Wall Street Goes Planet Love-tron!
“Lovetron was a planet that I even thought about in high school, and everybody's say, “Man, you crazy.” It was just a planet in my own little mind that I could escape to. And it was a drug-free planet, you know. It was just, ‘you get your girl and you go off and y’all just chill out somewhere.’ And it was Lovetron. And it was a lot of fun for me. I started to talk about it in Philadelphia, you know, and I thought people would think I was crazy, but people said, “I like that!” Darrell Dawkins
As a young boy growing up, I loved watching basketball (still do, just not as much). In the early seventies, the best teams were the Los Angeles Lakers, Boston Celtics, and Philadelphia 76r’s. Games were telecast late at night, not at prime time. The Philadelphia team drafted the first player out of high school, a 6-11 center who specialized in naming his dunks, as well as someone with an interesting personality. He called one of his dunks, ‘Chocolate Thunder.’ He quite accurately once noted he would rather play for the Afghanistan All-stars than for the team he played for at the time, the Utah Jazz. It didn’t win him any points from those fans at the time. So, Darrell was a different kind of dude, but actually quite observant. Even more unique, he believed he lived on his own planet, as you see from the leading quote, one called ‘Lovetron.’ Anyway, why do I bring up Mr. Dawkins and his imaginary abode, you might ask? It is because in many ways, the brilliant guys and girls on Wall Street also live on their own planet.
It is quite understandable as to why they might occupy their own mental domain. You see, when looking around the globe, there are plenty of places where you might question the wisdom of placing your hard earned money there, or anywhere else. For example, when the leading parties occupying the legislature in Italy could not agree on forming a ruling government, bond yields broke 3% there and our market participants decided the Euro currency demise was imminent, so they sold our equities hard. The next day, stocks recovered. In the middle of the week, when our administration announced that they were placing tariffs on steel and aluminum from the EU, Canada, and Mexico, again, visions of an impending trade war danced in the heads of investors and equities sold off. With a trucking strike causing countrywide and political issues in Brazil, so much so that the Petrobras CEO resigned (largest oil company in South America and home of the largest proven oil reserves in the world), Brazil became the latest reason to consider moving to another planet. In conjunction with the fact that a hard line socialist is leading the race in Mexico to become it’s next El-Presidente, you can see why South America doesn’t seem like a place where your money will be treated like a refreshing margarita (especially with Senor Trumpe talking about how Mexico will pay for the wall, and like it) any time soon. When the May jobs number came in at a strong 223K (versus estimates of 188k), again equities recovered their losses. All in all, when the week was finally over, we pretty much ended in the same place and the market makers on Wall Street got the volatility they just adore so (hmm, I wonder why that is, ka ching).
Elsewhere during the week, HP met estimates while Salesforce crushed the numbers, as has been the case for quite some time. Box earned the penalty box as did Michael Kors, while Phillip Van Huesen posted a strong figure. Costco just nudged across the earnings line but margins did not impress, while Sears reported another miserable loss as its market value slipped to a slim 300 million. If ever there was the poster child for why you cannot cut your way to success, Eddie Lampert’s disaster would be it. Naturally, Eddie owns the debt and arranged to cherry pick the best real estate too, so don’t feel for easy E. Just so you know we admire clear thinking and vision, you might check out this interview with JP Morgan CEO Jamie Dimon, as it shows that at least one member of Wall Street is quite definitively living on our planet.
Yale Bock, Y H & C Investments, its clients, and the family of Yale Bock have positions in the securities mentioned in the blog, Investing in securities involves risk and the potential loss of ones principal. Past performance is no guarantee of future results. All investment decisions should be considered with respect to ones risk tolerance, return objectives, liquidity needs, tax considerations, and one's overall financial situation. The fact that Yale Bock has earned the right to use the Chartered Financial Analyst in no way means or guarantee performance better than market indexes.