An Influx Of Global Data

Equities start the slightly lower as we get an influx of global data. Here, Bloomy did a great job summing up the data in this article so click away and soak up some multi-color bar charts.  What’s the main takeaway for those of you who want to march on? The US is still leading the world in Manufacturing PMIs, so nothing new there, but Europe is starting to perk up as well. In fact, here’s another article on why Europe is suddenly booming! We also saw CPI this morning (dead in line print) and you could argue this data point has rocketed to the top of our “most watched” list. Any surge in this and black cars are gonna be rushing Fed Presidents to big mahogany tables for cucumber sandwiches and rate hikes. Anyway, it’s slow so I wanna chat about a stock near and dear to me:  Disney. They say to invest long term right? That the key to wealth is finding stocks that last generations and provide stable returns for patient investors. Which brings me to Cinderella. The latest movie release has done $122mm as of March 22 and I want you to consider this: Cinderella is 65 years old. She brought the Disney company revenues in 1950 and, this is the great part, every single year since. How many companies do you know have assets that produce revenues / profits for 6 decades? Oh there are a few who do, I’m not saying DIS is the only one. I’m just saying as you look at your investment landscape there are always a few that seem obvious, yet are still attractive. You know what else? Disney has Marvel and Star Wars. You think those are 60 year assets? I do. You know what else? Disney can raise prices and people don’t care because their theme parks endlessly packed with people like me! Companies that have pricing power, generational assets, incredible brand value, and amazing management…..they do exist! And sometimes they are sitting in plain sight (Baird does not cover DIS).

After the open, it was another one of those really quiet sessions where the market rocks back and forth on a gentle tide.  2102, 2106, 2100, 2095, just random price action as catalysts are scarce. One reason why volume might be down is that companies are going into their buyback “blackout period” before earnings. GS talked about it this morning and Bloomberg ran this story if you wanna delve a bit deeper into it. Essentially that constant bid under the market goes on hold so seeing more frequent days with slightly negative price action shouldn’t surprise us. Buybacks are running 2% of overall volume right now…that’s a decent chunk to temporarily remove! Yields continued to make a strong move lower, 10yr UST touched 1.87 around lunch proving once again that being bearish on bonds is hard. Like insanely hard. At this point I’d have to see 10yr yields at 4% to think being bearish was right. Stock winners today included NFLX, FSLR, TWTR, and both the GOOGLES! Losers were WLL, DO, OKE, RIG, and EQIX. Take a look at the WLL chart…pain in these energy names is not over. You know when it will be over? When we see articles about Goldman and Blackstone and other PE shops taking energy assets from drowning enterprises. Remember the housing one’s? I do. I remember reading about Blackstone buying Miami condos dirt cheap. In my opinion, it’s just not there yet in energy. 

The final hour saw us sink to the lows where we closed. 2093, down 50 bps. So that’s a two day decline of about 0.75% on no real news. Look it happens, there’s not much going on and buybacks are going to be quiet for a bit. Clients are content with what they have so inertia reigns. I use this phrase often and it’s perfect to describe our current tape: buyers are higher and sellers are lower. People will buy the breakout or sell a sharp decline, they won’t transact in this no man’s land. So we sit and watch for a fresh piece of data to obsess over, and if anyone out there is looking for something to obsess over its me! By the way, since it’s slow and headlines are scarce let’s talk amongst ourselves. If you have the time, send me your top 3 worries about the stock market right now and we’ll discuss them this week. I’d love to aggregate a nice list to share with you all because that kind of information can be invaluable. So help me out if you can dear readers!   

Final Score:  Dow -57bps, S&P500 -61bps, Nasdaq -32bps, Rus2k -9bps

News Highlights:

• Succinct Summation of the Day’s Events:  Another one, like yesterday, with quietly negative price action.  Just aimless drift though. Companies starting to move to sidelines with buybacks so we are on our own for a bit.
• Must read today:  Dr Ed’s blog on “Old Age doesn’t kill bull markets”. The main takeaway is this:  Recession do.   And right now the coincident economic indicators are JUST breaking out. Go read it.
• How is this going to end?   Is there no limit?  “Top-ranked business schools are raising tuition by about 4 percent this fall, bumping up the cost of classes for the 2015-16 academic year to almost $60,000 on average. Throw in room and board, fees, and textbooks, and it will cost as much as $99,000 to attend B-school next year.” 
• In the long run, this is probably better for Wall St right? People heading to San Fran? (including the CFO of MS today): More interesting are the decisions of thousands of less famous names, promising young businesspeople and engineers who will shape the future of the American economy. And to add to the anecdotal evidence that working in Silicon Valley is the hot thing on elite college campuses, there is some solid evidence that Ms. Porat isn’t the only person deciding that technology offers a more compelling opportunity than banking
• Matt Levine on Public vs Private investments. Good one: “But if you think of their job as "allocating capital to productive equity investments," what else are they going to do? The public stock markets are increasingly about capital return rather than capital raising. Companies are going public later, and initial public offerings are now often about cashing out earlier investors rather than raising money for productive enterprises. And the interaction between big S&P 500 companies and their shareholders consists mainly of the companies giving money to the investors, not the other way around. Those investors have to do something with that money, if they want to keep calling themselves investors. If they can find growing companies that actually want their money, no wonder they're excited to invest.”
• Some guy filmed my workout and didn’t even bother to tell me!
• Bora Bora…yes please.
• I agree with this..I think my $99 Apple TV is a sleeping giant
• Crazy Factoid of the day:the Dax is up 40%.   In 5 months. I mean it’s not like the Dax is some 3rd world country, this is a major stock market. What a breathtaking move.
• Do me a favor, if you have a kid who plays Minecraft at all have them visit this server: mcmagic.us  Trust me on this.

It was a slow day so we’ll end with two videos tonight.

The first is pretty much how I would start an Olympic slalom course.

The second is a dog…who couldn’t catch a cold.  For some reason I love watching this dog miss absolutely everything thrown at it.

Have a good night.