Welcome Newbies

Equities start the day higher as we once again trade back to the top of the range. Let’s circle back to the market in a second, I wanted to welcome all my new subscribers and tweeps because it’s been a heck of a run lately. This blog has grown to about 3,000 subs and my Twitter account is now the largest account at Baird! Let’s go baby!! Thanks for being part of my mission to make markets fun and interesting to read about. That being said, if you want off this email just hit reply and type “unsubscribe” and I’ll remove you while crying into my pillow. Anyway, enough of that, a huge rally yesterday took us back to the top of The Range and I wanted to point out two things. 1) Sentiment (as measured by the NDR Trading composite) fell back to neutral after a tiny selloff. Hmmm. 2) People continue to flee the market like it’s being flown on a 737 Max 8. Huge outflows are an underrated story of late 2018, early 2019. So check this: a VERY small selloff (roughly 2.5%) caused sentiment to drop alongside a backdrop of constant outflows. It seems to me that “bullishness” isn’t all that deep seated is it? There are some very jittery people trading right now and I think it’s safe to say that this is NOT a “loved market”. So with that backdrop our team continues to believe that the 2nd half will be better than the first and even if we grind this range for a while that’s not a bad thing.

After the open we spent a good amount of time grinding back towards 2,800 but most of our time talking about two stories. Boeing’s continuing dilemma with the Max 8 (not fun to blog about) and rich people bribing college official to get their kids into school (fun to blog about). Are you kidding me? You paid $500k to get your daughter into USC by pretending she rows crew? Absolutely ridiculous and worthy of relentless scorn. Look, let’s set aside the toxic ramifications of “advantage begetting advantage” which destroys social mobility in a society and focus on the fact that once you show that you are competent at what you do NO ONE CARES where you went to school. Talent is talent, it doesn’t take a “prestigious college” (whatever that even means) to be incredibly successful in life. Sigh….college is easily the worst bubble we have in every sense of the word. Our children shouldn’t have to endure crushing debt and a corrupt system just to say they went to XYZ University. It’s a complete farce. Education is important and a worthy goal to attain but the rat race of prestige is out of control. You know what? If you put that $500k into an S&P500 fund when you child hit 18 and that fund returned the long term average for stocks (~9%) little Johnny or Jane would have $5.1mm by age 45. I’m angry, I’m on tilt. I need to move on.

I spent most of the afternoon in a meeting with my new peers in PWM where they told me the IMO was working well with our Branch CSs and the CTAP was on schedule to be integrated into our toolkit so yea, group meetings in Baird’s Private Wealth Division is like living inside an episode of The Office. We closed at 2,791 0.3% which is still shy of that magic 2,800. Let’s go back to my “range” chart quickly. We’ve been in 2,600 – 2,800 for over a year now with only 3 deviations. 1 and 2 are all about “yay, things are great, we’re growing and people are buying homes because they’re confident about their jobs and the economy” while 3 was about “holy cow the entire World just hit a wall and we might just slip into the abyss.” Both the upside and the downside seem wrong with the current state of the World so I guess the range makes sense.  Home, Home on the range. 

Final Score:  Dow -34bps, S&P500 +31bps, Nasdaq +44bps, Rus2k +6bps.  

News Highlights:

We’ll end tonight with a fantastic magic trick that I still haven’t been able to figure out. Amazing


Have a good night