Morning Commentary
The market is on autopilot as a confluence of things converges to play an investing version of that childhood favorite: “Last one in is a rotten egg.”
Sidebar: According to Eric Partridge's Dictionary of Catch Phrases: American and British, from the Sixteenth Century to the Present Day, "rotten egg" is a children's taunt that originated in the United States in the late 19th century or the 20th century. |
Nobody wants to be a “rotten egg,” as $40.0 billion poured into the SPDR S&P 500 ETF (SPY) in the most recent week, the largest tally since 1993.
The Heat Map shows green across the screen, with all eleven S&P 500 sectors finishing higher with a few red specks.
Value Versus Growth
The iShares Russell 3000 ETF (IWV) is surging, and while the same tide is lifting all ships, value stocks continue to underperform growth stocks by a significant margin.
Consumer Spending
The media continues to push the narrative of a strong consumer, which is partly based on flawed aggregate data and misleading assumptions and headlines. The 3.1% increase in holiday spending came below the consensus of 3.7%, down from +5.4% in 2022 and +12.7% in 2021. Moreover, online spending increased by 10.6% in 2022.
The Dallas Fed Manufacturing report continues to decline.
On the Ground
Respondents made ominous observations, pointing out that consumers will be encouraged to spend, but how will they find the extra cash?
Meanwhile, the bifurcation of the economy continues. Wealthier Americans are spending, while those who tried to keep pace are falling behind on their bills. Record credit card loan delinquencies underscore this for banks outside the 100 largest in size by assets.
Riding the Wave
It's party time, and I’m okay to ride the wave, but I’m also ready to ease up into strength and make other adjustments.
Today’s Session
Driving into New York City today was a breeze. It would be an understatement to say nobody came to the office. And I highly doubt many are really ‘working’ from home.
That suggests even lighter volume and that can have an exaggerated effect on the market.
Meanwhile, the melt up is looking a little tired this morning.
A big problem, and one that is causing us to have fewer fresh ideas for what we believe to be an ideal sector position, is a lack of ‘cheap’ stocks.
Of course, overbought stocks can go on to become even more overbought, and the same is true on the downside.
This table from Bespoke underscores how overbought the market has become.
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5/3/2024 1:41 PM | Cheering the News |
5/3/2024 7:33 AM | TIM COOKS THE (RECORD) BOOKS |
5/2/2024 1:54 PM | Holding Up |
5/2/2024 9:41 AM | COOL HAND POWELL |
5/1/2024 1:22 PM | Which Powell? |
5/1/2024 9:40 AM | MAY DAY, MAY DAY, MAY DAY |
4/30/2024 1:02 PM | Complete Flop |
4/30/2024 9:48 AM | CHIPS TAKE THE LEAD |
4/29/2024 1:39 PM | Musk Rides Back to the Mag Seven |
4/29/2024 9:50 AM | DIE BY THE SWORD, PROSPER BY THE SWORD |
4/26/2024 1:46 PM | Full Steam |
4/26/2024 9:39 AM | BIG TECH STEPS UP |
4/25/2024 1:16 PM | Don't' Bury me, Yet! |
4/25/2024 9:27 AM | THERE CAN ONLY BE ONE |
4/24/2024 1:30 PM | Earnings Flood In |
4/24/2024 9:26 AM | BUYING THE DIP |
4/23/2024 1:25 PM | Bloom Off Rose |
4/23/2024 9:32 AM | WHAT HAPPENED TO THE BRAVADO? |
4/22/2024 1:22 PM | Pins and Needles |
4/22/2024 9:30 AM | LIVE BY THE SWORD … |
4/19/2024 1:20 PM | Fair Chunk of Rotation |
4/19/2024 9:35 AM | DON’T OVERREACT |
4/18/2024 1:37 PM | Didn’t Break Down |
4/18/2024 9:40 AM | MARKET OFF SCRIPT |
4/17/2024 1:59 PM | Facing Pressure |
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