Tale of the Tape
Good evening everyone and welcome back to the funhouse.
Stocks closed mixed today with the Nasdaq down a bit and the S&P 500 up a bit.
The S&P 500 is having a ridiculous August up 15 out of 19 trading days so far. This 79% win rate is an all-time record pace with 2 days left in the month so Let’s Go! 🤞🏼
It was a countertrend day with Financials outperforming and Tech taking a breather.
Fed Chairman Powell spoke this morning and this is always overhyped. He said something about inflation and the US Dollar Index tanked for a minute and then bounced. Here’s the intraday:
Lots of noise around a TikTok US deal, with maybe Wal-Mart and Microsoft partnering. See more below.
Walmart announced today that it’s partnering with Microsoft with hopes of buying TikTok.
Walmart had this to say, “We believe a potential relationship with TikTok US in partnership with Microsoft could add this key functionality and provide Walmart with an important way for us to reach and serve omnichannel customers as well as grow our third-party marketplace and advertising businesses. We are confident that a Walmart and Microsoft partnership would meet both the expectations of US TikTok users while satisfying the concerns of US government regulators,”
Reports have valued TikTok’s US operations at as much at $30 billion.
The $WMT and $MSFT announcement came hours after TikTok CEO Kevin Mayer quit.
$WMT and $MSFT closed up 4.5% and 2.5% respectively.
Walmart is perfect for Tik Tok. Just keep the camera’s rollin.
Bring On Inflation.
The Federal Reserve will change how it sets interest rates. Fed chair Jerome Powell said that the central bank will shoot for 2% inflation with the goal of maximum employment.
So it sounds like the Fed is ok with a little inflation – if they even have a choice.
As a result, interest rates are expected to remain low for the near future.
Here’s Bloomberg with more.
Market History: Irrational Exuberance
Speaking of the US Federal Reserve – lots of bubble chatter on Stocktwits and across media channels this week. We noticed a host of Xers droning on about the Internet Bubble and subsequent crash.
Ok. Sure. We get it.
Some Tech stocks seem like they go up almost everyday, sometimes by a lot, and then they go up some more. It feels bubbly and odd, especially given the devastation on MainStreet.
Tesla is up over 400% YTD. Apple is up 60% YTD. Facebook is up over 40% YTD. Amazon is up 75% YTD. And don’t even get us started about the Zooms and the Sea Limiteds etc…
We’re not going to debate whether this is similar to the internet bubble and whether trouble is imminent.
We will mention that the Fed Chairman at the time, Alan Greenspan, gave the famous Irrational Exuberance Speech in December of 1996 – more than three years before the Nasdaq topped and crashed.
He was early and the Nasdaq rose more than 300% over the next 39 months.
So sure things seem like they’re getting frothy here but they can always get a lot frothier.
Here’s the quote from Greenspan’s 1996 speech:
Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets. We can see that in the inverse relationship exhibited by price/earnings ratios and the rate of inflation in the past. But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?
Abbott Labs $5 Covid Test
Abbott Laboratories received FDA Emergency Use Authorization for its $5, 15-Minute, COVID-19 Antigen Test.
President Trump intends to purchase 150 million tests following the approval.
Abbott CEO Robert Ford had this to say:
Rapid tests deliver actionable results quickly so that infected patients can immediately begin self-quarantine. This test, along with others like it, is risk reduction on a societal scale.
$ABT shares closed up 8% following the news.
The 2020/21 Ski Season
Vail Resorts shared a letter laying out the plan for the upcoming ski season.
When the resorts open (Keystone Nov. 6) reservations will be required and season passholders will get first priority.
Social distancing rules will be in effect on chair lifts and gondolas.
Things can always change though, here’s what Rob Katz, Vail Resorts CEO had to say.
It is possible that at some point in the season, as we evaluate the dynamics of our operations, we may decide that we no longer need the reservation system at certain resorts. However, with so many uncertainties, we believe it is only prudent to have this system in place now.
Here’s Summit Daily with more.
And here’s the $MTN daily chart.
Links That Don’t Suck
🏀 NBA Players Reportedly Will Resume 2020 Playoffs; Thursday Games to Be Postponed
🎵 TikTok’s Founder Wonders What Hit Him
🏌 Welcome To Olympia Fields Country Club
🥇 Wendy’s Snowboard Knuckle Huck | X Games Aspen 2020
☢️🔋 Illinois Governor’s Energy Plan Shakes Up Debate Over Nuclear and Renewables
🧼Artemide Unveils Ultraviolet Technology that Transforms Lights into Sanitisers
📗📈 Pre-Order Sale: Unknown Market Wizards: The best traders you’ve never heard of