Traders Hide Out in Defensive Stocks, as the Infrastructure Trade Gets Ravaged — and the Dot Com Era

Aluminum, steel and a sundry of construction names sold off with vigor this afternoon, after rumors spread by AP that Trump’s stimulus bill would be delayed until next year, in order to literally give democrats election wins this fall (anyone believe that yarn?). This is all part of the process of walking back a rally. Stocks never climb, uninterrupted. They’re instead stammered by periods of consolidation, swift pullbacks, and hair raising routs — before making it to their inevitable destination: higher.

Today’s collapse in $X, $CLF, $KALU and others is par for the course, an unfortunate tonic for an otherwise sick and twisted, even ribaldly hedonistic, spoiled rotten investor public.

On the upside were utilities and REITs, places of traditional safety and security.

When I first started the business in 1998, I was greeted with unending sell offs, panics, margin call liquidations, and utter misery, before getting to enjoy the grandeur of the dot com bubble. History doesn’t record the true nature of the dot com craze, a period in American history that will forever be remembered as the ‘Father of Stupidity’, bidding up worthless companies into the tens of billions. But there were disastrous collapses along the way. It wasn’t unusual to see your stock down 35% in a week, based off ‘profit taking’ or some fucked up rumor posted in the Yahoo message boards.

Getting off topic here for a second, one of the craziest trades we used to make was gaming CNBC Joe Kernan’s late afternoon internet stock segment, where he’d mention some dot com breaking out and why. For hours in advance of that teevee report, we’d be on the Bloomberg looking at the biggest winners for the day — buying up option contracts and taking heavily margined equity positions ahead of his report. I kid you not, after his report, the stocks mentioned would fucking explode to the upside, often doubling in a matter of minutes. Back then, merely changing your name from Fucktard Inc. to Fucktard.com meant your stock price would scream higher — because you were entering the wondrous world of the internet.

In many ways, this market reminds me of then. For the past 3 years, I’ve disliked the market. It felt fake, rigged, and definitely unsafe. At least now, like Trump or not, we’re talking about growth and not transcribing the speeches of the Fed heads, hoping to find something remotely dovish to give purpose to our bullish ways.