The World Is Filled With Optimistic Eagles Fans
Equities start the day lower and I’m still mad about something that hasn’t happened in over 8 years. No, not the stock market assassination, we’ll get to that in a second, I’m talking about the Bears losing in the playoffs. I’d rather endure endless December 2018s than have to live thru another kicker bonking a field goal against the post. A KICK HE SHOULD MAKE 99% OF THE TIME. That’s it, I’m done with the NFL, I’m going to E-Sports to be hip to the youngs. What do kids play nowadays? Underwatch? Fortday? What are those games called? I know it’s been awhile since I’ve written the recap, as always I apologize, I’ve been trying to think of a way to reboot this thing to keep it fresh in its 9th year of existence. Maybe I keep it shorter and bloggier, less day to day-centric and more timely thoughts about the market. We’ll see, it’s a big exciting year where anything can happen to your boy (and may have already…). Ok, let’s have at it, what’s the current sitch and will we ever get out of this grinding cyclical bear? Well, Friday helped, it was the 2nd “90% up day” we’ve had since the Christmas Eve massacre. Why does a “90% up day” matter? Well it tends to show that markets are breaking their horrific downside momentum because buyers are scooping up everything in sight. It’s just ONE condition for a bounce (sentiment is another) but we want to see it. The thing is, it might just be a counter trend rally and not THE bottom. Smart people I follow expect some retest of the lows. Oh and what about these “recession” calls? Friday saw a 312k NFP, one of the best of this cycle. Does that prove we’re not in a recession? No, it probably doesn’t prove strength, what I think it does is disprove severe weakness. Make no mistake, we’ll have a recession one day, but to me the data isn’t all that convincing right now.
After the open we got a nice bounce because apparently the World is filled with optimistic Eagles fan. If I had my way we’d have sold off 5% because there is only darkness in the world, the light has left me. ISM Services printed 57.6, which isn’t bad (I know it’s down from 60.7, take it easy beary mcbearison), and check out this textual nugget from the survey “Economy still chugging along, despite the rise in interest rates and relentless political claptrap” (finance and insurance). Claptrap, I love it, let’s bring back vintage terms like quagmire and morass too! The rally continued thru the morning led by a couple of things that pleased me: the Russell 2000 outperforming and risky sectors topping the leaderboards (Discretionary and Energy). Look, smarter people than I have said this but we are absolutely in a “good news is good news” market. If economic data or earnings collapse we’re gonnna get a mouthful of fur. Winners MAT, AMD, ULTA, CMG, and GE. Losers PCG, LW, MDT, NDAQ, and ICE (exchanges are SOO long vol aren’t they?). Oh and $MA dropped its name from their logo today. That’s right, instead of “Mastercard” below two tennis balls now it’s just the two tennis balls. I love late stage capitalism. “You know who we are don’t pretend you don’t. Now swipe the card”.
The rest of the day saw a lot of sideways on the highs and a close at 2,554 up 0.88%. Here is what we’d really like to see this week: sentiment remain very pessimistic, the Rus2k and the NYSE Composite outperform things like the S&P and Dow, sector leadership from industrials/banks/discretionary, economic data to remain firm, and the NFL to say that the Eagles actually lost. That would be something I’d be interested in. Anyway, allow me to end on this amazing stat @ryandetrick posted today:
“Since WWII, the S&P 500 has been down two years in a row only three times. Once during the '73/'74 recession and then twice during the tech bubble in the early 2000s. In other words, without a recession in 2019, history would say another down year in 2019 would be quiet rare”
Think about all the years since WW2 ended, think about all the administrations and conflicts and problems and “growth scares” and debt binges and China worries and Fed governors. Then realize that the S&P has only had THREE back to back losing years since then. Truly an extraordinary comment on the durability of companies inside the United States to adapt to all sorts of environments.
Final Score: Dow +43bps, S&P500 +71bps, Nasdaq +126bps, Rus2k +178bps
News Highlights:
- Succinct Summation of the Days’ Events: ISM Services slowed but still at 57 for crying out loud. Counter trend rally underway with lots of resistance to the upside.
- Ritholtz on what he got wrong in 2018. I find it helpful to say that occasionally. In fact, each year, I make a list of what I got wrong; I share publicly all the things I have written about where I was off, either a little or a whole lot. Publishing this list in the full light of day allows me to own my mistakes, recognizes our fallibility, and learn from the experience.
- You come to me for valuable insight….here’s your valuable insight today
- One of the best lessons learned by Cullen last year: The financial markets reminded us of this in 2018. The global stock market finished down about 10% and the US stock market was down about 4.5%. Amazingly, after all the constant fear mongering about bonds, the Barclays Bond Aggregate finished…positive by 0.1%. It was a bad result by any measure, but not unexpected. I’ve been preaching lower future expected returns for quite some time. So a few negative years here and there aren’t surprising. It’s a good reminder – the market needs to go down sometimes.
- One of my goals in 2019: Consistency
- Buying and Selling stocks is hard featuring your boy
- Genius level intellect in this house
- I’m debating calling up LazEBoy and helping them mass produce these. E Scooters are worth billions why not E Recliners?
- If you still like the NFL, or you still have a team involved in this sham of a playoff system, make this for the next round. Buffalo Chicken pull apart bread? Let’s go
- Soak up this quote because it’s unbelievably important: “Life, like poker, is one long game, and there are going to be a lot of losses, even after making the best possible bets. We are going to do better, and be happier, if we start by recognizing that we’ll never be sure of the future. That changes our task from trying to be right every time, an impossible job, to navigating our way through the uncertainty by calibrating our beliefs to move toward, little by little, a more accurate and objective representation of the world. With strategic foresight and perspective, that’s manageable work. If we keep learning and calibrating, we might even get good at it.” — Annie Duke, Thinking in Bets
In case you missed this last night, $WMT had an amazing commercial that speaks to the pop culture / movie nut in me. Check this out!!
https://www.youtube.com/watch?v=dMcBBHpzKiI
Have a good night