Punch Drunk and Without Bail

Tale of the Tape 

Good evening, everyone. Extreme volatility continued today and the S&P 500 closed down 4.89%. This was bad and we gave back all of yesterday’s gains plus a smidge more. The index is now down 7.7% for the week. The Dow fared worse due to Boeing’s troubles (see below) and the small-cap Russell 2000 is a bonafide dumpster fire (also see below).

Things are finally beginning to get surreal in NYC as streets get less crowded, trains empty and those in the financial industry begin to appear punch drunk and without bail. Sorry to say, it could still get worse.

Treasuries did not get bought today which is strange and a bit of a breakdown in the relationship we have seen recently between bonds and stocks. We have no idea what to make of it.

Here are the closing prices of the major indices:

S&P 5002,741-4.89%
Nasdaq7,952-4.70%
Russell 20001,264-6.41%
Dow Jones23,553-5.86%

Bank CEOs Visit the White House

This afternoon, President Trump hosted a number of the big bank leaders for meetings and a press conference at the White House. There’s a tightrope the administration and the banks must walk in order to project confidence and stability during times of increasing duress. 

They assured the public that the banks are healthy and that policies would support small businesses. This could go either way. If they successfully instill confidence, the markets may calm down a bit. If this comes off as staged or thirsty, the markets may respond very poorly. 

It’s too soon to tell how it played. The market is the judge of such gambits and so let’s see where we head from here.


Russell 2000 New Intraday Lows

The Russell 2000 has been the weakest out of the 4 major indices for a hot minute. Russell ETF, $IWM closed at the same price today as it did on December 24th, 2018. The same exact price, $125.88.

The ETF made a 40-month intraday low today. It is now up only 6.5% since the election night in 2016.

This is getting to be a big deal.

Here’s the daily chart:

Why does this matter?
The Russell 2000 is comprised of 2000 publicly traded small-cap companies. This index tracks how these mostly US-focused public companies are performing. They don’t look great.  

Oh, Boeing.

$BA dropped 18% today. The stock is down 27.9% this WEEK. To say they need some help is an understatement. Check out the weekly chart:

Here’s a live look at $BA investors:


PepsiCo To Acquire Rockstar

This morning it was reported that PepsiCo will acquire the energy drink company, Rockstar, for $3.85B. Both companies have agreed on the sale, however, the deal is pending review from regulators. 

Quick question, at what point do we look at big sugar like we look at big tobacco? Discuss amongst yourselves…


Links that Don’t Suck

Panic With Friends – Jim O’Shaugnessy

Animal Spirits: Oil’s 1987 Moment

Socrates The City – Peter Thiel

NCAA Tournaments to Be Played, But Without Fans

The 30 Minutes That Can Make or Break the Trading Day