being on hold. SO BAD.
After the open we got a surge in the major indices as we priced in Tax Reform for the 8th time this year. Look, all the catalysts are in the books, we aren’t “pricing in” tax reform anymore, it’s December 18th this thing is locked in. People are chasing stocks because its year end and they always chase at year end. Actually, the most fun today was in watching LFIN. I had never heard of this stock but WOW what a magic carpet ride this thing took. Logfin Corp debuted for trading on the Nasdaq last Wednesday. It languished around $5 a share for the first few sessions before catapulting itself to $140 today. 140....as in a 2300% gain? That’s right my friends. So what happened, did these guys cure cancer? Did they make a good Star Wars movie? Nope, they bought another company, take a look at this Bloomberg news blurb then come back. “Microfinance crypto warehouse receipts with Ziddu coins”? I couldn’t make that up if I tried. I will say…it sounds more interesting than Rey’s two day camping trip with A-hole Luke but is that really a business? You know what? I bet that news release is studied in business schools in a decade as a clear sign of “what were these people thinking in 2017”. Anyway, we spent most of the day grinding higher and by lunch the Nasdaq had hit 7k, the S&P 2,692, the Dow 24,800, and the Rus2k 1,546. All were fresh highs….way fresher than that dumb milk scene. I’m angry.
Unfortunately the rest of the day was a whole bunch of sideways as the clock ticks down on 2017. That being said, by the close the S&P500 had gained 20.19% YTD and the low is STILL the first trading day of January. Think of how many people have called the market a bubble over the past 1, 2, 5 years. Is it 50? Sure. 250? Absolutely. 1,000? Guaranteed. Look, NO ONE knows when this thing will top. Not me, not your favorite blogger, not the guy on CNBC, and not old Yoda who was actually good in the movie. No one can predict the future. All you can do is control your behavior, construct a durable portfolio to weather market storms, and then sit back and filter out the day to day noise. What if the market is up 25% next year too, will it be a super mega ultra bubble then? One final note on Star Wars: I’m not naïve enough to think my opinion is the “be all end all” of movie reviews. There’s probably a ton of people who like TLJ and I’m ok with that. Personally I’m being super critical because I hold the franchise and its story in such high regard. I want my children to have the same sense of wonder and awe I had during my time with Luke, Leia, and Han that I get bummed over tiny details that seem lame. I don’t know, I’m rambling now, maybe it will be better with another viewing. Final Score: Dow +58bps, S&P500 +55bps, Nasdaq +84bps, Rus2k +121bps.
We’ll end tonight with an absolutely amazing ping pong link. A guitar pick? He hit a ball with a guitar pick?
All Anyone Cares About Is Bitcoin
Equities start the day unchanged because all anyone cares about is Bitcoin. I debated turning the recap into an all Bitcoin/Litecoin/Antoncoin jam but I’m not sure I have enough experience in bubbles to accurately portray the stuff I’m seeing. Dad/Mom/Sister asking about it? Sure, absolutely. Dentist/Doctor/Veterinarian? About a month ago. Plumber/Geologist/lady who arranges fresh flowers at the market? Probably this week. The stock market has been so boring for so long that we literally had to create a new asset class to trade. You have to love human ingenuity right? The best part of this whole crypto thing is that Wall St was dead last to the game. Zero presence in trading, marketing, research heck anything! Has that ever happened before? Ever? Anyway, we’ll talk more about whatevercoins later because right now we need to talk about the next 10 days. 10 days to trade your way into stock market history. Up 18.4% as of this morning (27% in the NDQ) because of this (h/t JPM). Did you click that link? Please do then come back. That my friends is why the stock market is rallying. It’s not the Fed, the Fed’s balance sheet, Janet Yellen, some insidious illuminati, or anything that garbage peddlers throw at you on TWTR. It’s global macro growth, it’s global earnings growth, and it’s a breakout after YEARS of sideways markets. I mean aren’t you glad you opened this email now? Hey, did you know today is the 30th anniversary of the movie Wall St? What a glorious piece of cinema, that guy from Platoon managed to play the role of 1) Equity Trader 2) Investment Banker 3) M&A advisor 4) Chef and 5) Real Estate Speculator all in one place! Here are the top “Trading” movies of all time: Trading Places. Wall St. Boiler Room. Wolf of Wall St. The Big Short. That’s it, nothing else qualifies.
