Here’s your Market Menu

Equities start the day higher as we get into the meaty part of the earnings season.  We’ve got quite a bit on our plate this week so let’s break it down, shall we? For an appetizer, we have Middle East tensions, which, to be honest, really haven’t impacted the market all that much.  Here’s a 10-year prediction for you:  Disney will be making amazing movies, my hair will still be gray, October will still be the best month, and the Middle East will occasionally flare up making people nervous.  For the second course, we have earnings and economic data.  Roughly 16% of the S&P has reported already and another 30% will report this week.  Factset tells us that on a blended basis Q2 EPS is tracking a 1.9% decline so far.  But (there’s always a but in markets) if things play out like they have over the past few years the average estimate is usually exceeded by around 4.8% which implies that this quarter will end up with POSITIVE EPS growth of 2.9% (4.8% – 1.9%).  We also get Q2 Advanced GDP on Friday so prepare for a whole lot of takes surrounding that (anything near 2% would be fine in my eyes).  For the main course, we have an upcoming Fed meeting.  Smoke signals from the WSJ on Friday told us that a 25bps cut is in the cards and like we always say here at BullandBaird, don’t fight the Fed.  Finally, for dessert, we have a lovely berry cobbler made by my friend Helene Meisler who reminds us that 200 days ago (market days not calendar) was Oct 1, 2018.  Which means that each day that goes by will drop off another awful session from late last year.   The 200-day MAVG will start to get a lot prettier soon. 

After the open, it was another slow summer Monday.   While this week is jam-packed with earnings the bulk of them aren’t until Wednesday or Thursday.  So, Mike, lover of all things Yacht Rock and Disney, who/what matters over the next week or so?   Well here’s three small companies you may have heard of:  AMZN, AAPL, FB.  Those three plus MSFT have accounted for nearly 20% of the gains in the S&P500 this year (chart courtesy WSJ).   You want something to root for how about FAAM!   That’s right, we need our FAAM to not fight at the dinner table for this rally to continue (MSFT has done its part).  What else should we be rooting for?  GDP on Friday to be above 2%, better than expected New Home Sales, sentiment to cool off, fresh lime juice in all your drinks, and summer to never end.

Unfortunately, most of today was forgettable and since that Fed meeting isn’t until July 31 any trading day that doesn’t have a ton of earnings will be as exciting as the semiannual Muncie Dirt and Fertilizer show.  Here’s something I want you to remember:  earnings season is fun to watch but no one should be changing their long term investment plan based on what a collection of companies had to say about the past few months.   Yes, of course, professional investors trade around them, but for most of us, a well-crafted plan isn’t going to change because the CEO of a machinery company is worried about tariffs or the dollar.  One of the keys to success in stock market investing is filtering out the noise and earnings season is basically a weeklong EDM concert.   Final Score:  Dow +0.07%, S&P500 +0.28%, Nasdaq +0.71%, Rus2k -0.20% 

News Highlights:

• There’s a couple of things I demand of my readers.  1)  you watch The Hunt for Red October and Midnight Run  2)  You have a love of all things Disney (or just don’t be a hater) and 3)  you read all of Morgan Housel’s stuff
• Behavioral coaching is key in an advisor / client relationship but it’s not easy to implement: “No client, let alone one with hundreds of thousands or millions of dollars wants to hear about behavioral coaching because it can come across as demeaning. No one wants to hear how emotionally inferior they are.  “Stay the course” is good advice in a fortune cookie kind of way. But the heavy lifting should be done well before the onset of a market crash.  Good investor behavior is not done in the moment but in advance, if it’s going to work and much of it doesn’t even come across as coaching at first blush.”
• Ummmm…are there really people who wanna do this out there?   “TD Ameritrade’s new voice-activated investing technology brings investors one step closer to trading while driving.  The Omaha, Nebraska-based financial services company is launching an in-vehicle offering that enables account holders to check their portfolio or receive a quote on a security via voice command”.
• Maybe this guy was trading while driving?
• Great op-ed on the Fed here: “At their next meeting on July 31, officials are very likely to respond to persistently low inflation and global trade risks by cutting interest rates for the first time in more than 10 years. On its own, such a move is of little importance to the economy.  But if history is any guide, it will mean that the Fed is highly unlikely to be willing to raise rates for the next twenty-five to fifty meetings. That is a big deal.”
• Wanna know what a nomination for Best Actor looks like?   This
• Wonderful quote by Michael Collins here, the guy who sat in space, alone, while all of humanity was on the other side of the Moon
• “The median U.S. rent rose 3% in June from a year ago, to $1483/month, according to the June Zillow Real Estate Market Report. Rent was up year-over-year in 49 of the nation's top 50 markets (Milwaukee is the only exception) and is growing faster than a year ago in 43 of those 50 markets”   That’s right everyone, if you like -60F in February you too can live in the ONLY top 50 market that didn’t see rent go up year over year!!  (this really is a great place to live but the weather is atrocious)

So I was never much of a skateboarder.   I, like many children, gave it a shot but quit after falling for the 20th time.  This guy does a trick that looks impossible, even in slow motion.

https://www.youtube.com/watch?v=sYTxYuUoSRg

Have a good night