*Avengers Spoilers Follow*
Equities start the day higher and if you haven’t seen the new Avengers movie you might want to hit delete on this email faster than you normally do. Ok, one last warning here before I continue **spoilers follow**, but how AMAZING was that flick? A roller coaster spectacle masterfully curated by the incredible talent at Disney. My family and I sat stunned as the death of Spider Man rocked us like we had just missed earnings by a trillion dollars. The narrative created around Thanos, the motivation for what he did was so nuanced and deep that he was truly a wonderful villain to behold. But what if I told you the comic book version of Thanos had a different narrative? Instead of trying to kill half the universe to solve some overpopulation problem Thanos wants to kill everyone to impress Lady Death. He falls in love with her and to show his true devotion sets out to obtain the stones to wipe out everyone and everything. Different narratives but both have merit on their own. Now think about what we’re trying to do here on a daily basis. Each person is crafting their own version of market events to help explain what’s going on but, like Thanos shaving that chin, it’s really hard to do correctly (if not impossible). Bottom line beat rates have been incredible so far, world beating (+24%). Top line has been good too (+10%) but the market is going nowhere. One narrative is that we might be at peak earnings, that things just couldn’t get any better than this. That tech is peaking and Dr Strange should’ve just used the dumb green stone and rewound time to when Thanos was born and killed him. The other is that earnings are doing just fine, that the economy continues to expand and the next few years should bring further gains. Like the story of Thanos there are two different versions each with their own merits. I guess we’ll have to wait a year or two to see this all play out. Who else is excited to see what Captain Marvel brings to this story? She’s incredibly powerful so her movie, plus her appearance in the final chapter of Infinity War, should be epic (we need more powerful women characters).
After the open we entered one of those “hey a Fed decision is a few days away, let’s just randomly go up and down for no reason” type of markets. SPX up 0.5% for the first hour, then flat for an hour, then down 0.5% thru lunch, just noise surrounded by noise. Plus I’m sure people are reading those stupid “sell in May and go away” articles that are popping up everywhere so the first half of the day was fairly sloppy. DIS gained 1.1%, I guess the biggest movie opening of all time was actually worth something to shareholders. Speaking of worth something, they paid $4.2B for Marvel in 2009 and with this latest movie have passed $15B in box office receipts. Wow. I wish I had a couple stocks to make fun of but there wasn’t much news to be honest. The biggest loser was an Aluminum company that cut guidance (ARNC -21%), an refiner that bought another refiner (MPC -7%), and a drug stock with this headline “Metabolite noise on Ozanimod” so yea have fun with that health care geeks (CELG -3.6%). Winners were the refinery that got bought (ANDV +13%), MCD +5% because I had a double QP with cheese on Sunday to cure a hangover, and MAT +5% because who doesn’t love toys? By lunch no one could explain why the market fell from 2,680 to 2,650 so I’ll go with “algo driven selling.” Prove me wrong!
The rest of the day was more senseless selling as all those dog like things that broke thru the shield overwhelmed buyers. We closed at 2,648 which puts April squarely into the “nothing burger” camp for performance (ended last month at 2,640). Look, a lot of stocks are starting to act they’ve been snapped out of existence. We’re going to need leadership to undo all this negative energy and it has to come from the AMZNs, the AAPLs, the BAs, and the GSs of the world (among others). If anyone wants me to spoil them on how the comics resolved Thanos hit up your boy! I love talking about stocks, pop culture, travelling to Australia, why volume doesn’t matter anymore, how Baird is a great place to work, and why Nebula is the key to all of this…
Final Score: Dow -61bps, S&P500 -82bps, Nasdaq -75bps, Rus2k -92bps
News Highlights:
- Succinct Summation of the Day’s Events: $600mm debut for Avengers, Iger popping bottles as we speak. Fairly ugly price action on no news. April S&P performance: +0.34% zzzzzzz
- Sell in May has been BADDDD lately: “Ryan Detrick notes that if you sold in May during the past six years, you lost out on five up Mays. The average gain was 4.8%. The one down year was just 0.3%.”
- Dear Corporate Leaders on my recap: Let’s go!! Pump some of this into our awesome economy!! “The roughly 180 companies in the S&P 500 Index that have reported results saw their effective tax rate drop by 6 percent on average in the first quarter. That saved them a total of almost $13 billion in taxes, an analysis by Bloomberg shows. About a third of that went to 44 financial firms”.
- My guy J.C. likes ‘em here: “The current bearish sentiment is consistent with higher stock market prices. And when I say higher, I don’t just means little bit higher. I think we go a lot higher. This bull market in stocks is just getting going. In my opinion, we are much closer to the beginning than any sort of end.”
- Lovely little story about investing and how hard it is to think long term: “In 2004, a hedge fund called Private Capital Management made a massive bet. They found a company they liked, and they decided to invest most of their portfolio in it. They had never made a bet this big. Private Capital Management bought a little more than 20 million shares of a small, but growing tech company at the time”.
- Get outta here with this.
- Things Michael should’ve invented #124
- I need to head down to Charleston, talk to some of our amazing clients down there!!
- Your must-watch gif recipe of the day!
- This is like my legit dream living room. Garage doors that turn it into an outdoor space. Shame I live in the North Pole
Do you have any idea how big the “World’s Biggest Surfed Wave” was? Would you believe 80 feet? 8 stories? Marky Mark and Batman ain’t got nothing on this thing
https://www.youtube.com/watch?v=bVR92_-CBZ8
Have a good night.