WEEKEND NOTES

All we really have to do is report to you the news:

In spite of North Korea, in spite of a couple of very costly hurricanes, in spite of an impotent DC (except for their spending), major indices had one of those mystery gaps on Monday and just kept going. Remember, IT’S NOT THE NEWS. IT’S HOW THE MARKET REACTS TO THE NEWS. When “supposed” bad news is not only not sold but bought up, that’s all you really need to know.

The DOW into new high ground.

The S&P right there.

The NYSE in new high ground.

The NASDAQ is close. In fact, setting up to move out. Needs 6460.

The NDX also close needing 6010.

Leading growth names have either moved out or are setting up again to move out.

The ALL-IMPORTANT SEMICONDUCTORS (SOX)  is just a stone’s throw away from the June 9 high with a few names already moving out.

EMERGING MARKETS at new highs.

The lagging areas like TRANSPORTS and FINANCIALS even rallied but certainly not leading.

Remember, we still have the easiest monetary policy in the history of the world. Trillions printed, negative rates, 0% rates and notice, central banks talk a tough game but keep on keeping on.  They will never be able to normalize and they know it.

AUNT MARY AND UNCLE BOB!

—-   “AUNT MARY AND UNCLE BOB!”—-
—-By Gary Kaltbaum- September 15, 2017—-
—-This email is being sent to the President!—- 
—–Aunt Mary and Uncle Bob did not have a lot of money. They were living paycheck to paycheck, just getting by. But Aunt Mary and Uncle Bob were efficient with their lives and their savings. Whatever they could save, they did. They both worked long hours trying to make a good life for themselves and their family. But Aunt Mary and Uncle Bob were tired of their jobs. They believed there was a better calling for them. They searched and searched and finally found a franchised business that they thought they would excel at. The problem was they did not have enough money to buy a franchise. But they met with the owners. They pleaded with the owners over a 9 month period. Talks were long and arduous with Aunt Mary and Uncle Bob letting them know how hard they would work to be successful and that they would be a great addition to their organization. After much back and forth, the owners agreed to bring them on and lend them the money to start their first franchise.——-
——–Sun up to sun down, Aunt Mary and Uncle Bob put in the time. Initially, Aunt Mary and Uncle Bob did not do that well but did show improvement. They had no problem working the 16 hour days. They would do anything to be successful and become independently wealthy. After a year of just getting by, things started to click. Business started to flourish. All the hard work, the sweat, the toil, the risk capital, the sleepless nights started to pay off. Business started to get going. Because the business got going, they hired two people. Those two people now had a decent paycheck with a business that was on the upswing. But it did not stop there. The owners of the company recognized their success and offered to give Aunt Mary and Uncle Bob another franchise. They jumped at the chance. Things went well. Things went so well that they hired 5 more people with one of those people coming off of welfare because of the hiring. A couple of their originals went from hourly pay to salaried pay. And then there were 3 franchises. And then 4. But something happened. They now had 25 employees, some salaried and still some hourly. Government then decided to mandate a certain number Aunt Mary and Uncle Bob must pay…which was more than they were paying. But they relented. They fired no one. But then came a new healthcare program, one where Aunt Mary and Uncle Bob’s costs and taxes went up markedly. They could not believe their expenses went up so much because of government dictate without any commensurate productivity gains. What to do? Aunt Mary and Uncle Bob loved their employees. In fact, they were not called employees. They were called partners. They were family. When one partner had an auto accident and was out of work for 6 weeks, what did Aunt Mary and Uncle Bob do? They paid the person anyhow and made sure that person’s children were taken care of.——–
———On top of this, Aunt Mary and Uncle Bob are philanthropic, giving a nice chunk of change to children’s charities every year. Because of this, many at-risk children have a better chance. Because they have a better chance, they are less apt to fall prey to all the negatives that are out there. Because these children made something of themselves, society is much better off.——
——–Aunt Mary and Uncle Bob also buy products for their business. Because they buy more and more products, those businesses that sell the products are doing better. Because those businesses are selling more product and are growing their business, they are hiring more people. Because they are hiring more people, those people are now getting paychecks. Those people who are being paid can now afford things they could not afford before. Those people than use that money to buy food or clothes, go to the movies, maybe go to a theme park. Because those businesses are selling to those employees, those businesses are also growing. Because those businesses are growing…AND ON AND ON AND ON AND ON AND ON AND ON AND ON!——-
——-Look what Aunt Mary and Uncle Bob created. They created a virtuous business cycle. A cycle where everyone benefits, not only in their business but all the way down the line. They did it despite onerous government policy that confiscates more and more of their wealth on a yearly basis. Aunt Mary and Uncle Bob are the best of the best.——-
——But Mr. President, you just said you are not worried about them. You said they don’t need their taxes cut. You basically said they did not matter. You talked like the Pelosi, Schumer, Sanders, Warren’s of this world who demonize success and wealth on a daily basis. You have put yourself in bed with those who do do not have the foggiest idea what it takes to become a success. They are only capitalists with their money and life but socialists with everyone else’s money and life. Mr. President, you say Aunt Mary and Uncle Bob do not need their taxes cut. Au contraire Mr. President. The successful, hard working, philanthropic Aunt Mary and Uncle Bob are exactly the people who not only should have their taxes cut but DESERVE to have their taxes cut. ——–

