The Month of Endless Vacations Grinds On

Equities start the day lower as the month of endless vacations grinds on. August, I mean what can we say about August other than “recipient is out of office” should be the motto? Got a big distribution list to fire off your amazing commentary to? Save it for September. Hey, at least we have this Olympics right? Nothing better than Gold medal Badminton and Archery to pass the time. So here we sit, with the market treading water on new all-time highs, waiting for the other shoe to drop. I mean it has to right? What’s going to be the big catalyst that causes the market to finally sell off from these fake, central bank induced sky high levels (channeling my best Zero Hedge there). China? Sure why not, China is always a good fear. Centrally planned economy with a pegged currency prone to wild swings in GDP, basically the boogeyman. Fed rate hikes? Definitely, Yellen is probably out to submarine your fancy stock returns. Valuations? I love me some Shiller PE / Price to Sales / CAPE worries, those are some of the best. Fund Flows? Don’t get me started, all that cash leaving mutual funds has to be the top. Actually wait…none of those are the catalyst that will mark the top. You know what will be? A recession. That will be the top and no one will be able to time it at all. I mean I thought we were about to enter one earlier this year and look how that turned out for me. Now there will be clues to look for like a yield curve inverting or a substantial drop in vehicle sale or a turn in the job market but it won’t be obvious at all. Look, Bull markets don’t die of old age and they don’t end on “valuations” so please ignore naysayers and those calling “top” every time the S&P ticks higher. Enjoy the dog days of August because the Summers die one by one, how soon they fly on and on. 

After the open we actually saw the market grind lower for the first time in days. Why? Because nothing goes up in a straight line my friends, you need the occasional pullback to keep things fresh and exciting. Hey let’s talk HAIN for a second shall we? One of the biggest losers today was Hain Celestial, which fell 26% after delaying their annual earnings report due to “accounting issues”. Ouch. Anyway, besides having an awesome name HAIN is the proud owner of many healthy / exciting brands one of which is Blueprint Cleanse. Anyone ever done one of these? I have, I mean there’s nothing like spending $200 to drink liquid grass clippings and cayenne infused lemonade for 3 days all in the hopes of “cleansing impurities in your system”. What do people do to “cleanse” their systems that DON’T have access to cold pressed vegetative juice mixes? Shhh, let’s not talk about that. Maybe they just grind up their own lawns and drink it, who knows. I will say their Cashew Milk is all world good but at $12 for 16 fl oz’s these guys have pitched a tent in crazy town. OK, what else moved today? DKS +7%, GK +17%, FTNT +6%, VRSN -7%, TJX -6%, and ATVI -5%.  Housing Starts beat and CPI was roughly inline so not much from the macro front to guide the boat. By lunch we sat on 2,183, down 30bps, as the market simply took a breather from all this “new highs” nonsense. Anyone miss swimming as much as I do? Track and field sucks. Go back to Mykonos Euripedes the discus thrower.

The rest of the day saw even more downside and we closed at 2,178, a loss of half a percent. Should we be worried? I don’t think so, frankly I’d love to see the market retest the 2,135 breakout area just to finally put the past behind us. Anyway, let’s take a quick look at a chart shall we (courtesy of @ukarlewitz)? Now if you want a reason to believe “it’s different this time” then this might be Exhibit 1. Households just aren’t levering up like they did in the past to buy stupid useless stuff they don’t need (like juice cleanses). Maybe the lessons of fight club have finally sunk in? Anyway, that chart should make you feel good, if and when we do enter the next recession households will be in way better shape to survive it. 

Final Score: Dow -45bps, S&P500 -55bps, Nasdaq -66bps, Rus2k -86bps.  

Volume was low. Our desk was better for sale. Buying in Energy and Tech. Selling in Semis and Retail. Shorting in Machinery. 

News Highlights:

Tonight we’ll end on amazing goals from one of the best Olympic sports there is…Team handball!  (thanks JR).   First one best one.

Have a good night.