Daily Content
Fleck's Thoughts
Appearances
IndexClose% Change
Dow26583.08-1.05
Dow Transports10433.63-2.51
Dow Utilities816.610.95
S&P 5002953.56-0.9
Nasdaq8111.12-0.79
Nasdaq 1007801.15-0.61
Russel 20001553.59-1.33
VIX Index17.9911.6
10 Year Gov't Yield1.89-6.43
Spot Gold1443.152.07
Spot Silver16.360.59
GDX-Gold Miners27.855.09
Crude Oil54.51-6.95
Dollar Index98.31-0.21
Euro Spot1.110.14
Japanese 10 Year-0.16-2.61
Shanghai SE2908.77-0.81
Long Bond 20-year157.881.47

Trumped!

08-01-2019

The market exploded higher, led by the Nasdaq, which gained about 1.5% in the first couple of hours of trading. Virtually everything was green except, oddly enough, a couple of companies that reported disappointing news in tech land, namely, Qualcomm and Littlefuse (LFUS) (while other disappointments were higher, as you will see below).

What's the Lowdown? Fred Hickey pointed out to me that business is so bad at Littlefuse it is cutting operations expenses and shutting a bunch of factories. (For those who don't follow that company, it makes electronic sensors and fuses that go into all sorts of different products.) Even that company's stark honesty didn't matter, however, as its share price rose (after an early dip) despite the news.

Both Western Digital and Lam Research reported last night, each calling the bottom, which now makes three and four quarters in a row, respectively, that they've done that. Clearly, they've been wrong, but whether that is because they didn't "get it" or because they didn't feel like telling the truth doesn't matter because there is no penalty for being overly optimistic, be it intentional or accidental. The only thing that matters is the storyline, as I have noted many times, which ultimately means the dislocation will be bigger and badder than it would have been had folks behaved sanely.

Where's the Beef? However, with the central banks manipulating interest rates to zero and trying to use markets to drive their economies, while convincing investors that nothing bad can happen, we wind up with the insane environment we have where a ridiculous veggie burger company can have a valuation of almost $12 billion, or 50 to 60 times sales, then do an offering at $160 versus the $220 price it had traded at about three days prior. The point being, in many cases stock prices don't mean anything, as illustrated by where they had to price the deal to get it done. None of that changes the path we are on, of course, it just helps illuminate the risks.

In the afternoon, the party was in full swing until Trump tweeted that an additional 10% tariff will be placed on $300 billion of Chinesse goods on Sept. 1. That news clubbed the tape and with an hour to go, when I had to leave, the market was about 0.5% lower.

Away from stocks, green paper was initially quite firm, but then gave up most of its gains. I would imagine that more dollar strength would lead to Trump blowing a gasket and, I expect, trying to do something about it. I don't know what level for the dollar would precipitate action on his part, even if it's just verbiage, nor is it possible to know because he is so unpredictable. (The rally turned into a decline on the tariff news.)

Turning to fixed income, it was aggressively higher, particularly at the long end, while silver and gold were initially 2% and 1% lower, respectively, but by midday they were back into the green and when the Trump tweet hit, they ratcheted higher, up 0.5% and 1.5% when I left. The miners bounced aggressively after yesterday's nasty selloff, and oil did something for a change, as it was splattered for 8%!

Can You Dig It? In company-specific news, Pan American announced that the deep skarn under La Colorado continues to see good drill results and it looks as though the zone is growing, so that is good news. Alamos Gold was successful at beat-the-number and everything looked fine there. Even New Gold, which had both good and bad parts of its report, managed to rally (I mention that mostly as a measure of sentiment). Also, last night Wesdome announced some very impressive drill results, so thus far there has been pretty good news in the sector.

Positions in stocks mentioned: long AGI, long PAAS, long PAAS calls, long WDOFF.