Fall Rapidly Approaches
Equities start the day higher as Fall rapidly approaches. Did you know Fall starts on Wednesday? I didn’t either and it’s always bittersweet to see summer go. Do you know what else is bittersweet? Watching the Bears and listening to the Fed. Actually watching the Bears isn’t bittersweet it’s awful and they are awful. The Fed though…what a mess. I was hoping that they’d bite the bullet and do one of those “dovish hike” things but instead they decided to fret about China and the market hated it. Guess what Janet, if you are and your crew are worried about what’s going on across the Pacific it’s going to be even worse in the stock market. Let’s face it boys and girls: the uptrend is broken, kaput, finished. The bull market that started back when the Fed first engaged in QE has come to an end. Unless they decide to restart this puppy we are now beholden to growth concerns across the planet. No more shrugging off Europe because the Fed is spending $80B a month. No more multiple expansions because the banking system is being goosed. No more beating the Packers because Cutler or Clausen or whoever else they put back there can’t get it done. The Fed typically does a good job managing the market’s expectations but on Thursday they blew them up by delaying a decision for external factors. If they did it once they’ll do it again, and unless China turns its supertanker around we are in for a long slog. 2,000 in the S&P is now insane upside resistance, mark it on your chart because that’s the roof. Until that roof is blown off it feels like the house is in questionable shape. Oh the humanity.
After the open, Hillary Clinton decided she had enough of this whole Biotech thing and came up with this: "Price gouging like this in the specialty drug market is outrageous," Clinton tweeted at 10:56 a.m. "Tomorrow I’ll lay out a plan to take it on." So if you’re Hedge Fund bet against drug companies because Twitter is a thing…you won! We had a decent morning rally going before this happened but by lunch time it had evaporated. There isn’t a single person alive who would characterize this tape as a “buy the dip” type of affair anymore. That whole notion feels like it’s been buried in the Nevada desert next to Jimmy Hoffa. Then this awesome quote came out by Atlanta Fed President Lockhart to really stir things up: “Fed ready to hike FFR ‘as things settle down’”. Oh is that right? You are waiting for things to settle down huh? I’m also waiting for GQ to come calling about my awesome Dad bod and tendency to wear Crox around my yard. Things to settle down….sigh. Hey, I’m not investing in oil until that Middle East thing settles down either, I’m gonna need some clarity there. Health Care led the way lower after Clinton decided to pipe up and the biggest losers ended up being names like BIIB, VRTX, ENPDP, and REGN. Nice work. Winners were oil names because when the world decides to pound drug companies it takes a break from the energy sector. We got a real mess of a market here don’t we? By the way, with Fall starting you know what’s not far off? This magnificent goodness (how steep is that one hill...my God)
The rest of the day was commercials by Draft Kings and Fanduel. Seriously, it’s getting to the point where I will never visit these sites because I’m so angry at them. I could pick that dude who won $1 million out of crowd right now. STOP WITH THE ADS ALREADY (sorry Europeans on the recap, this one is going to fly over your head). Actually the rest of the day was quiet but a small rally kept us from closing in the red. But here’s the thing….who’s left to sell U.S. Stocks? Bloomberg tackled that question here so give it a read. Sentiment is horrendous right now….awful….so if our upside is capped then the downside is too (absent a fresh catalyst). A new sideways range? Maybe, sure starting to feel like it until the next Fed meeting.
Final Score: Dow +77bps, S&P500 +46bps, Nasdaq +4bps, Rus2k -19bps
- Succinct Summation of the Day’s Events: Fairly quiet Monday, felt a bit like summer markets. A few headlines of note but nothing game changing. Guess we wait for Yellen on Thursday
- Existing Home Sales whiffed today but my guy Bill sets it straight: “However, it is important to remember that new home sales are more important for jobs and the economy than existing home sales. Since existing sales are existing stock, the only direct contribution to GDP is the broker's commission. There is usually some additional spending with an existing home purchase - new furniture, etc - but overall the economic impact is small compared to a new home sale. So some slowing for existing home sales (if it continues) would not be a big deal for the economy”
- This is one of the best snapshots of valuation I’ve ever seen! Give this guy some page views. And if you want the meat and potatoes click here. Does the S&P strike you as crazy overvalued here? No right?
- And this is probably the best article on the current state of our market. Read the whole thing, I’m serious. A glance at the SPX chart tells us that multiple uptrends have been broken, both at price and momentum levels, which confirm the near-term bearish outlook. Initial support levels to watch for is 1940-1945 and secondary support exists at 1910-1915. If those don`t hold, expect a test of the August low support at 1860-1870. Should that fail, there will be further technical support at the November 2014 lows at about 1820.
- You think the US Government has a vested interest in the performance of student loans? “Student loans may be a liability on the consumer balance sheet, but they constitute an asset for Uncle Sam. Just how big? It's 44.4 percent of the total Federal assets. This is about 7.5 times larger than the 5.9 percent for the Total Mortgages outstanding and 5.0 times the size of Taxes Receivable at 9.0%.”
- Articles like this make me feel like the cycle has turned over… Toll Brothers Inc., the largest U.S. luxury-home builder, is zeroing in on smaller apartments with lower prices in Manhattan after watching expensive units sit on the market, said David Von Spreckelsen, the New York division president of the company’s City Living unit. Its latest project, at 55 W. 17th St. in Chelsea, will have an average asking price per square foot less than at new buildings in the rest of the borough.
- Does your kid use the iPad too much? Here’s a nice long article on whether it’s a big deal if they do or not. The gist of which is “relax, its just another thing that required moderation. It’s not evil” Seeing young children completely “zone out” while using a tablet often makes parents cringe, wondering what it’s doing to their small, developing brains. There’s the idea that “if they love something so much, it must not be good for them,” like candy or ice cream. But no kind of technology is inherently good or evil. It all depends on how you use it. Kirkorian’s research suggests that interactive devices do have the potential to help young children learn in ways unachievable by television or other passive screen media.
- Where are teens shopping nowadays? Looks like NKE and Forever 21.
- Merkel has some solid advice for the Fed: 1) stop holding regular press conferences and holding regular meetings 2) Stop trying to support risky asset markets.
- Goldman put a nice list of “high dispersion” stocks for all you active stock pickers!
- Every tree near a school should look like this
- Your moment of Zen today. I wish I could live right there and eat fish and look at the stars. Think there’s decent wifi? There needs to be.
- Can you believe they made cars with record players?
Tonight we have some wedding fails because if there’s anything that screams funny its people messing up one of the best days of their lives!
Have a good night.