Great Flash Crash of 2010
Equities start the day higher on the anniversary of the Great Flash Crash of 2010. I poured thru the history of my recap to see if I could find the one from that day but alas, my record keeping sucks. I suck. Anyway, it was so fun to write that day, what a surreal experience that was. I remember sitting at my desk sipping on an overpriced coffee drink and watching Accenture’s price go to $1. $1 you say? Yep, the market was so broken that a multibillion dollar consulting company was trading for less than my drink. Could it happen again? In my opinion? Abso-freaking-lutely. The equity market is so fractured that I find it hard to believe it couldn’t break again given the right circumstances. But you know what? You know what clients will value when that happens? A human being sitting at their desk making intelligent decisions. I had plenty of sell orders on that fateful day and guess what I didn’t do: recklessly sell them no matter the price, which is exactly what computers were doing. “Oh I’m sorry Mr Client, you told me to work 25% of the volume. Sorry you sold it $15 lower” – regards, Skynet. I engaged my clients and we made smart decisions because, you know, that’s why they are trusting you with their stuff. I hope we don’t see another Flash Crash, I really do, but I worry about market liquidity all the time. It is SO easy to move stocks nowadays, even names you think are liquid can be really hard to transact in. When everything hits the fan again you think all these wide bid / offers and relentless algos will treat us well? I don’t. But me, and every one of my colleagues at Baird will do our absolute best to protect our clients’ best interests. That’s why they are here and we won’t let them down.
After the open, our old friend Yellen tried her best to crush us all. “Equity valuations are quite high”….gee thanks Janet, that’s just what we were looking for on this exact day. You know who else is worried about valuations. EVERYONE. DON’T MAKE ME GET UPSET HERE. I swear, you can’t swing an Apple Watch without hitting someone worried about stock valuations or startup company valuations or home valuations or bond valuations. Man I really want to rant here but I have to contain myself, this is supposed to be a semiprofessional recap. Here, let’s pretend to goto this church and do a bit of zen meditation (honestly how breathtaking is that place). Back in market land we sold off most of the morning. Why? Well I could go on and on (and I have lately) but it comes down to this: the market just doesn’t wanna break out, nor does it want to sell off, it just wants to sit here and make both camps as miserable as possible. Range bound trading baby. The Dow (I know) has gone 37 days without setting a 1 month high or a 1 month low, longest streak in over 100 years (credit to @jlyonsfundmgmt on that). Winners today were GEVA (up 113%!), WU, CVC, EXPD, and EA. Losers were ZU (love the name but the stock is having real issues), FTR, ALXN, and FOSL. By lunch I was mostly marveling at the continued surge in treasury yields, 2.23% on the 10yr, up from 1.9% at the end of April. Crazy town (how about this headline: German bond investors just lost 25 years of yield in 14 days)
The final few hours saw us bounce around but nothing meaningful came of it and we closed lower once again. So all the talk on trading desks will be about a double top up at 2,117 but you know what? Neither side has the advantage right now. We are back to flattish YTD because bulls have no giddyup and bears have no oomph. It’s just a whole lot of quick sand right now. We pull ourselves up only to sink right back down. I guess we look at Friday’s jobs report now but honestly…what am I rooting for? Good or bad? Do I want a ton of people to find jobs? Is that good for stocks? I hate this, I hate not knowing what to root for. Bears Packers…the choice is clear. Cubs Brewers…the choice is clear. Pizza vs Cheeseburgers…yea there’s no clear winner there. Where was I going with this? Oh yea, markets are confused and unsure what to even root for right now. That’s why we sit here going nowhere fast.
News Highlights:
Have to skip these today, sorry, heading down to Chicago to our Conference but I won’t skip the big finish!
The first link is someplace I desperately want to go now. I’ve never really had a thing for the Grand Canyon but this looks incredible!
The second is a guy who I’m putting in the running for Dad of the Year. I never would’ve thought about using a javelin to pull my kids tooth out. Brilliant.
Have a good night.