I’m going to take a different tack today and examine the reasons why the stock market will just keep marching higher. The old “here’s why the market is going to fall right about now” doesn’t seem to be holding much water lately.
Before doing so, I must point out that the world right now is a contrarian’s dream (notwithstanding the fact that the market simply refuses to go lower. Ever.) Look no farther than this week’s Barron’s, which states that the market won’t crash (and I’m not making this up) for another thirty or forty years.
About a week ago, I wanted to watch something (out of the corner of my eye, as I often do during my trading day) that wasn’t Bob Ross or one of the movies I’ve seen a thousand times already. I fired up Netflix, and I decided to watch The Smartest Guys in the Room, the Enron story, whose trailer is here:
I was amused yesterday evening to read about the implosion at Theranos, which is located right here in my beloved Palo Alto. Elizabeth Holmes has been the darling of the business press for years, what with her flowing blonde hair, big blue eyes, and slender neck peeking out of the Steve Jobsian black top. Like Holden Caulfield, I have no fondness for “phonies”, and she seemed like one to me.
The thing is, the phenomenon of attractive women leading high-tech companies is a relatively recent one. On the surface, we as a society will pat each other on the back about how progressive we are, now that we have unvarnished gender equality, even at the highest echelons of corporate power. But let me just spoil your little party and tell you something. The reason men gawk at photos like this……….
It has been ten weeks since the market bottomed on February 11th. To me, it feels like ten years. It’s been a grueling, awful grind, but it didn’t get really beyond-belief miserable until March 17th, when Yellen went uber-dovish and patterns and trendlines started getting smashed like turkeys being thrown from helicopters.
As I sit here now, the last decent down day we had was back on April 7th, and otherwise the market is just grinding higher and higher, in many cases making highs never seen before in human history. I really thought we were done with all this; that, as I put it, “the wind was at our backs.” Well, the central banks learned their lesson in 2008, and they’re not just going to roll over and let market forces take control. No way, no how.
It’s a good thing I didn’t look at my iPad in the middle of the night, because I would have flipped out. When I went to bed, the ES was down 16 points. At one point during the night session, crude oil and the ES has almost entirely erased their post-Doha losses.
I couldn’t believe the action overnight. When I first saw it, I had to assume that the Doha participants had sent out a press release saying it was all a big misunderstanding, and they, in fact, had a signed deal. But…………no. There was no reason (except, probably, for central bank frantic buying of every asset in sight) for the bounce. Just……………..bizarre.
As you can see, oil almost completely healed its wounds from Qatar.
When I was a boy growing up in Louisiana, our youth group at church had us do an enlightening exercise: we all fasted for a day.
Now, not eating anything for 24 hours isn’t a huge deal. No one is going to die from hunger. But for suburban kids accustomed to eating three meals a day, plus snacks, it’s a big change, and having access to only water quickly gave us a small sliver of empathy about what it would be like to actually not have a choice about being hungry.
When we met at the church the following night, we had all been fasting 24 hours. At that point, the minister picked about six kids at random, had them walk up to the stage, and he gave each of them a McDonald’s bag with a meal inside of it. They joyfully ate their meal, while all the rest of us watched on with true envy. It was the first time I knew what it was like to be jealous of someone who had something to eat when I was hungry. That is a memory that has stuck with me my entire life.
I will now tell you another story from the past to lead in to my general point.
I’ve been online, in one way or another, since about 1982 when I got my first 300 baud Lynx modem. During the many years since, I have acquired what I think is a pretty strong sense as to the rhythm, timbre, and pulse of a given online community. In many ways I’m more comfortable with an online group than with a live group of people.
If I chose to do so, I could spend a lot more time in Slope’s own comments section. I could make a lot of comments on my own, try to guide the conversation, gently scold people whose behavior seemed to be getting a bit out of line, and so forth. I do not spend much time in comments, however, for many reasons. Broadly stated, I’m really busy, and let’s face it, with Slope in its 12th year, I would hope that the community could, by and large, manage itself.