PRE MARKET

Office back up…house still down…but being told by Sunday!

2 big hurricanes with massive losses, North Korea, another attempted London terror attack (did not fully detonate), inept Washington…and markets still cannot correct more than 2%. In fact, a few indices have gone topside.  When markets ignore supposed bad news and actually go up, it is the best of worlds. Until that changes, no arguing. Markets (price) is always reality.

The SOX looks ready to move out to new highs. This is very important as it has led the market. On top of that, better tone in worst areas does not hurt. On top of that, may be getting some clarity on corporate tax reform.

Futures have hardly budged. The Nikkei hardly budged even though a missile flew overhead.

A full set of reports for you this weekend. A lot of whining and complaining.

MID-DAY NOTES…THE SEMIS

Sorry about pre-market…still no phones or internet at office. Hotspot was spotty. Still nothing at the house. Yummy. I know they are working hard around Florida to get things up so no complaining.

As I write this:

THE SEMIS (SOX) looks poised to break out of a 14 week trading range. The SOX topped on the vicious June 9th drop after becoming extended and has taken this much time to work through the supply. If it can move out, it will go a long way in keeping the market moving forward as it has been the leading group for quite a while. There are already a few names into new high ground and some very close.

Otherwise, mostly quiet but very constructive action in the indices this week. FINANCIALS bumped back into trading range…but still no leadership there.

COMMODITIES in pullback mode as dollar strengthened a bit past couple of days. A few names broke back below the 50 day.

More tonight on radio and right here.

 

No power at home. No phones or internet at offices. Yippeee! But we are grateful as we know so many have it so much worse…and we are thinking of them. We hear over 25% of the homes in Key West have been lost. Wow!

Another good day yesterday as new highs pick up, the tone gets better and S&P into new highs. Yes…we are overbought but no biggie.

Best areas remain Chinese ADRs, technology, internet, medical, drugs/biotech. See a couple of housing names breaking out. Seeing a few new highs in semiconductor-land. Even energy/oil & gas with better tone off of the hurricanes…but still no grand leadership there.

Go visit my twitter…@GaryKaltbaum to see how much tree damage was at our house. I posted a bunch of pictures and video. It was a miracle that all the trees feel away from our house.

Hopefully we will be back to full sooner rather than later.

THE FINANCIALS

The direct inverse correlation with the financials and interest rates continues…that’s long end interest rates. As the 10 year yield was whacked down to 2%, financials headed lower with with the regionals bearing the brunt. All it took was rates to back up for 2 days and we get a 2 day romp back up in the financials. The theory being as long rates go up, margins expand. Margins expand, profits expand. Profits expand, stock prices go up.

Look how GS (which still lags) was breaking another area of support badly…in 2 days, back into the high end of resistance. The KRE (regionals) which still acts poorly, undercuts a multi-month low and reverses back above. The best looking name remains Citi (C) as it has had the best relative strength since  early June…but only just getting back above 50 day average today. Really no leadership yet in this group.