After the open we made new highs on….tada….absolutely no news whatsoever. Look, it’s Mid Dec, half of people are dialed out and the other half are trying to figure out how to open a Coinbase acct. Wall to Wall Bitcoin coverage on @CNBC got me like whatever so let’s talk stocks. Energy led the way with oil up 1%. You know it’s boring when Energy stocks are the leaders. CTL was the biggest gainer (up 8%) but it’s had a worse year than Kevin Spacey. We made new all-time highs before lunch and if you think SPX closes below 2,700 this year you crazy. Up 20% on Dec 31 just feels right to me. Losers were SCG, ULTA, ALXN, FL, and TPR. Hey…..remember when retail stocks used to dominate the losers list like Michael Jordan playing a 3rd grade pickup team? I do, those were good times. Then someone launched the EMTY ETF (a play on the decline of retail) and literally marked the bottom for the sector. Can’t make stuff like this up people, Macys is up 31% since this genius idea hit the tape and Kohl’s is up 21%. Why does irony have to be so thick in what we do? Is it this thick in other industries? By lunch we sat on 2,657 up 0.2%.
The rest of the day was a bit of snore but we closed on the highs! 2,659 up 0.32%. Another victory for the Resistance against the First Order! Volumes were down about 12% vs a 30day avg and if you don’t think that’s gonna get worse as the month drags on then I have a coin to sell you. Tell you what, I have a knack for writing these things on the absolute deadest days and skipping the one’s with true fireworks. Conclusion? Write more. The Fed meets on Wednesday to raise the rate on your HELOC and that’s really the LAST catalyst we have (it’s fully priced in). After that it’s Mariah Carey, Star Wars, Egg Nogg, and overflowing recycling containers. Christmas….it’s the MOST WONDERFUL TIME…..FOR A BEER.
Final Score: Dow +23bps, S&P500 +32bps, Nasdaq +51bps, Rus2k -12bps (odd)
I have two amazing links to end on tonight because I’ve been saving them up for a month
The first is a 1 minute movie. I love 1 minute movies because I have the attention span of a gnat. This one is exceptional
The second is a rock and roll Millennial version of the best Christmas song ever: The Little Drummer Boy. Watch this whole thing…trust me.
Have a good night
One of the greatest weeks of the year….Thanksgiving!
Equities start the day lower on one of the greatest weeks of the year….Thanksgiving! Yep, that’s right everyone, I’m back. I mean if you’re gonna start writing again why not write during a week when no one opens email and all they care about is whether the gravy is homemade. Where did I go? Well, I decided to take a job working PR for celebrities in L.A. because I wanted to be in the bigtime. How did that work out? Yea…ummmmm….looks like writing market blogs and giving speeches is the better career choice. I come back to you now at the turn of the tide, we have all of 27 settlement days left in the year for so much to happen. 27. Talk about the shot clock winding down. You know how many legislative days are left in the year? 15. 15 days for the most dysfunctional body since the UN to reform a tax code that’s something stupid like 18,000 pages long. Good luck everyone, I hope your bull thesis doesn’t revolve around a bunch of people who literally don’t care about you. Anyway, last week featured a 1.1% selloff driven by high yield jitters and curve flattening that, if you read Fintwit or blogs or the media, felt like the crash of ’87. We’ve gone up for so long that literally anything that MIGHT be a reason to sell is given Titanic coverage. Curve flattening? Sure, I get it, it’s a very reliable recession indicator, but we have a long way to go until this thing hits zero. I’ll get worried when 1) the curve flattens to zero 2) weekly claims starts rising 3) auto sales keel over 4) new home sales decline and 5) Let’s enjoy our holiday week, make real stuffing and real mashed potatoes, then come back and reassess whether Santa get us to +20% on the year. Ho Ho Ho, who wouldn’t want that?
