They Run The Bulls in Pamplona!
Equities start the day higher as they run the Bulls in Pamplona! If I was a better writer I would look back in history and see how many times we closed in the green this week but that requires about 10 minutes of research and I can’t be bothered. What’s up everyone….what did I miss? A sideways market mired in a weak sauce trade war, rife with overvalued stocks late in the cycle? Check. A flattening yield curve, tariffs, political wrangling over a random lawyer from Yale, plastic straws, and football coming home to England? Check. Sounds like we got ourselves an exciting summer. So hey…are you worried about any of that? Yes? Then welcome to the wonderful world of investing where worrying happens 95% of the time (the other 5% is when you should really fret). I’ve seen this insane market both rise and fall on Tariff tweets. I’ve seen it fret over China selling its Treasuries, Trump insulting our allies, and Elon Musk putting up a tent to make 5k cars. That's JUST HOW IT WORKS, there is no steady state, this train will never pull into a station and make you feel comfortable about owning stocks. Thankfully earnings are upon us so we are about to get a fresh look at Corporate America. Our economy continues to suggest positive but modest growth which is consistent with single digit top line growth from S&P companies. Is a “Trade War” problematic? Of course it is, in fact you could argue that the biggest threat to the market comes from stupidity of policy (is that a term? It should be). I’ve been in the camp that the market will resolve higher, not lower, and I remain in that camp even with all the noise swirling around us. There’s juice left in this orange, don’t throw it out yet!
After the open we banged our heads on 2800 which, for now, remains the most important level in stock market history. If we can manage to break that and hold a retest, one could argue that we’ve finally crossed that bridge… over… trouuubbled water….I WILL EASE YOUR MIND (you’ll sing it all day). No economic data to speak of, Trump was on a plane to Europe so no tweets to speak of, may as well do a breakdown of winners and losers. Dr. Pepper Snapple (ticker used to be DPS) completed their merger with Keurig and jumped 11%! Apparently they are now called Keurig Dr Pepper (new ticker symbol KDP) instead of Dr Pepper Snapple so sorry Snapple lovers, no one cares about you anymore. Actually can we just rename the company please? Call it Fizzy Caffeine, or Weaksauce coffee, or 23 flavors but really tastes like cherries mixed with prune juice. COST hit another new all-time high because AMZN isn’t selling 32 lbs of Nutmeg and Kirkland branded wipes. Other winners PEP, WYNN, SO, MU, and PG. Losers were HTZ, CERN, BIIB, CMG, and TPX. Why is there always a mattress store across from a mattress store? In fact why are there so many mattress stores, I mean I’ve bought one in the past 10 years. Hey Bezos, head on over to mattress town if you’re looking to disrupt another slow lumbering consumer segment. By lunch we were still solidly south of the 2,800 Maginot line going nowhere fast.
The rest of the day brought nothing special as we closed at 2,793, up 0.3%. So close…we are so close to greatness we just need that one push which hopefully comes from bank earnings on Friday. I wanted to end on an interesting question posed on TWTR. The $AAPL app store is celebrating its 10th year of existence so someone wondered “what is the app that most changed your life the most in the past decade”. I thought about it for a while, looking for something profound to say but I think the answer is quite simple. It’s either iMessage or Google Maps. We have the ability to speak to anyone in the world instantly without dialing a phone and hoping it connects. We can do this from anywhere including 30k feet above sea level and get instantaneous responses (well except for my wife who literally never answers). That app is a game changer for human global communication. We also have the ability to go anywhere on the planet and never get lost. Do you know how many times I’ve pulled out my phone to find a client office or wander in a place I’ve never been without having to worry about it? Too many to count. Those two apps truly made the world a better place.
Final Score: Dow +58bps, S&P500 +35bps, Nasdq +4bps, Rusk -53bps
- Succinct Summation of the Day’s Events: Bank Earnings start on Friday so we’re kinda drifting around below a key level. The entire nation of England won’t be working on Wednesday.
- This is so true and I hope Baird allows me to do this for a long time because I have so many things I wanna talk about! Today, any financial professional who isn’t blogging or on social media is an outlier. Blogging and social media is how financial professionals now express their opinions, display their expertise and provide constant client and non-client facing communication.
- Speaking of earnings, expectations are pretty high: “Analysts expect earnings from S&P 500 companies to grow 20% in the second quarter from the year-earlier period, according to FactSet. Despite fears that earnings peaked in the first quarter, they are still on pace for the second-fastest rate of growth in nearly eight years. Revenue is also expected to impress, with projected growth of 8.7% from the year prior—the fastest rate since the third quarter of 2011.”
- Ok, I probably have my fair share of equity analysts on this blog, if you guys are gonna do this can you give me a heads up so I can live blog it? Thanks. “An irate sell-side analyst appears to have chosen a memorable way to resign — by uncorking a champagne bottle and spraying it around his boss’s office and then pouring the bubbly on the floor around the rest of the office”. Guy is poppin corks and burning bridges like Colonel Nicholson !
- Ever wondered what bull market bathroom faucets look like? Well now you know. I mean $19.5k? WHAT?
- E Sports is coming for everything: “Of all the clues I found, the one that offers the most upside is just how accessible esports must feel to so many young people compared to other sports. There are 2,836 people that get to play in the NFL, NBA, and MLB combined. In the top 3 esports leagues by prize pool, I counted 16,287 players who have won money since esportsearnings.com began tracking the data. Millions more people of all shapes and sizes from very different places have no reason to think that could not be them. Think about that difference for a second. The same kids are given reasons every day to believe playing in the NFL, NBA and MLB will not be them. I don’t know about you, but my neighbors’ kids look a lot more like these Golden Guardians than they do Kevin Durant”
- If you are in Institutional equity trading on the Buy or Sell side you should read every word of this article. It’s the best description I’ve seen of the challenges we all face. MUST READ. So clearly written and concise.
We are going to end with people being awesome because I desperately need some inspiration in my life right now.
Have a good night.