RATES PLUNGE; STOCKS SOAR!

Yesterday I said this:

HOWEVER, all of my machinations and opinions are somewhat gaunt in the face of a market which refuses to drop — are they not? If things or people were truly in a bad state — wouldn’t markets reflect as much? I think it’s important, especially when the news doesn’t match the action, to take a step back and trade small — to wait and see — rather than jump to conclusions. Next thing you know, bond yields tank 20bps tomorrow on some Fed speech and the NASDAQ flies +200 and everyone cries foul — how it’s all rigged and it’s a scam. The only scam is refusing to accept reality and living inside a fantasyland of your own choosing.

Today the NASDAQ is +145 and the US 10yr is down 9bps. All of the fashionable stocks are rallying and people are clamoring to get in. After all, Stocklabs is oversold and inflation is under control and US profits, in spite of what the people at $FL say, are pretty pretty good (Larry David voice).

Do you see how one day can change a perspective? It felt so right and just to be short yesterday — but today an anathema. Hence markets and sentiment — here one day and gone the next. This is nothing more than a short term game of sentiment, based upon longer term fundamentals.

After the close we have earnings out of $NVDA. I own it for my children in their trust accounts and have been tempted to sell — but why bother. I’m pretty sure they’ll mention AI 50 times and people can’t get enough. The stock is ABSURDLY overvalued — but since when has that mattered in the midst of a bubble?

BOTTOM LINE: With treasury yields plunging again, stocks have indeud become attractive. Whilst the earnings pitfalls of PTON and FL are troubling — it’s all part of an overall pattern that describes the US consumer as weak and feeble. In the past we used to place great emphasis on the consumer — but these days the economy operates on smoke and shadows — producing gigantic companies with massive troves of cash which seems to come out from nowhere.