Earnings season is apparently going gangbusters — even if we’re barely through and there’s a lack of love for big banks.
Netflix NFLX, -0.46% shot to a record and lifted all boats yesterday, with the major indexes rising to the best level in a month. The low is in, says this VIX chart. The worst is over, says this other one.
Let the grumbling begin. “The market traded today as if only the 4 FANG companies matter. It is as if Netflix’s earnings erased any privacy concerns for Facebook and Google and the Presidential criticism Amazon is facing,” grouses JonesTrading’s Michael O’Rourke.
On that note:
Does O’Rourke have a point? Maybe, judging by our call of the day from the often bearish fund manager Doug Kass, who offers up five reasons why it’s time to “sell all your stocks and run away.”
Kass says he’s used the two-day big run-up for stocks to beef up his short position on the SPDR S&P 500 ETF SPY, +0.07% — already a large one. His first reason is narrow leadership, which is the fact that only a handful of stocks are pushing the overall market higher.
“We’re back to a market that’s basically led by the FAANGs — Facebook FB, -1.36% Amazon AMZN, +1.60% , Apple AAPL, -0.22% Netflix NFLX, -0.46% and Google/Alphabet GOOGL, -0.37% ,” he says in an article for The Street, echoing O’Rourke’s thoughts.
What’s the rest of his rationale? He mentions rising short-term rates, with the 2-year U.S. note yield TMUBMUSD02Y, +0.01% about 1.3 basis points higher at 2.39%. Another is investor complacency after the market rallied off its recent lows.
“Anecdotally, there is little or no concern of a large drawdown in stock prices – there is a consensus mantra that every dip is to bought,” said Kass in an email.
He also thinks gold’s rise — up 3% so far this year — is “solid,” and he’s long the SPDR Gold Shares ETF GLD, +0.08% .
“Also, oil stocks have been leading non FANG sector in the stock market over the last few days/weeks — in response to the rise in crude oil prices. Historically, a market being led by oil stocks is close to a top and can be characterized as a mature bull market,” adds Kass in an email.
His last reason to sell stocks is that banks’ trading has been lackluster. That’s even though he’s still a buyer of Bank of America BAC, -1.70% , Citi C, -1.09% , JP Morgan JPM, -0.81% and Wells Fargo WFC, -0.36% .
Kass says he’s been switching from small bullish to big bearish positions on U.S. stocks this year, given the rampant volatility. And that’s one thing we likely haven’t seen the last of.
Key market gauges
The Dow DJIA, -0.16% , S&P 500 SPX, +0.08% and Nasdaq COMP, +0.19% are all flat to slightly lower this morning.
European markets SXXP, +0.29% are up. Asia ADOW, +0.64% saw some strong gains. Gold GCM8, -0.18% is up, while the dollar DXY, +0.10% is holding steady. Crude CLM8, +0.32% is also trekking higher on optimism over U.S. supply data due later.
The buzz
Morgan Stanley MS, +0.04% is shooting up after posting results. U.S. Bancorp USB, -2.00% and Abbott Labs ABT, -0.47% also reported early, with American Express AXP, +1.37% and Alcoa AA, +4.06% due after the bell.
IBM IBM, -7.53% is taking a hit after an earnings beat that didn’t quite impress everyone on Wall Street. CSX CSX, +7.85% is up after the railroad company beat on earnings and sales.
VMware VMW, +4.29% is up after a report activist investor Carl Ichan has taken a “medium-size” stake the virtualization-software group.
Southwest LUV, +2.86% has begun to probe an engine blowout that resulted in one fatality. Pilot Tammie Jo Shults, a former ace Navy pilot, is being credited for helping avert a bigger disaster.
One of the Parkland high school shooting survivors, David Hogg, is urging investors to dump BlackRock BLK, -0.69% and Vanguard over their holdings in gun manufacturers. That came out a series of tweets from Hogg late Tuesday.
Read: Starbucks will lose about $12 million over racial-bias training day
On the data front, the only highlight today is the Fed’s Beige book. New York Fed President William Dudley and Fed Vice Chair for Bank Supervision Randal Quarles will both step up to speak.
The chart
Inverted head and shoulders or maybe the giant “shrug” chart? Take a look at the past 24 hours for bitcoin BTCUSD, -0.07% , which shot up again this morning after a similar rapid move on Tuesday. More whale action? Maybe.
The quote
“I’ve been gone for a year. I’m like a breakup he can’t get over … I’m out there living my best life, he wakes up in the morning and tweets at me.” — That was former FBI Director James Comey, talking to The Late Show’s Stephen Colbert about what it’s like to be the object of Trump tweets.
In a lengthy interview , Comey also said that even if Deputy AG Rod Rosenstein and Special Counsel Robert Mueller were ousted, “everyone in the Justice Department” would have to be fired too, to stop the Russia election-tampering investigation.
