Back To The Future.

Here’s something to think about (excerpted from my latest over at DealBreaker called “Amazon Is Cheap At Any Price, Say Carnivorous Animals“):

Amazon is the poster child for a consensus view about “world-changing” companies. That consensus is basically that no price is too high when it comes to staking your claim on a share (figuratively and literally) of the future.

“I’d pay anything for a piece of a company that’s going to change the world” isn’t really a “thesis.” It’s just common sense. If you know that something or someone is going to change the world, then the only way you’re not bullish on that something or someone is if you’re bearish on human progress, and I’m not sure “neanderthal nostalgia” is really a thing.

The question then, becomes this: can you see the future? And if you can’t, then it would be wise to avoid overpaying for companies that you imagine are going to shape a future you can’t see. Doesn’t mean you shouldn’t own them – you should own them. But you shouldn’t own them at any price. More in the linked post above.

With that said, it was one helluva good day for the “future” where “the future” means today’s tech behemoths.

Future

Obviously that’s the reaction to Thursday’s earnings and it was all that mattered on Friday. In fact, as Bloomberg notes, the Nasdaq 100 had its best day in eight years relative to the broader market:

Nasdaq100VsSPX

Best day for the Nasdaq Comp. since the election:

Nasdaq

CNBC reminds you that Amazon just added one whole FedEx in a single day.

FedEx

Massive day for FANG in general – just as things were looking dicey:

FANG

Note the timestamp on this tweet (i.e. just as everyone was laughing at iPhone 8):

Fast forward to this morning:

  • APPLE SAYS CUSTOMER DEMAND FOR IPHONE X IS ’OFF THE CHARTS’

AAPL

Bottom line: Nasdaq 100 companies added $200 billion in market value on Friday.

The VIX was crushed back to a 9-handle:

VIX

Super day for anyone who quit Target to become an armchair VIX futures trader:

XIV

Here’s some fun color from Bloomberg’s Andrew Cinko:

Amazon rules the roost in the S&P Consumer Discretionary sector. Breadth in the sector is terrible, 23 up versus 61 down given JCPenney’s woes and Expedia’s earnings miss. But with Amazon rallying 11%, it’s adding 12 points to the index, accounting for the entire 8-point gain. Its reported expansion into health care yesterday only makes it more alluring for growth starved investors. Amazon’s gain keeps its growing strength versus the rest of retail intact — showing that any relative weakness doesn’t last.

Treasuries rose after a couple of people familiar with Trump’s “thinking” told Bloomberg that Jerome Powell is the frontrunner for the Fed which, if true, would be dovish compared to Taylor and his “rule.” The Powell headline hit the dollar as well:

us10y

It goes without saying that Trump could very well change his mind depending on what the next person he talks to tells him. Remember, this is a President who is now polling Lou fucking Dobbs on the issue:

White House spokeswoman (and furious hamburger in lipstick), Sarah Huckabee Sanders, had the following to offer at her daily propaganda briefing:

I can confirm the president plans to make an announcement on that next week.

Meanwhile, bond market volatility is showing some signs of life as the MOVE’s monthly average is on pace to log a third consecutive rise:

MOVE

For his part, TD’s Priya Misra thinks any selloff beyond 2.50 isn’t likely sustainable. “While UST 10Y yield can sell off a bit further if John Taylor gets tapped for Fed chair, we remain long duration via 5y5y real rates and plan to initiate long nominal 10Y in model portfolio if yield reaches year-end target of 2.50%,” the strategists says in a new note.

Spanish equities fell 1.5%, reversing their weekly gain in the worst one-day loss since a couple of days after the referendum:

IBEX

Here’s a look back the 2-day rollercoaster:

IBEX

The euro generally took Rajoy’s late-afternoon announcement that he’s fired Puigdemont in stride, although the picture is muddied by the ECB’s dovish taper which obviously dominated in terms of dictating EURUSD this week:

EURUSD

But if you look at the euro versus the yen, you can see the trouble showing up on Friday:

EURJPY

You can see a similar dynamic showing up in bunds around the time this hit:

  • CATALAN PARLIAMENT VOTES TO IMPLEMENT INDEPENDENT STATE

GermanyYield

Oh, and the Nikkei crossed 22,000 on Friday to hit a fresh two-thousand-year high:

Nikkei

This was the seventh straight weekly gain for the index:

NikkeiW

One last thing:

TrumpObama

Trump

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3 thoughts on “Back To The Future.

  1. Let’s invert the curve and end this fantasy before it is too late. And the Prime sign ups have an element of shenanigans attached if you think about it.

  2. One last thing. That “last thing” is deceiving because the chart’s top spike (the so-called trump bump) was during the period AFTER trump’s election and before his inauguration. Although neither obama nor trump really caused this spike, other than the “hope” that Trump would be pro-business and pro-growth.

    Further, the chart is misleading in that it could be (mis)interpreted as the US falling off the cliff, and while the dollar surely fell (thus collapsing the curve), it’s really more of a reflection of strength elsewhere, particularly EM. Which is why I pounded the table since my first day here earlier this year to sell US and buy abroad.

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