Growth Worries...They Are Evergreen

Equities start the day lower after a wild week where the market tossed its cookies, Purdue actually played well in a NCAA Tournament game (they never, ever play that well), and the US political world….you know what you’ll never read in this here market recap? Political commentary because A) It doesn’t interest me and B) my goal is to make learning about markets fun and politics is the antithesis of all that. Speaking of tossing cookies, has anyone ever ridden that “Harry Potter and The Forbidden Journey ride” at Universal Studios in FL? I was there for an event and tried to ride it 3 times in a row. One could describe such a thing as “foolhardy” but that would be an understatement. I’m quite certain that jumping in a clothes dryer would give you less motion sickness. Anyway, we’re back to worrying about global growth so YAY! I love worrying about global growth, it’s as evergreen as me getting Auntie Annie’s in an airport concourse. Europe has negative yields, banks are getting crushed, our yield curve inverted (like me on that ride) and stocks have all of a sudden got a case of the jitters. You know what hasn’t gone haywire though? Credit…which strikes me as odd. Take a look at the IBOX High Yield Credit index. If we’re so worried about a recession and an imminent bear market why haven’t riskier credits shown any signs of concern? Ari Wald (via JB) talked a bit about it here and I’m inclined to agree with his conclusion. It’s a slowdown worry not a recession worry (for now). Right now we do not believe an imminent recession is likely in the US but that doesn’t mean growth expectations aren’t currently being reset. 2600-2800…the range persists.

After the open we got a whole lot of sideways and not much of a bounce from Friday. Small caps did well, as did Consumer Disc and Industrials, but the overall market really couldn’t get going in the right direction for very long. We briefly touched green around Europe’s close but by the afternoon we had given that up to trade 2,792 down -.30%. Apple had an event where they introduced a whole slew of new subscription services like Arcade, News+, and TV+ (I am definitely going to launch BullandBaird+). To make sure it looks as good on the big screen as it does on your phone all their new content will be viewed thru the same maze of cracks you have when you dropped your phone. How amazing is that? What a company. Seriously though, I have 10+ subscriptions right now between all the services I use. Ugh, the absolute last thing I needed was another monthly bill. Actually, does anyone wanna start a company with me that manages the insane amount of subscriptions people are going to have in the future? We’ll call it SubHub.

The rest of the day involved watching bond yields slip lower and wondering why..why do they keep dropping? What are bonds thinking? Look, no one knows where the market is going and no one knows when the next recession will happen. Yield Curves and New Home Sales and Unemployment and all the other fancy economic indicators are just pieces to a puzzle that no one can put together in real time. That being said, take a look at the Chicago Fed National Conditions Index which is at near lifetime lows (basically measures how easy / hard it is to get money). If a recession is close its going to have to come at a time when “financial stress” isn’t even a thing in credit markets. Doesn’t that seem peculiar to you? 

Final Score: Dow +6bps, S&P500 -8bps, Nasdaq -7bps, Rus2k +46bps (best news of the day I guess)

News Highlights:

So I actually found a final link with a Harry Potter theme!! Do you know how hard it is to find a short video that links my first paragraph to an end video? It’s hard….harder than writing about finance…

Have a good night