Unfazed bulls are doing (another) victory lap this morning after investors drove a record-breaking day on Wall Street. China tariffs kicking in? Yawn. Brexit breakdown? Relax. Fed hike next week? The economy looks great!
Our call of the day from the Cracked Market blog’s Jani Ziedins says this is a “buy-and-hold-no-matter-what market,” though longer- and shorter-term investors might not have the same approach.
“If a person isn’t sure if they can hold through the next dip, they should take profits, stay in cash, and wait for the next buyable dip. But for anyone willing to give their positions more slack, this isn’t a bad place to sit in the market and watch the profits accumulate over time,” said Ziedins, adding that neither choice, at least on the shorter horizon, is wrong.
He says the fact that equities keep confounding the naysayers and overturning any negative headlines, is a telltale sign of an “aging bull market.”
Five years ago, investors were afraid of their own post-financial crisis shadow, selling every bump in the road, he explains. But nearly 10 years later and after getting burned selling prematurely a few times, most investors have “learned to stop reacting defensively,” says Ziedins.
Another explanation for the latest bump higher from stocks comes from Asbury Research’s chief market strategist John Kosar who was telling clients earlier this week that a big spike in total daily assets invested in the SPDR S&P 500 ETF SPY, +0.81% was a bullish signal. That is after those assets have been contracting for months.
Here’s the “I-told-you-so” chart, he sent around to clients Thursday after the close:
Asbury Research
Oh and be on the lookout for quadruple witching day—the simultaneous expiration of stock-index futures, stock-index options, single-stock futures and stock options. That could make for some extra volatility and volume, though this quarterly phenomenon isn’t always a big deal.
The market
Dow YMZ8, +0.09% S&P 500 ESZ8, -0.03% and Nasdaq NQZ8, -0.02% futures are pointing to some caution on the heels of Thursday’s action delivered records for the S&P SPX, +0.78% and Dow DJIA, +0.95% —its first since January—while the Nasdaq COMP, +0.98% also moved higher.
Gold GCU8, -0.18% is of a little, but crude US:CLU8 is up, while the ICE Dollar Index DXY, +0.15% is rising as the pound GBPUSD, -0.6331% suffers on Brexit worries. The yield on the 10-year Treasury note TMUBMUSD10Y, +0.49% is sitting at 3.08%, not far off a seven-year intraday high.
Read: Here’s when traders began to fall in line with the Fed’s projected hiking path
Europe SXXP, +0.38% has pared some gains, but Asia blasted higher, led by the Shanghai Composite SHCOMP, +2.50% whose 4.3% weekly gain is its best since March 2016.
Opinion: The ECB’s bond-buying program was a flop, which is perilous for the eurozone
The chart
So retail investors are all in this market eh? Not so much the so-called “smart money,” as shown by this Bloomberg Chart via the WSJ’s Daily Shot:
The Daily Shott/Bloomberg
The chart shows Bloomberg’s Smart Money Flow Index, which gauges action in the Dow industrials during the first half hour and the last hour of a trading day, i.e. the “wise” money holds its best bets for the close and doesn’t go rushing in at the start of the action. (discussion on this Twitter thread)
Of course, the “smart money” hasn’t always lived up to its reputation, notably during this bull market, as some of the biggest names that did well off the crisis like Greenlight Capital’s David Einhorn and Paulson & Co’s John Paulson—have had a tougher time in this bull market.
“The Greater Fools! More seriously fund managers are scared to miss it, so the ‘smart’ hedge funders might be out but the average pension fund is still hiking their equity exposure,” chipped in Chris Bailey, founder of Financial Orbit, in emailed comments.
Read: 10 years after Lehman Brothers collapse, people are ‘deeply distrustful’ of Wall Street
The buzz
A sector shake-up will affect some big tech names as of Monday. Facebook FB, +1.82% and Alphabet GOOGL, +1.47% will leave tech, and Netflix NFLX, -0.44% will leave consumer discretionary to join a new S&P Dow Jones communications services sector that will replace telecom as of Monday. Twitter TWTR, +1.12% will also join that group.
And a report says Google workers considered ways to tweak search results in the wake of Trump’s travel-order ban.
Micron MU, +2.22% is getting hit by a disappointing forecast. Shares took a tumble after CFO Dave Zinsner delivered that news and said gross margins will get dented by tariffs on Chinese imports. Some are saying the memory-chip maker is signalling the party is over for that sector.
Steelcase SCS, +5.21% is a big gainer after upbeat results.
On the M&A front, a blind auction will decide who gets to buy Sky SKY, +0.60% media group this weekend, with Comcast CMCSA, +1.31% and Fox FOX, -0.14% and Disney DIS, +1.67% team both due to submit secret bids on Saturday with the winner announced later that day.
Uber is reportedly in early talks to buy Europe’s food-delivery service, Deliveroo, and that is proving a big down for shares of rival JUST EAT JE., -5.45% in London.
Pity the ex-Tilray TLRY, -17.62% analyst. Shares rallied five days after Roth Capital Partners’ Charles Finnie axed his buy rating, and then he was out. The hot cannabis producer is looking at a 62% jump this week, after another volatile session Thursday.
Another Tesla TSLA, -0.23% executive—VP of global supply management—may be leaving.
Markit manufacturing and services purchasing managers indexes will be released this morning to close out the week. Next week, we’ll be rolling with that two-day Fed meeting that wraps September 26.
The stat
Getty Images
9.2%—that marked the August rise for imports to northern California’s Port of Oakland for August—the busiest month in its 91-year history. Cargo rates for Pacific trips are also at a four-year high as Chinese toy makers and importers rushed to get their goods to the U.S. ahead of the all-important holiday season and ahead tariffs that kick in Monday.
Random reads
Teens are vaping like crazy, says new study.
Cleveland Browns finally snap that 635-day losing streak.
Sexy ‘Handmaid’s Tale’ Halloween costume causing a stink.
U.K. braced for “hell storm” this weekend, thanks to Hurricane Florence leftovers.
The Carolinas are expecting even more flooding.
Pure heartbreak: a story of hate and murder in a Kansas town.
“Won’t you be my neighbor?” Google celebrates Mister Rogers.
Just saw the "Mr. Rogers" Google Doodle. I'm not crying, you are...
