Markets Closed Soft, Just Like Yellen

Today was a very polarizing day for stocks. There were two camps, with clear divisions. There were the have’s and have nots, in the new ‘Fed hiking this June’ world. The have’s were the banks, semis and healthcare names, while the have nots were gold, oil, copper, steel and retail.

Naturally, nothing this neat and organized ends up lasting. But the rationale behind these moves is that the banks profit from wider spreads, semis have great balance sheets, and healthcare doesn’t give a shit if rates are 0% or 40%. Costs are still going higher.

On the other end of the spectrum, anything commodity based got taken down because the dollar was strong and borrowing costs went up, which is especially harmful to industries with lots of debt. Speaking of which, retail is levered up with debt too, which is why it fell hard today. Both copper and steel are red herrings for the overall growth picture in China. A stronger dollar will cause dislocations in China’s FX chicanery, which is what occurred in early 2016. Remember? Ergo, this scenario bodes poorly for Chinese growth.

But the market wasn’t being entirely true to this mantra, with the Dow off by just 4 and the Nasdaq up 23. The market, with an infantile demeanor, wanted to have its cake and eat it too. Well, I’ve got news for you: this hogwash, abstract, that was passed on as intelligent market positioning today will not last.