The Boxer

Equities start the day higher as…whoa boy….so much is happening. Last week was absolutely goat rodeo bonkers insane as tweets came flying in from all directions whipping the market around like a 6-year-old on a Tilt a Whirl. It is impossible to handicap what the market is thinking given how fast the narrative is changing. Futures were down last night because the United States ratcheted up tariffs on China yet when I walked in the door futures were up because of a tweet. Ok, I mean is it too much to ask for all of this not to happen live on (if you aren’t on TWTR I don’t even know what to say anymore). Let’s put all of that aside for a moment and try to ground ourselves in a few facts. Last week saw all of the following: Initial Jobless Claims fall (still near cycle lows), New Home Sales print a new cycle high (after June was revised), $TGT release incredible consumer based earnings (might I remind you their stores are within 10 miles of 80% of Americans), and Leading Indicators print a new cycle high. There’s still good news to be had here, it’s not all doom and gloom, LEIs and New Home Sales peak well before a recession begins and they just printed new cycle highs. However, think of our economy as a boxer, it can take a lot of punishment until it can’t anymore. The biggest threat to the expansion is a policy mistake, i.e. things just go a little too far with the Trade War and consumer/business confidence, which is as fragile as my ego, shatters. We don’t know which punch will knock the boxer down but we do know that less punches would help keep us on our feet.

All things considered it was a fairly quiet day as the market basically went sideways from the open. Luckily for us that sideways was in green territory led by Tech, Staples, and Financials. Headline Durable Goods beat expectations as did Dallas Fed and if you were to wander over to the Citigroup Economic Surprise Index you’d notice its had a heck of a run lately (economic data is beating expectations). That being said August has been CRAZY because Tariff and Trade War madness is leading us around like we’re on a leash. Winners:  FTI, DISH, HAS, DE, UPS, and AMGN. Losers PM, LB, GPS, ADS, and DD. There’s no way this works right? Also how often are you using a ladder on flat pavement with tons of room in both directions? I’m short this thing.

We closed on the highs of the session, 2,878, up 1.1% so at least there’s that! To be honest if I had to put a reason on the market rallying today it would be 1) we were due for a bounce after Fridays drubbing and 2) there were no new tweets? Here’s the thing, I think the entire World agrees that trade with China needs to be addressed, it really boils down to “how” we address it, that’s what has the market spooked. The US economy has weathered a great many storms over its existence and you could argue it is STILL weathering the current one. The real question is how long the winds of trade blow and what their final tally will be. Only history will tell us but know that we’re diligently watching the anemometer here at Baird (never in a million years did I think I could work that word into a recap. BOOM). 

Final Score:  Dow +1%, S&P500 +1.1%, Nasdaq +1.3%, Rusk +1.1% 

Tonight I wanted to end on something that made me smile or laugh. This kid right here, makes me smile. Get after it little man!!

Have a good night