After the open we got a nice, slow, grinding higher market that threatened to make mincemeat out of recently turned Bears. Volumes a whopping 19% below a 30 day average and if you think it’s going to get any busier later this week you’re nuts. Get your trading in now because Wednesday and Friday are going to be dire. Only one data point in Leading Index (check my news highlights for more there) and no Fed speak so I guess we have to talk movers and shakers? SQ ripped 2.5% after saying they may allow Bitcoin trading in their app. I really should write a Bitcoin speech, especially now that it’s trading around $8200. Is there a single reliable expert on Bitcoin in the world? Probably not, so there’s room for me to jump in and make waves! CAVM rose 10% as rival Marvell said they’d buy them for $6B. How many chipmakers are going to be left by the end of the decade, 3? Other winners DLPH, WYNN, AMAT, and MU. Losers were INCY, CAH, PDCO, MCK, and GE because it was open for trading. Has there been a bigger fall from grace than GE over the past year? This one will put to test my theory about “Great American Companies” not going quietly into that good night (WMT, MCD other examples). Lotta things for them to fix but I’m sure super smart people are looking at it daily. Anyway, by lunch we were trading on the highs, 2,582, up a rocking 16bps. Hey, dear reader, I need you to weigh in here: when it is appropriate to cook just a turkey breast and not the whole turkey? Is that “mailing it in” or a proper use of capital market efficiency? (dark meat sucks)
The rest of the day was quiet except for the last 30 mins when it was announced ATT may face an anti-trust lawsuit over its TWX acquisition. Hmmm….super “business friendly” right? (honestly, is this all over CNN? Please tell me it’s not). The tape got hit for a little but most of that was just a knee jerk reaction to a giant M&A deal being threatened. We closed at 2,582 up 13bps, which isn’t bad for a slow Monday. Look, there’s always going to be reasons to sell the market, whether they be indicators or something having a “4 standard deviation move” or someone yelling “SELL” but in the end all you can do is have a plan and stick to it. High Yield got you down? Hindenburg Omens making you nervous? Please,…. turn off the media and spend more time with the family. Final Score: Dow +31bps, S&P500 +13bps, Nasdaq +12bps, Rus2k +71bps.
Volume was low. Our desk was better to buy. News Highlights:
- Succinct Summation of the Day’s Events: Holiday week kicked off with a “I shouldn’t have sold because I worried about High Yield and Curve flatteners” rally. They do sound like fancy reasons to sell though right?
- So many chart crimes in here, I think I’ve actually done the first one way too many times. “I’m expecting this to resolve in an explosive fashion, one way or the other.” Technical analysis on economic charts. Just don’t.
- Don’t let politics hurt your investments please: “The bottom line is that corporate America is going to innovate and maximize profits regardless of whether there’s a Republican or a Democrat leading our government. While politicians are important we shouldn’t build portfolios based on our political biases. All that does is cloud our judgement and lead us to make irrational decisions driven by short-term political biases.”
- Leading indicators TLDR: Still ok
- Wait….wait….preppers are starting to buy Bitcoin instead of Gold? “Across the North American countryside, preppers like McElroy are storing more and more of their wealth in invisible wallets in cyberspace instead of stockpiling gold bars and coins in their bunkers and basement safes” So let me get this straight, after Mad Max Beyond Thunderdome happens these guys are going to log in to their crypto accounts and cash out their millions? With what internet / power / app exactly?
- Rule #1 in college, never trust your drunk buddies
- Good luck on resale pal
- This bird listens to Rage Against the Machine
- You want a new Thanksgiving side? How about truffled potato gratin? Oh my…
Tonight we’ll end with a look at why America is such a great country. We have people willing to test their limits in death defying dives to show the world how brave we are!
Have a great night