Is It Summer Yet?

Equities start the day slightly higher as Memorial Day weekend comes to an end. I hope you had a good long weekend, I sure did! Before I educate you on markets and why you should grille every single meal outside until October I wanted to pass on this wonderful tribute to the fallen from @billsweet. A very powerful reminder that freedom isn’t free. Anyway…is it summer now? Do we count Memorial Day as the start of summer? I don’t know, it was 55 in my town yesterday so it sure doesn’t feel like it here. That being said, it’s time to start consuming beach cocktails, listening to Yacht Rock, and cooking outside because summer FLIES by. If you aren’t filling your days and nights with smooooooooth music and icy cold drinks then you’re just doing it wrong. As for the market there’s really nothing new to talk about, I hope you’re prepared for endless parsing of trade commentary mixed with sentiment swinging back and forth. Here’s the official position of Baird’s investment strategy team led by Bruce Bittles and Willie Delwiche: “So where do we go from here? We still believe that a trade deal will be reached, although it may take many months. We suggest investors stay with the strongest S&P 500 sectors which include the defensive sectors of utilities, consumer staples and REITs along with communication services and consumer discretionary.”  By the way, when I said “sentiment swinging back and forth” I meant it. If these headlines don’t change (or end up taking months like Bruce and Willie said) we’re going to experience countless weeks where everyone is depressed followed by wild swings back towards optimism after a random tweet or a comment from Chinese official. Sigh. Headline markets are never fun, especially during slow summer months.

Price action this morning was largely forgettable, I guess everyone wanted to stretch that long weekend out. Volume was roughly 12% below a 20 day average and the market basically went nowhere. I have to say that things feel decidedly less rosy than they did even a month ago. Now I’m sure part of that is the fact that we’re about 4% off the highs (as my friend @hmeisler always says, price determines sentiment) but all the notes I read and blogs I consume feel like they’ve turned dour in their prognostication. If the Trade War slogs on and treasury yields continue to puke and PMI’s keep falling…well…I guess there really isn’t a lot to get excited about. Man, if I had written a “Sell in May” blog I’d be retweeting it every 13 seconds right now. Hey, dear reader, are you watching this #Chernobyl on @HBO? If you aren’t I’m gonna get really mad. Not only is it the highest rated Mini Series of all time (I’d argue that still belongs to Band of Brothers) it’s also blowing my mind. Did you know there was a 36 hour stretch where, if things went a certain way, about 50 million people would’ve died and most of Eastern Europe (and parts of Western) would’ve been rendered uninhabitable? It’s a sobering look at what was probably the most dangerous time for Europe outside of World Wars.

After lunch the market finally gave up its wanderlust and promptly fell on its face. Down 0.85% as “growth worries” spread its malediction thru our corruptible veins. I think at this point “muddle thru” is shaping up to be the best case scenario for both the economy and the market. With bond yields dropping faster than Game of Thrones podcasts we’re now faced with the sobering fact that the market has priced out an upside surprise to growth. Not only that, the odds of a rate cut in December (which would be troubling at this point in the cycle) have breached 80%. Macro seems sketchy, technicals are weakening and buy the dippers seem to have vanished. Sheesh, this market can be sweet but a psycho.  

News Highlights:

We’ll end tonight with one of the craziest traditions I’ve ever seen. Chasing a cheese wheel down a hill in Gloucestershire (a name I literally cannot pronounce. But that’s from a guy who used to call Leicester Square “lie-chester square” so whatever, I suck) 

(God I love England) 

Have a good night