We Are In The Swoon Of All Swoons

Equities start the day so much higher I can’t even begin to describe how higher.   Bigly higher.    Like the kinda higher you see in a Damn Yankees song and on the campus of UC Boulder on April 20th.   Now we’ve gotten use to new highs lately, they come often and with little fanfare but today felt different.  Last night we got Trump’s first SOTU speech and from the market’s reaction it looks like everyone was positioned to fade him.  “Long on talk, short on action” has been a theme bandied about lately and Bears have clung to it like a piece of fresh salmon.   Everyone wants to sell the top and say “words don’t take stocks higher, actions do” but hold on a second, what they don’t realize is that we are still in the Honeymoon phase.  You’ve been there, you know what it’s like.  In the honeymoon phase you look past the stray nose hair or random gas attack because you are SO IN LOVE.  Honey, I don’t care that you leave your underwear on the TV you are my soul mate!!   Look, let me be frank here, the notion of an “over the top more pro business than John Rockefeller” White House has the market swooning and that swoon is far from complete.  We are in the swoon of all swoons because it’s been awhile since we felt the swoon (I never get to use that word in a recap, stuff it).  You wanna know what could REALLY rip this thing?   Hot economic data.  Can you imagine what would happen if ISMs started printing in the 60s and unemployment kept dropping?   Swoon.  So while you sit there and say “but nothing has really happened” I want you to remember that markets discount the future not the present.   Oh did I mention that the Fed is STILL in easy mode?   We haven’t even hit 1% Fed Funds.    Oh my….

After the open we hit 21k on the DJIA within seconds!   According to the good people at LPL Financial the DJIA traveled from 20k to 21k in just 24 sessions, tying the record from 1999 for fastest 1,000 pt gain!  What a country, America, I love it!   So what was really moving and shaking today?  Looking at financials you woulda thought Trump called for the creation of a CDO agency to revitalize housing loans (highest level for the sector since 2007).  In fact all the risky sectors were off to the races as the market jumped 1% in the first 30 minutes.  Hey, people, can we stop talking about “no 1% moves” now thanks.  MCD was halted most of the day as they gave an investor presentation.  You know what they are kicking around doing?  Delivery.  Cue the ray of light from heaven because I am SO on board.  Sunday morning after a long night I can dial up a Mcmuffin with cheese delivered straight to my pillow?   Yes please, someone link me the app asap (how do they not have pick up a la SBUX yet?   Should I apply for head of mobile strategy or what).   LOW was back near its all-time highs because home improvement can’t stop won’t stop, WTW surged because Oprah (literally the only reason anyone ever cites on this name), and SCHW had a nice day because they cut commissions (if only it were that easy..).   Losers were few and far between but most of them were down because they occupy buildings, pay rent, and try to sell things to people thru actual stores:  BBY, ROST, AEO, URBN, and GPS dominated the list.  Yikes.  By lunch SpaceX was firmly in charge with the S&P up 1.3% to 2,396.        

We closed at 2,395 up 1.3% and no amount of creative writing can describe what we saw today.  Offers were paper thin and stocks got chased all day (more new highs in SPX than any other day since Dec 2014 h/t Bespoke).   This kind of price action can only mean one thing:  people were leaning in the wrong direction and got caught.   Does it continue higher?  Probably, imagine you didn’t get involved today and we open higher tomorrow….your patience won’t last long.  Anyway, I want to end tonight with this thought from Michael Batnick because it’s everything you need to know about markets and how to approach them:  “In the 23 months from December 2014 to October 2016, the S&P 500 gained 2.8%. In the last 4 months it added 11.2%”.    Who…I mean WHO…could possibly time something like that?  If you are trying jump in and out of this thing you are doing it wrong.  Have a consistent plan and stick to it.  Period.  What if you got cute and decided Trump was going to be bad for the market?  You lost out on an incredible run, incredible.  11% in 4 months is boffo amazing spectacular.  Don’t let silly things (politics is tops on this list) get in the way of making money, stay focused and shun the noise.  And if you hear music playing and your daughter is near you dance with her.  Always dance.   Final score:  Dow +145bps, S&P500 +136bps, Nasdaq +135bps, Rus2k +194bps.  

News Highlights:

We’re gonna skip to the big finish because everyone is too excited to read links

So I love Dumb and Dumber.  Great movie, a true classic.  I think I found the perfect people to act in another terrible sequel


Have a good night.