- why not all areas of the market are abject right now; and
- why thinking in the market is being dominated by an oversimplistic dichotomy.
A Day Does Make a Difference Posted at 2:43 p.m. EDT on Friday, Feb. 22 I don't blame you for not wanting to trust this market. Aren't you being given a golden chance to bow out of it, literally 26 hours after Dennis Gartman told you he's gone all cash when he was on CNBC yesterday? Doesn't it make sense to sell everything because of higher gasoline prices, sequestration, no more payroll tax holiday, slowing China, sinking Europe and weakening housing (according to Toll Brothers ( TOL))? Or at least according to news reports about Toll Brothers? How about copper and gold going down endlessly? Doesn't that signal the end of the world? Armageddon's beckoning, Mayan-like and the averages scoff at it. What's going on here? How can this market not be clobbered. Some of it happens to be the anomaly of Hewlett-Packard ( HPQ) fighting back, confounding the critics. Others parts of it have to do with the age-old issue of shorts being put on that weren't immediately requited. Oh, and there's that nagging problem of companies continuing to declare higher dividends and bigger buybacks exactly when people are betting against them, like Wal-Mart Stores ( WMT), which we found out from an errant email that February's a disaster. Now no one seems to care except the shorts, who are actively covering. No, we are not out of the woods. We are simply recognizing that there are parts of the woods that aren't as scary as other parts. I still want to lean toward the sell side because of the drumbeat of sequestration woes and because gasoline and tax-holiday worries have become so standard that I tire of having to be whacked by them. Still, the market feels a heck of a lot better than it did 26 hours ago when we got the Gartman bombing.
Maybe I Shoulda Been a Glib Macro Guy Posted at 7:08 a.m. EDT on Friday, Feb. 22 One thing is for certain, if you asked the hedge funds what is the one reason why this market goes higher, they are going to say "the Fed." And therein lies the real problem of this market. You either hate the Fed and think its bond-buying program is illegitimate, and you are therefore betting against stocks all the time. Or you fear that the data will one day be so good that the Fed will stop its program. Just like from the beginning of the era of the billion-dollar hedge fund, there seems to be no middle ground. There seem to be so few people who say, "You know what? Corporations have a lot of money. Dividend boosts are rife. The merger games are on. The consumer's got a great balance sheet. The economy will be able to sustain itself. The stocks deserve to sell higher." No. It's either, "The Fed can't do this forever and it is all a big phony and it will never work and we are in a permanently crippled economy hobbled even further by Washington's strife and a very liberal president," or it's, "The Fed can't do this forever and it will stop well before it says it will and we will all be left sitting on the Titanic." As a stock picker I feel endless pain from this one. How many times have I been faked out by this Fed/bad nonsense? How many times can you sell Heinz ( HNZ) because of it, or NYSE Euronext ( NYX) or Berry Petroleum ( BRY) or Dell ( DELL) or Google ( GOOG) or Union Pacific ( UP). The list goes on. How many times can you hide in cash because of it? I was furious yesterday every time the glib notion of "sell everything" was spoken. That's not a glib thing to say on air, believe me, because people actually do it. The whole totally Fed-centric thing steams me. Sometimes I wish I could change my stripes and be a big macro thinker, sit back and castigate the Fed and say "the market's a big joke."