Joke’s On You

Don’t say you weren’t handed a dip to buy. Or a falling knife to catch.

Market participants had a chance to buy tech shares considerably lower than they were the day previous after what the media delighted in calling a “plunge.” We’ll know in hindsight if bargain hunting at 23X (the S&P’s forward multiple coming into the week) was a good idea. One man’s dip is another man’s severed index finger.

Believe it or not, some of the metrics illustrated in the figure (below) are actually down from the previous week. For example, the S&P is “only” 99th%ile expensive versus 100th%ile last week.

For what it’s worth, the 10-year percentile rankings are 86th, 99th and 99th for 10-year US Treasurys, US investment grade credit and US junk bonds, respectively.

If you don’t like stocks or bonds or credit, you could always buy gold. If you’re unfamiliar, it’s like Bitcoin, only real.

Sam Zell is thinking about buying some. But only for lack of better options. “It feels very funny because I’ve spent my career talking about why would you want to own gold?,” Zell told Bloomberg. “It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?”

Corn, maybe. You can hold on to corn. And, unlike gold, you can eat it later. It’s going for $7 a bushel for the first time in eight years. That’s pretty good — depending on your definition of good.

Or, Zell could hold on (for dear life) to Ether. It’s like Bitcoin, only cheaper. But maybe not for long (figure above).

I’m joking. Mostly. But the above gives you a sense of where we are now. Stocks are in nosebleed territory. Sure, they could “grow into” their multiples assuming earnings bounce back and, indeed, the pace of corporate earnings beats this reporting season is close to a record. But there’s palpable concern that some corners of the equity market desperately need to de-rate — that while it’s impossible to say, ahead of time, what’s “sustainable” and what isn’t, trees don’t grow to the sky. And so on. You can choose your own tired, old adage from that market-themed book of “timeless” one-liners you bought off the impulse rack in the checkout line at Barnes & Noble back when real people went to real stores.

While pundits are busy trying to call the top in equities, commodities and crypto are trying to tell us something. With commodities, the message is clear enough. With crypto, less so. Dogecoin (which surged 50% and crashed Robinhood again) is a reminder that we shouldn’t take ourselves too seriously — or else the joke will be on us. “It’s pretty amazing that something that started out as a joke has become so popular,” Matt Maley, chief market strategist for Miller Tabak + Co., said, in remarks to Bloomberg.

One person who isn’t joking is Joe Biden, although his folksy cadence certainly came across as funny Tuesday, despite the deadly serious nature of the conversation.

While declaring his intention to get at least one shot into the arms of 70% of Americans by July 4, Biden told the nation to “walk into your local pharmacy without an appointment.” “Every adult is eligible,” he added.

He’s right, of course. And he does have a plan. But irrespective of federal guidelines and assistance, it won’t always be as easy as striding into the pharmacy, walking to the back and demanding someone shove a needle into your shoulder. (“No, I don’t need an appointment. Joe sent me.”)

Biden’s new vaccination target came a day after The New York Times suggested the consensus among experts is now that herd immunity won’t be achieved in the US. Possibly ever.

By the closing bell, stocks trimmed losses. Bonds were choppy. “The early-session bid in Treasurys was retraced following Yellen’s comments on the risks of an overheating economy, but even following the intraday swing in yields, 10s held steadily within striking distance of 1.60% after reaching as low as 1.555%,” BMO’s US rates team wrote, in an afternoon note. “We’d be remiss not to mention the weakness in domestic equities, although in the current environment a selloff to ‘extremes’ not seen since April 22 doesn’t come close to moving the proverbial macro needle,” they added.