PRE MARKET AND EARNINGS
Earnings season continues.
BA will be front and center today, a name that has led the DOW for a long time. It is down $14…about 80 or so DOW points.
Yesterday was weird. While the Dow moved higher, growth names turned south, with some slammed. With the Dow up almost 200, the RUSSELL was down over 1%, mid-caps not much better…and the a/d more than 2-1 negative on the NASDAQ. A/D on the NYSE was also to the negative.
AUTOS also hit this morning as market does not like FCAU and GM numbers.
Want to make note that the prez now bails out farmers because of the tariffs the prez has put in place. I am vehemently against these tariffs…but if they can move the needle, I will applaud the prez. So far, no one is laying down. Hopefully that changes.
PRE MARKET
Some random thoughts and markets:
USA TODAY front page article: “CLIMATE CHANGE LINKED TO SUICIDES!” I guess you know what we think of these headlines. Do these people just make it up as they go along?
Google has learned the sandbagging game. Google and the analysts just sandbagged their earnings reports. Everyone knows Google has been reporting 25%+ growth in earnings every quarter…actually, most in the high 20s…yet Google and the analysts set guidance at 8% growth for this past quarter. Yes 8% growth. Guess what the report came in at? A HUGE BEAT OF THE NUMBER…and guess what the growth rate was? I don’t have to answer that question. The “beat the number” game continues. But to be clear, Google (I will not call them Alphabet) is kicking, very strong numbers for such a large company. It gaps into new highs this morning.
NY TIMES article: “U.S. SAYS IT BROKEN UP RING THAT STOLE MILLIONS BY FAKING I.R.S. CALLS!” I am thrilled. I personally have received about 1o of these calls in the past couple of years. Knowing better, I play games with the callers making them believe I am going to pay up. I then blast Led Zeppelin’s “Rock and Roll” in their ears. Unfortunately, these scumbags prey on everyone, with many actually paying up thousands, and some tens of thousands. Put them away and throw away the key!
Why is there so much bearish talk? Funds selling all their longs. Recession talk. Depression talk. Yes we heard depression talk. And we are not even talking about turning on CNN or MSNBC who report the sky is falling 24/7 because of a certain President. There just remains a lot of bearish talk even though our market has not done a lot wrong. Yes, we have reported that 50% of the market is not participating. But that means 50% is participating. And with the NASDAQ/NDX and the RUSSELL at highs, why are so many so bearish? Don’t know. We’ll just pay attention to price because price is all that counts.
This morning:
The NASDAQ/NDX will open in new high ground as GOOGLE beat handily. As we write this, it is up $53. For a megacap, that is a big $53. In sympathy, other megacaps are also higher. On top of this, the comatose FINANCIALS finally have woken up as our long rates have turned higher. Higher long rates supposedly help the financials as their margins can expand. On top of this, the S&P will open above recent range but still below the January highs. The DOW continues to bring up the rear. For sure, there are still plenty of areas that are weak…emerging markets, industrial, materials, housing and housing-related but there is no reason to be extremely bearish unless the markets dictate so…especially with :
In the past few days, China has:
Cut its 7-day Treasury rate markedly.
Launched some QE.
Told banks to flood the system with liquidity.
Slammed the Yuan.
Telegraphed more easing is coming.
Yes, China is easing and in a big way…and as you know, markets love easy money. With the U.S. still with ridiculously low rates, with Japan and Europe still negative and still printing and now China easing even more, the band continues to play on. As always, it is all about price. If price changes, we will let you know. Lots more earnings to come…which can definitely change the playing field. Paying close attention.
And I didn’t even mention the word TARIFF!
PRE MARKET
S&P futures down a wee bit…NDX a little bit more.
RACE down $7 as CEO looks like he is stepping down for health reasons.
LPNT up big on a buyout.
After the close:
GOOGL reporting.
Before tomorrow’s open:
MMM, UTX, VZ from the DOW. Also, BIIB, HOG, PCAR, SHW, JBLU, KMB, CNC, DGX.
WEEKEND NOTES
Last week, the market simply sat. There is nothing wrong with the market sitting quietly, even into earnings season. But one thing that sticks out for us is that while the normal bulls are still out, we are surprised by how many bears are out there. One hedge fund announced they sold all longs. We are constantly reading how the economy is topping, the yield curve is going to invert, earnings are peaking. tariffs are going to kill the goose…the list goes on an on. But quite surprising and maybe a good thing that so many are bearish.
For sure, plenty of areas are still not working. We have highlighted all those areas for you. But for the most part, major indices act ok…a lot of range-bound action but for the most part, act ok.
The NASDAQ/NDX/RUSSELL remain the strongest. The S&P less so. The DOW remains the weakest.
TRANSPORTS, FINANCIALS, INDUSTRIALS, MATERIALS again range-bound.
Most EMERGING MARKETS are another story. While improving off lows, still relatively weak.
Sit, relax as markets wind their way through this action. So far, it has been nothing more than a working off of the move from the election to the highs of January. This is quite normal if the market is going to break out again in the future. Of course, if the long-term lows that were tested recently give way, we will have another story for you…but as we have told you, we do not expect that to happen at this time.