A fresh start….what more can you ask for?

Equities start the day higher as the untapped potential of a new year is upon you! A fresh start….what more can you ask for as you sit down at your desk on January 3rd? Before you lay two paths, the first is filled with bad habits and pessimism and too many donuts and bagels. The second contains exercise and optimism and writing more recaps and eating egg whites instead of cheese (egg whites suck, come on, just eat the whole darn thing). Choose wisely my friends because it’s nearly impossible to backtrack. So what should we take away from 2016? What’s the best “market related lesson” we can learn? Well, I’ve thought long and hard about this and the best thing I can come up with is: market predictions are stupid and you should never, ever listen to them. Honestly what’s the point of saying “well if X happens and Y happens then your stocks should do well?” If I gave you ALL OF THE FOLLOWING on January 1, 2016  1) Brexit  2) Donald Trump  3)  Deutsche Bank quivering 4) rates rising 5) a 12% selloff in the first month of the year 6) no Santa Claus rally 7) oil back above $50 8) Dollar at a 13yr high and 9)  Mariah Carey blowing up her live career would you have said “yea I’m thinking +10% sounds about right for the S&P.” No….freaking…chance. There is no reason to have a “year-end price target” on any index on the planet…none…period. The best we can do is look at the situation surrounding us and say “do I feel comfortable owning equities or not” and to me the answer is still yes. I will begin to squirm when unemployment makes its cycle low. I’ll fidget when auto sales turn over. I’ll jump out of my seat when the yield curve inverts. We just aren’t there yet, none of those things have happened. Do me a favor, head over to this link to find the questions you should be asking yourself right now. If you have a view on those you will have a framework to approaching investing in 2017, if not you are at the whims of fate.

After the open it looked like we might take a shot at Dow 20k but then everyone realized nothing is going on and we sold off. Seriously nothing is going on right now, there is no coherent thesis yet so we are basically coasting on last year’s fumes. Up 1% overnight because Europe had a few good data points? That’s not gonna cut it pal, we need some good old fashioned American meat and potatoes before chasing 23x earnings. XRX was the big winner today rising 16% after a few analyst upgrades. Do me a favor, ask a millennial what XRX makes and get back to me, I’d love to know what they say. Other winners were CTL, MPC, ENDP, and FIT. Speaking of FIT, have you seen the inside of a gym lately? You’d think they were holding Black Friday sales on TV’s or something, I mean come on people just because it’s Jan 3 doesn’t mean you have to wait in a 10 minute line for the salad bar and do the “spin” thing. Set some realistic goals like walking for 30 minutes or drinking more French Press coffee (literally the best way). Losers were mostly energy names as Crude fell $2 and Utilities as the “yield unwind” appears to be never ending. By lunch our cafeteria had run out of Romaine AND iceberg while the market sat on 2,247 up 0.4%.

We got a small rally in the afternoon when it was announced that the close had $1.2B worth of stock to buy so remember all that “pensions need to rebalance out of stocks and into bonds to start the month” thing? Yea…something else that was completely wrong. So let’s wrap up with a quick thought on consensus. I still hold to the notion that this bull market has room to run so what do all the big wig macro guys think? Well, a group of 15 strategists expect the S&P500 to finish the year at 2,356, a gain of 5%, the least optimistic they have been since 2005.  Now you know what I think about “year-end targets” but what intrigues me is that the bulk of Wall St thinks the upside is limited.  Yea…about consensus thinking….. 

Final Score:  Dow +60bps, S&P500 +85bps, Nasdaq +85bps, Rus2k +62bps.    

News Highlights:

Tonight we are going to end with a true American hero, who just so happens to be 2. Imagine how much this kid is going to show this video to his brother later in life.   Parents….bolt your kid stuff to the wall!!


Have a good night.