Retail Sales Whiffs
Equities start the day lower as Retail Sales whiffs. Seriously, we can hit space rock from 4 billion miles out but we can’t get a retail sales number to beat? I thought this was the country of “spend until you die,” did I miss some kind of seminar where we changed gears. If I told you Retail Sales hasn’t beat expectations one stinking time this year would you believe me? Yea, actually you probably would. This is just going to reinforce all the chatter about late cycle slowdowns and a recovery that is waning. Sigh.How about this price action though? The last two days have been incredible and I know the EXACT reason why the S&P is up 2.3% from Thursdays close (I bet you want this information BEFORE the rally huh). Cash baby! It’s all about that cash money. BAML put out their latest Fund manager survey and cash levels are the highest since Lehman (Josh talked about it here). Why are they so high? Because everyone has been following the same pattern all year long 1) Macro flares up (in this case Greece and China) 2) Sell because I’m a weak knee’d bull at the highs 3) rub my hands waiting for a big pullback because WE ARE DUE FOR ONE 4) headlines rage and I feel good about my cash holdings. Im gonnna get DIS for $30 5) headlines die down because a central bank / policy maker said or did something. Maybe I shouldn’t wait any longer 6) oh man a snapback rally and I did nothing 7) it’s right back near the highs and now I’m offsides / underweight @#$#@%#$ 8) rinse and repeat. So let’s see if today was more of the same, basically we have to ask ourselves “are too many people positioned incorrectly right now?”
After the open it sure felt like they were. Bad retail sales? Take em up! The low was the OPEN as apparently everyone has regained their love for US equities. Quiet morning though, and I’m sure all the brokers out there miss last week’s volatility already. JPM and WFC reported today and both kinda said the same thing: we’re doing ok, trying to cut expenses where we can and dealing with this low interest rate environment. Same old same old for these two juggernauts. TWTR was the subject of shenanigans today. Some yahoo put out a fake webpage that looked EXACTLY like a real Bloomberg story and this was the result. Now you know I love the TWTR service, especially for what we do. It’s an invaluable real time information service and traders thrive off it. But it can be easily misused / gamed. It’s obvious that multiple algo’s out there exist to simply scan headlines and react so tread carefully. Up and to the right all the way thru lunch where we landed on 2,110, a full 3.2% higher than last week’s low. Remember when this article hit on Sunday night? (click the link just to see the title) Yea…so about that…
The rest of the day was blah, we actually faded a bit at the close because buying pressure ran out of steam. 2,108, up 0.4% was the final tally and if I were a betting man I’d say the market will be lower on Wednesday. We’ve come a long way from last week’s lows, it’s time to catch our breath. So yea, I think the past few days have been about wrong-way positioning. “Grexit” became the base case last week, consensus if you will. Everyone had shuffled their hands for exactly that event and it didn’t occur. You know what they say about investing and consensus right?
Final Score: Dow +42bps, S&P500 +45bps, Nasdaq +66bps, Rus2k +63bps.
- Succinct Summation of the Day’s Events: 3rd day of offsides rally. Guess people feel forced to get back in after the Greece thing ended.
- Winners: MU, CHK, VRTX, RRC, SNDK
- Losers: NAVI, FAST, EXPE, EMC, AMAT
- Is there a brightside to the Greek deal? This author attempts to find out: “Well, a deal is done. It wasn’t a pretty process, or well-handled, or sensible. But there is a deal. And any deal was better than no deal. Every commentator seems to be saying that the deal which was struck will be disastrous for Greece. But I think those predictions might be wrong”
- And you know what? It’s time to be positive people. This is the best time to be alive in history
- Are there cracks in the rally? Maybe, sure didn’t feel like it today. “If the US economy doesn’t start to improve measurably in short order the Fed might find itself in the same predicament as the PBOC. The S&P 500 appears to have peaked in any case. As I wrote a couple of months ago, the long term momentum indicator I use is putting out sell signals not seen since late 2007 (and in 2000 before that). All we’re waiting on now is a catalyst to push the market into a full blown, honest to goodness correction.”
- I don’t think I’ve ever said this before but how cool is this parking garage? (in Kansas City)
- Today’s must read “Short Investment Philosophies” (not short as in negative. short as in brief). This one is my favorite: Tom Gardner, Motley Fool: "Find remarkable leaders on a lifelong mission -- buy and add." Let’s name a few like that shall we? DIS, AAPL, AMZN, TSLA
- Here is Einhorn’s Q2 letter if that kind of thing floats your boat
- Awesome chart here by JPM. Look at some of the SPX valuation measures compared to their 25yr avg’s. Still worried?
We’ll end tonight with one of the worst dives I’ve ever seen. How painful do you think that was? Like papercuts all over your back with lemon juice painful?
Have a good night.