What a silly stock market.
There I was on Tuesday at 2:00 p.m. waiting for the Dow Jones Industrial Average to crash 1,700 points as Trump verbally ripped Iran to shreds (and pulled out of the Iran deal). The Dow instantly tanked 80 points one sentence into Trump’s latest global spectacle. But then the Blue Chip index rallied back as Trump continued to hit Iran, and actually finished the session higher. As a 15-year old would put it: #WTF.
For an already jittery market to be able to shrug off major news of this kind is nicely short-term bullish…or is it.
“Couple of thoughts. First, there’s genuine confusion right now about the value of strength. We like strength in employment because there’s no real wage inflation. We like strength in commodities because it means the world’s not slowing down. And we like strength in consumer spending like we heard last night in Disney (DIS) and we have been hearing for weeks now in earnings season,” writes TheStreet’s founder Jim Cramer over on RealMoney on the weird move in the markets Tuesday. In effect, we could be in a short-term good news is good news environment for stocks. That’s an environment where you load back up on cyclicals and hot tech names like Netflix (NFLX) (which could be acquired by Action Alerts PLUS holding Microsoft (MSFT) in within two years, reports TheStreet’s Katherine Ross).
But, the key point of emphasis here is short-term as weakening job growth and higher oil prices are two factors that deserve to be priced into stocks (they aren’t being priced in right now).
Says Cramer, “At the same time, the market’s not doing what it should do. Oil spiking this fast is not necessarily healthy. It’s also at this point artificial. We know that it isn’t demand as much as fear of disruption. We also know that a slow, gradual rise in rates is good, but a spike is bad. To me that means it is a mistake to really trust this market, especially if it opens up. There are way too many people who remember February when the market fell apart for many of the things that are driving it now and I think those sellers will materialize as we go higher.”
Words to trade by.
Around Wall Street
Alphabet’s (GOOGL) developer conference on Tuesday afternoon was largely embraced by Wall Street. Points out Jefferies analyst Brent Thill: “We continue to view Google’s commitment to AI as a significant competitive advantage.” Thill is one of the few tech analysts I listen to, along with Loup Ventures founder Gene Munster. Alphabet is a holding in Action Alerts PLUS.
TheStreet’s Bradley Keoun, our 2017 SABEW award winner, pens this fun profile of veteran Wall Street banking analyst Dick Bove. Bove is first rate, feels like yesterday I was watching him on TV slicing and dicing the bank analysis during the financial crisis.
RBC Capital Markets analyst Joe Spak has written an open letter to Tesla (TSLA) CEO Elon Musk. Writes Spak,”Tesla remains an amazing company with a compelling long-term opportunity and an incredible list of accomplishments already under its belt. But I continue to hold Tesla (and every company I cover) accountable for implementing a strategic vision that aligns with an ability to execute at scale.” You tell’em, dude.
When long-time, sometimes controversial bank analyst Mike Mayo speaks it’s often wise for investors to listen. Recently plucked up by Wells Fargo (WFC) to cover the banking space, Mayo is fresh off a meeting with top Goldman Sachs (GS) management, including CEO Lloyd Blankfein. Mayo’s mention of a possible “revenue breakout” in a new note dropped in our email box Tuesday is attention-grabbing (if not a reason to trade Action Alerts PLUS holding Goldman).
Names on TheStreet
Dine Brands (DIN) CEO Steve Joyce tells TheStreet the company could make an acquisition within a year. Talking with Joyce after our segment, it sure sounded as if he wants to buy more than just one brand to add to a portfolio of Applebee’s and IHOP.
Meanwhile, Panera Bread’s CEO tells us the company is starting to really dig down into its big data to improve the restaurant experience. Fascinating stuff.