A Storm Descends Upon Wall Street
Equities start the day lower as a storm descends upon Wall St. Am I referring to the Great SnowMediaApocalypse of 2015? Nope, that one didn’t quite pan out. I’m talking about a good ole fashioned earnings / data thunder storm. The kind where big names puke up their lunch and blame everything from the dollar to big trouble in little China. MSFT, CAT, UTX, FCX, PG, I could go on and on. Mega cap companies dumped horrible earnings into our lap and ran for cover. Then the US Govt dumped a godawful Durable Goods number into our laps and the freak-out stew was complete. But hey, you know what, at least we can’t blame some Finance Minister in Europe for today’s horrible start. This was one self inflicted and I’m fine with that. Stock markets should express the cash flows / business outlook of its component parts and not whether a bank in Cyprus ran out of rubles or whether some German lobbyist woke up on the wrong side of the bed. Want a random stat that shows why everyone is worried about earnings? Thomson Reuters gave us this gem: 18 $SPX companies have issued Q1 profit guidance and a grand total of 0 of them have beaten street estimates. Ouch. Why do I feel like this video is appropriate right now?
After the open we wondered whether today was going to be the big crash. Down 1.3%....down 1.5%...down 1.8%....everyone at home in NY because they couldn’t traverse 15 blocks on foot..…mass hysteria. I swear I wanted to use this entire recap to harass my friends on the East Coast but I guess I’ll stop here. I get it, forecasts are difficult and Mayor Bloomberg took heaps of criticism over the 2010-2011 blizzard thing. So they whiffed it…better safe than sorry. However…how much would it have to snow in Chicago before it led every single news wire and my favorite client from Australia knew about it at 540am Sydney time. This much? I guess that much. Anyway lots and lots of ugly moves this morning. MSFT -9%, CAT -7%, FCX -5%, INTC -4%, EMR -3.5%, all kinds of big names down meaty amounts on heavy volume. Any winners? What if I told you a few energy names led the way! Would you finally believe me that Jan 27 was mass anarchy all over the place? NBR +4%, DO +5%, NE +2%. Crude up 2%? Is this bizarro world? Thankfully for us the low was put in about an hour into the session and we proceeded to rally thru lunch. Why? Because it’s a bull market until proven otherwise that’s why. Oh and how awesome would it be to live in this town? Bet they don’t care about currency headwinds there.
The final few hours saw more red than green and we closed at 2,030, down 1.28%. Off the lows but also way off the highs. So dear reader…you know what’s really hard? Weather forecasting. You know what else is hard? This whole stock market / earnings thing. People do their best to model an outcome but a rise in the Dollar can change things just as dramatically as a gust of wind from Maryland. So we take what we’ve learned and adapt the model. Maybe we need to re-examine multinationals or poke at small caps that sell exclusively to people in Ohio. That being said, one day of mediocre earnings shouldn’t bring this thing to a crashing halt. We need way more inputs before we decide to downgrade the bull or tell someone in Park Slope that they need to hoard Kale for the next week. Where was I going with this….oh yea….it’s still a bull market. Make it prove to you that it’s not anymore. Let’s see what tmmrw brings.
Final Score: Dow -165bps, S&P500 -134bps, Nasdaq -258bps, Rus2k -51bps.
News Highlights:
Nothing spectacular out there so let’s move to the big finish:
I have an awesome Fail video for you tonight so it should stand well on its own. So many good face plants in this one…enjoy!
https://www.youtube.com/watch?v=69Ou8gUyMTA
Have a good night.