Doing The Impossible
Equities start the day slightly lower as we sit just 2% away from a new all-time high. No, this isn’t an April Fool’s joke, we legit sit roughly 2% away from a level that seemed impossible only a few months ago. Why did it seem impossible? Well, for one, when you get hit in the nose it’s hard to imagine things are going to be ok anytime soon. A 20% selloff in a month is like getting hit in the nose with an Aircraft Carrier. Second, economic data has seemed so lax. Whether it’s because Q1 always stinks or just a general global slowdown, it was hard to imagine approaching all-time highs with Europe practically in a recession. Finally, nothing seems to have been solved. Brexit still exists, the China Trade war still exists, earnings are still expected to be shaky, and there’s all kinds of divergences strategists are worried about (lack of momentum, Rus2k not back to its highs, Transports not back to its highs, etc). But as we know, markets climb a wall of worry. There is always something to fret about, heck people have been fretting about LYFT and what that might mean for the general state of the stock market (never mind that FB got cut in half after its debut). Look, I don’t know what the market is going to do next, no one does, maybe we hit new all-time highs in April, maybe we go sideways for months, maybe we selloff. But there will NEVER be an “all clear” bell, there will never be certainty, things will never seem calm. When Purdue lost on Sunday I was devastated but things will be ok, I will be back at my all-time highs soon even though I know it will be bumpy along the way. (my weight is already there…yeeehawww!!)
After the open one would’ve expected the market to experience some sort of weakness given we rallied over 1.25% yesterday but it never materialized. There was a very brief dip around 11am ET but most of the morning was basically flat. Why do I always end up writing on days when the market is flat? I suck. Durables goods were weak but we are still getting old data due to that oh so wonderful gov’t shutdown. This was a Feb number and I really enjoy when people draw big conclusions about where we are going from Jan / Feb data which always seems to be slow. Whoa hey what happened last year, we had a 20% selloff in stocks, the gov’t was shutdown, it was colder than Mars over most of the US, and the Fed was threatening to hike more than a 20 year old who dropped out of Berkeley. I’m shocked economic data slowed....SHOCKED. Whatever, I’m ranting, data does need to start picking up for my theory to be correct so we’ll see I guess. The market went nowhere this morning and that’s ok, it goes nowhere most days. Winners DAL, DOW, WYNN, and FB. Losers WBA, CVS, KR, HUM, and ABC. This song is awesome btw, if you don’t like Marshmello you should.
The rest of the day was a lot more sideways and a close at exactly FLAT. ZZZZfest. I mentioned earlier that there are things strategists are worried about but there are things we like too. Breadth made a new recovery high (h/t my guy Willie D), so the number of stocks moving higher is expanding again. But here’s something that I think is still under the radar. Look at these two charts (h/t @ukarlewitz and BAML). People are still off sides, they have been pouring money into bonds and cash as worries about global growth consume them. So, as this market grinds higher more and more of them worry that they are wrong about their view and unwinding their “wrongness” could be a tailwind going forward…
Final Score: Dow -30bps, S&P500 flat, Nasdaq +25bps, Rus2k -18bps
- Succinct Summation of the Day’s events: Quiet, sideways.
- Oh wait, what’s this? (via WSJ): “Big Banks Reach for Small Deals as Merger Boom Slows” and the money quote “Competition heats up for deals Wall Street bankers would have scoffed at a few years ago”. Is that right? Well guess what “big banks” you know who already occupies this space and does an amazing job for their clients no matter what part of the cycle we are in? That’s right…Baird. Go ahead and take a gander thru all 973 items here big boys.
- Tidbit of the day: Research has shown that 70% of wealthy families lose their wealth by the 2nd generation, and a whopping 90% by the third generation. Granted, some of that is due to high spending, addiction, bad luck, leverage, or just poor decisions. But a lot of it is how people invest their money. Investing over centuries isn’t easy…at all.
- One of the best Fed watchers @timduy “There Will Be A Recession At Some Point, But It Won’t Be Soon
- You know what would be worse than Brexit? This. Billionaire Joseph Safra won initial approval to build a 305-meter (1,000-foot) tower in the shape of a tulip next to his Gherkin skyscraper in London’s financial district.
- Been awhile but Things Michael should’ve invented #91
- Honey….where is my flower vase? Well dear, I burned the bacon so I had to throw it at the stove, sorry.
- Honey…why do you have no skin? Well dear, I turned all the jets on full blast. (that shower CRACKS me up)
- Best data viz you’ve see in a long time. Look at the “live together” bucket!! Remember when that was taboo?
- I’m sure sitting there, eating pasta and drinking a bottle of wine while the warm ocean breeze washes over you would suck. Awful. Can you imagine?
- Who’s ready for GoT? This guy. So is Oreo
Ok, look, I need to make a social commentary with my end link tonight. Do we really want to occupy that world because that’s the kind of thing you see when Lux Luthor is about to unleash the nerve gas or when machines conquer humanity and turn us into a giant Duracell. What is this maadddnnesss???
https://bit.ly/2U9CV2I (this is also my favorite tweet on it today)
Have a good night