We Get More Earnings Than You Can Shake A Stick At

Equities start the day higher as we get more earnings than you can shake a stick at. Heart of the order coming up but let’s circle back to that later, I want to address this Twee-pocalypse we saw yesterday. Right around noon central time, as I ate my overpriced cafeteria salad, the market decided to perform a Crazy Ivan. As we frantically searched for a reason I jumped onto Tweetbot (the best app for Twitter, trust me) and saw “bomb at White House, President Obama injured”. You know the rest of the story by now: the market dropped 1% only to recover it all 2 minutes later after the AP came out and said “yea we got hacked, our bad”. So what can we learn from this goat rodeo? Here’s how I see it 1) If you aren’t on Twitter you are doing it wrong, especially in our industry. News breaks there first, you absolutely must be watching it during the trading day. But while it breaks news first twitter is awful at analyzing news, so be cautious. 2) There are computers / algos that scan headlines and stand ready to impact the market. Those computers can cause enormous dislocations without regard for common sense (see flash crash). This is important, and the reason why computers will never replace humans in trading. As the market plummeted I decided not to chase it lower with my client orders. Why? Because I can use human intuition and judgment where a computer can’t. A bomb in the White House reported by 1 random tweet? No confirmation at all? Other people in my Timeline saying “im standing next to the White House, there is nothing going on”? Client trust is our lifeblood, events like this prove that guarding their orders / assets with a human brain will never be replaced by Skynet. Now, more than ever, clients need a technologically savvy river guide who won’t get distracted by random currents and eddies.

After the open we had our hands full with abject boredom. For the first half of the day the market hovered around unchanged like Homer Simpson at a seafood buffet, which was crazy given the amount of companies reporting. We also got a teaspoon of macro data from Durable goods but it missed as bad as Spring in the Midwest showing a 5.7% decline in March (looking for 3% decline). Let’s move on to stock movers because the list is long and distinguished, like my eating achievements (took down 20 MCD nuggets the other day...BOOM). There were 4 score and 7 years worth of misses from such names as VOCS, EW, RHI, JNPR, T, AMGN, and PG. There were a couple winners like R, YUM, GD, and BRCM but if you’ve been playing along at home you’ve noticed that earnings (particularly top line) are doing about as well as this guy at sit-ups. The fact that we are trading around 1,578 is pretty amazing. AAPL reported last night and apparently sentiment isn’t as bad as it gets because the stock went nowhere (good take here by Felix Salmon). So we had lots and lots of noise yet very little index movement...odd. By lunch we were still sitting on unchanged hoping no one would tweet about Ben Bernanke. Can you imagine? Seriously, if there was some vast tweet-spiracy to reduce the market to rubble wouldn’t you choose Bernanke over Obama? That might make a good economic thriller book. Wait…no one steal my idea.

The 2nd half of the day saw a run at 1,583 (up about 25bps) but ultimately a close at 1,578.78, which is EXACTLY where we closed yesterday. A metric ton of earnings and the market ended completely flat….what’s there to say about that? Nothing really, sometimes the market acts silly. But we are near the yearly highs, even with all these bearish cries. Tomorrow is fresh day for knowledge, stuff you can’t learn in college. So I bid you good night, let’s hope these earnings don’t cause a fright. Final Score: Dow -29bps, S&P500 flat. Nasdaq -4bps, Rus2k +51bps.

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 Have a good night.