The Biggest Single Day of Earnings This Season
Equities start the day lower as 322 companies report earnings!! Holy information Batman, that is an insane amount of data to weed thru, pity the analyst community and their insatiable thirst for truth. I mean can you imagine what it’s like to be an analyst on a day like today? They probably don’t sleep, shower, or eat, they have to pour over reams of data so they can hand off all the work to their juniors, they have to listen to endless conference calls for a chance to jump in and say “great quarter guys”, then they write dozens and dozens of notes that they email to a trader like me who then has to del…umm….delineate which one’s are important to send out to clients, then they have to do it all over again a day later. Whew, what a job, thank god they have so many minions to help. Yo, junior analyst out of some school that our bosses went to, fetch me a new discount rate because I doth have a thirst for a frosty DCF. I love all our analysts, seniors and juniors, heck even the starry eyed interns I see at 630am saying to themselves “wait….I’d have to wake up at 530am to do this job?”, they are the beating heart of our World Class research product, gimme a hug you warriors of EBITDA. FB blew itself apart last night after whiffing top line and lowering growth forecasts, dropping a cool 24%. If my math is correct they wiped out $148B in mkt cap while I ate sushi and wondered whether that was the biggest overnight drop in dollar terms in history (it was). Zuck the Great personally lost $16B in net worth while you yelled at your kids to stop searching Youtube for slime videos. Wait that was me, sorry. Look, I’m on a roll here, let’s see what happened today because I’ve had two large DNKN iced coffees and I’m feeling it.
After the open, owners of the 2X Facebook ETP (ticker symbol FB2) sat at their desks wondering why they bought such a dumb instrument. I mean come on, do we really need stuff like this to exist? Sigh. FB itself spent most of the session down 18-20% on ridiculous volume and I guarantee you there are a bunch of PMs in London and NY that needed a drink after the bell. That being said (pay attention here) the EQUAL WTD S&P ETF ($RSP) was positive the entire day. The notion that “a few big stocks are leading us higher” is complete garbage, all of FANG was negative at lunch and that equal wtd ETF was still positive. That’s breadth my friends, and not bad breadth like I have after gyros. Ok enough FB, what else moved? SVU must’ve really been a super value because it got taken out for $32.50 a share, pushing the stock up 65%. SPOT gained 5% after earnings and if you’re looking for a stock that doesn’t care about trade wars this has to be one of them. No one streaming Drake says to themselves “I hear NAFTA is falling apart, I gotta cancel this here music platform”. Other winners AMD +13%, ARNC +11%, XLNX +10%, and UAA +5%. Losers, and there we a ton of big ones, included NLSN -23%, MHK -16%, BIIB -11%, and F -6.5%. The one that bothers me the most is that MHK, was supposed to be “housing is awesome” play and it blew up. Yikes (we rate Outperform). At the halfway point there were 5 stocks in the S&P that were down double digit percentages and 3 that were up double digits. Just HUGE moves all over the place, today was absolutely bonkers, bonkers like letting your kid have the remote, or drinking a Bloody Mary at night, or thinking your plane might actually leave LaGuardia on time, or hoping to get smarter by engaging in political debates, or trying to slide down this hill. By lunch we sat on 2,837 down 31bps.
The rest of the day brought nothing new and we closed roughly where we were at lunch, 2,837 down 0.3%. Today was the biggest single day of earnings this season and by the close tmmrw more than half of the S&P will have reported. The biggest takeaway I have is that the average stock in the S&P is doing fine. If this was all about a few big stocks than FANG would’ve decimated the market today and it didn’t. Let’s see what $AMZN has to say because that’s the next big company to report. Final Score: Dow +44bps, S&P500 -30bps, Nasdaq -101bps, Rus2k +60bps
Volume was off the charts stupidly high. News Highlights:
- Succinct summation of the day’s events: Tons of earnings and we closed lower but I’m calling that a “win” given one of the largest companies in the world fell 20% and it didn’t decimate the market. AMZN earnings up next
- Would you be interested in canoeing this lake?
- FA’s out there: How to save investors from themselves. “Given the time periods over which most individual investors receive and process stock market information, stock market changes may as well be purely random.”
- This makes me so sad: According to a survey from Bankrate.com, 30% of millennials say cash is their top long-term investment, while each successive generation claim stocks — a third of Gen Xers, 38% of baby boomers and 44% of the Silent Generation. You know what the probability of the S&P 500 being negative over a 20 year span is ? (using historical data) 0%. Dear millennials: email me, insta me, text me, I’ll get you to the right people to help.
- In a million years would you ever?
- Seriously, don’t mess with these guys in London
- 2Q Advance GDP is tmmrw, if this happens there will be no living with him…. "You're going to get a GDP number on Friday that's going to be a very impressive number. Some people are in the 4 to 5 percent zone," Larry Kudlow, the White House economic adviser, told CBS This Morning.
- 10 Money revelations for parents. This one is spot on: “A king-sized bed is the key to a happy marriage. No one gave me a heads up that once your kids turn 3 or 4 they start migrating to your bed in the middle of the night. Our 4-year-old has some sharp elbows and a case of the leg shakes when she sleeps so having a king-sized bed has been a lifesaver when this happens”.
- I’m making both of these for the first Packers Bears game Yum 1 Yum 2
- 15 Shades of Gray: “It might feel like a safe move to get out of the stock market and put all of your savings in a money market fund or stuff it under your mattress. You’re making trade-off between certainty today and uncertainty tomorrow. But all of that uncertainty you thought you unloaded has instead been dumped on your future self in twenty years in the form of lost purchasing power.”
I absolutely love this Fail video, it starts STRONG. The girl on the slide, I mean we’ve all been there…
https://www.youtube.com/watch?v=9k8rdNEYH7s
Have a good night