Is There Actually A Sell Button On People's Keyboards?
Equities start the day lower as maybe risk is returning to the market? It’s been so long since I’ve seen red futures that I can’t even describe it anymore, is there actually a sell button on people’s keyboards? I mean is it possible that higher interest rates finally matter? I guess we’ll see but first we need to talk about this crazy news story I woke up to. Apparently JPM, AMZN, and BRK are going to band together to try and figure out a way to save their employees from the misery that is the U.S. Healthcare System. A system that charges me $525 for a Physicians Assistant to tell me that my son stubbed his toe and that I just wasted my entire morning in the clinic. Look, I’m on the record saying that whoever brings price clarity to this goat rodeo will be richer than Bill Gates so I’m all for it. I’ve sat here and talked to our Financials Trader about starting some kind of local app where people input the cost of their procedures and we crowd source the cheapest price. If the giants of banking, cardboard box shipping, and cherry coke drinking decide they are going to lead the way then let’s go baby, let’s break up this insurance monopoly. An MRI cannot possibly cost 20 different prices. Let’s simplify the easy stuff then move on to pricing heart surgery. Anyway, futures were lower because Asia gave up 1.5%, Europe 0.5-1%, and Treasury yields were marching higher. Will this route take back all of Friday’s gains? Stay tuned to find out.
After the open we stumbled all the way down to a gain of 5.7% in January. You could cut the tension with a knife and people ratcheted down their annual return expectations from +28% to +25%. Let’s keep it real for a second: yes, the market sold off 1.2% in the first hour and yes, the market is about 2% from its highs but you what? I’ll take a selloff seriously why credit spreads quiver and the VIX soars and correlations start trending higher. Has momentum been broken? Probably, but weren’t we all saying that we needed a “healthy pullback”? Let’s knock 5% off the market before getting our feathers ruffled. Ok, let’s talk stocks and jocks. UNH, ANTM, CI, and AET all cratered on that insurance news but I doubt shareholders are crying in their Bugattis, most of those stocks are up 50-60% over a 1 year period. Energy got shellacked with Crude dropping 2% and racy sectors like Financials and Industrials fell because they’ve gone up every day for months. Look, this is likely a run of the mill pullback from the highs but if I see anything that makes me nervous you’ll be the first to know. Winners were utilities and telecom but there’s only about 32 of those in the S&P so nobody really cared. Who is going to win the Superbowl you say? Probably the Patriots and if you aren’t sick of Boston by now we can’t be friends. They are the freaking Evil Empire, I’d rather see Duke Basketball, the Yankees, the Cowboys, and Kim Kardashian all score huge wins before Brady hoists another trophy. Sigh. By lunch we were down 1% with things looking grim.
The rest of the day featured more of this with a close at 2,822 down 1.09%. It’s been so long since we’ve had a meaningful pullback that a 2 day, 1.7% move feels like the Crash of ’87. Finance Twitter has been aching to call top for so long that any down move seems mega serious. I do wonder though….with macro data strong and global growth accelerating is this really the time to get nervous? Maybe…my friend @helenemeisler pointed out that tops are made on good news so perhaps I should be more vigilant. I just don’t know…does anyone think the market is going to correct significantly with this happening? I mean do you wanna be on the other side of that when the man…comes around (god I love this song so much. Gimme credit for working Johnny Cash into a market recap).
Final Score: Dow -137bps, S&P500 -109bps, Nasdaq -86bps, Rus2k -96bps
- Succinct Summation of the Day’s Events: 2 day selloff driven by sky high move in January, pension rebalancing, fears over higher interest rates, and all the other excuses we use when the market pulls back slightly.
- Ok, time for me to rant. Look at this headline in the USA Today “Becoming a 401k millionaire doesn’t mean you’re ready for retirement” I mean….DOES IT EVER END? Will I ever be ready? My “financial fitness score” on the retirement website we use hasn’t budged even though the market is up 300% since March 2009. What do I have to do to be ready for retirement? Shoot 62 in golf and shop at Tommy Bahama?
- Here’s a link for all my fixed income peeps: Do bond prices have momentum? “There is little to no evidence showing that a momentum strategy will help you make short-term predictions about the fundamental secular macro trends that drive interest rates. In fact, if anything, inflation and interest rates tend to exhibit long-term momentum that becomes reinforcing. Using short-term trends to decipher long-term momentum is unlikely to be a useful way to predict future bond prices.”
- How about this IPO stat as we complain about a lack of shares to trade: “US IPO market off to its strongest start to a year on record, per Dealogic. $8B raised this month to date”. Apparently 13 were regular way, US IPOs, and 4 were SPACs
- I say this in every single speech I give for our awesome FAs and their clients: “This smells to me like one of the most expensive errors investors can make: allowing partisan political views to creep into investment decisions. Experience teaches us that emotions -- and these play a large role in shaping our political views -- are not your friends when it comes to putting money to work in capital markets”.
- Guys, look, you need at least two of these in your kitchen. Especially where you charge your phone
- Not gonna ski that, nope
- Not gonna ride that, nope
- Not gonna walk over that, nope
- Want another idea to spruce up your Superbowl apps? Try this
- I feel like this guy’s shirt perfectly encapsulates everything about this
- Going up must be hard
- This dude definitely peaked early
Tonight I have a link for all my dad bros out there. If you have a kid (or multiple kids) under the age of 10 then this link is for you! (look, it plays off the “F” word so if that kind of thing bothers you maybe don’t click. In fact if that’s the case my recap style probably isn’t for you…
Have a good night