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Monday Market Movement – Dow 34,000, S&P 4,200, Nasdaq 13,900 – Again

Girl Revenge GIF - Girl Revenge Chair GIFsHow do we have so many strong openings and end up getting nowhere?

The market has been churning at these highs for quite some time but we're not making any progress.  This is with "great" earnings and "great" GDP an accommodating Fed and endless stimulus – you'd better be ready to grab a chair when this music stops – it's going to get ugly!  

Not much for us to do but keep going through the motions.  Until the music does end, the game continues and we've been buying a lot of stocks for our Member Portfolios recently – despite my overall misgivings about the market.  

Warren Buffett pointed out something interesting this weeken in Berkshire Hathatway's (BRK.A) annual report – he pointed out that NOT ONE of the 20 largerst companies in the S&P 500 in 1989 are on that list 30 years later – not one of them.  The biggest company in the World 30 years ago was the Industrial Bank of Japan and 6 of the top 10 companies in the World (13 of the top 20) were Japanese companies and all the "smart" money was that Japan was the place top put money in 1989.  I even interviewed for a job with Mitsubishi myself! 



And talk about inflation!  The top five companies on our list today are EACH worth more than the entire top 20 were COMBINED in 1989.  Of course we use the term "worth" loosely but these valuations have cleary run amock.  In 1989, the Global GDP was $40Tn and now it's $80Tn yet the top 20 companies have gone up in price from $1Tn to about $16Tn – the cost of owning the companies that produce the Global GDP is now 16x higher than it was 30 years ago – THAT'S INFLATION!

Well, it's something, anyway.  Just like the cable company and the phone company get more and more efficient at extracting money from your wallet every year – the entire stock market does that through the Investment Banks – making sure there are more fees for them and less stock for your money for you.  We accept these ridiculous prices because the consumers of stocks have no advocate.  The SEC looks out for dishonest trading but they don't make a peep when a stock is trading at 500 times earnings, do they?  

The P/E Ratio of the S&P 500 in 1989 was 11.82, as of April 30th of this year, it's at 42.57 – you are getting about 1/4 of the earnings power for your money these days.  As you can see from the Case-Shiller P/E Ratio, which takes inflation into account, we were already at 37.56 in December and the PRICE of stocks went up 10% this year – but the earnings remained the same.  What if the price of homes or cars or food were climbing like that?  You would know that, at some point, we'd hit a tipping point because it simply can't go on forever.  At a certain point, people have to make choices about what to do with their money.

Why then, do we labor under the delusion that the markets are exempt from those decisions?  The Fed and other Central Banksters have been printing money like it's going out of style (and maybe it is) for the last few years – even before Covid and the ultra-rich are converting their potentially worthless fiat currency into Stocks, Commodities and Cryptocurrencies – anything but fiat currencies.  Those then become an extraction tax on the bottom 99%, who have to buy Commodities to live and that money then trickles up to the Top 1% – who wisely invested in the commodities to protect themselves from the inflation they caused.  Isn't Economics just great?!?

"We’re seeing very substantial inflation," Buffett said in his nearly 6 hour long address to investors. But it's what he said that was especially ominous:  “It’s very interesting. We’re raising prices. People are raising prices to us and it’s being accepted.”  Why does this matter? Because the ability to pass on price increases and have them stick, means the surge in prices will not be transitory, no matter how many times the Biden admin, the Fed or the Treasury lie and vow the opposite.

As you can see from the chart, the Government is currently shouldering the burden of inflation with Transfer Payments now making up 35% (more than 1/3!) of all income in the US.  Buffett was questioned about inflation during Berkshire's annual meeting:

Question:  "From raw material purchases by Berkshire subsidiaries, are you seeing signs of inflation beginning to increase?"

WARREN BUFFETT: Let me answer that, then Greg can get more into that. We're seeing very substantial inflation – it's very interesting. I mean, we're raising prices. People are raising prices to us. And it's being accepted. Take home-building. I mean, you know, the cost of-- we've got nine home builders in addition to our manufactured housing operation, which is the largest in the country.

So we really do a lot of housing. The costs are just up, up, up. Steel costs, you know, just every day, they're going up. And there hasn't yet been because the wage-- the wage stuff follows. I mean, the-- the UAW writes a three-year contract, we got a three-year contract.

But if you're buying steel at General Motors or someplace, you're paying more every day. So it's an economy, really-- it's red hot. I mean, and we weren't expecting it. I mean, all our companies, when they thought when they were allowed to go back to work at, well, various operations, we closed the furniture stores, I mentioned.

You know, they were closed for six weeks or so on average. And they didn't know what was going to happen when they opened. And they can't stop people from buying things. And we can't deliver them. They say, well, that's OK because nobody else can deliver them either, and we'll wait for three months or something of the sort.

The backlog grows, and then we thought it would end when the $600-- the payments ended, and I think around August of last year, it just kept going. And it keeps going and it keeps going and it keeps going. And I get the figures. Every week, we go over, day by day, what happened at the three different stores in Chicago and Kansas City and Dallas.

And it just won't stop. People have money in their pocket, and they pay the higher prices. And when corporate prices go up in a month or two-- and that was the price increase for April 1-- our costs are going up, supply chain's all screwed up for all kinds of people. But it's a buy-- it's almost a buying frenzy, except certain areas, you can't buy at.

You know, you really can't buy international air travel. And so the money is being diverted from a little-- some piece of the economy into the rest. And everybody's got more cash in their pocket than-- except for, meanwhile, it's a terrible situation for a percentage of the people.

No more F*cks to give - 9GAGI haven't worn a suit for a year, practically. And that means that the dry cleaners just went out of business. I mean, nobody's bringing in suits to get dry cleaned, and nobody's bringing in white shirts the place where my wife goes.

The small business person, if you didn't have takeout and delivery services for restaurants, you got killed. On the other hand, if you've got takeout facilities, then, same-store sales at Dairy Queen are up a whole lot, and they adapted. But it is not a price-sensitive economy right now in the least. And I don't know exactly how-- what shows up in different price indices. But there's more inflation going on than-- quite a bit more inflation going on than people would have anticipated just six months ago or thereabouts.

Like the U.S., China has tens of millions of small and medium-size private businesses, including restaurants and shops, which form the backbone of everyday economic activity. They account for as much as 80% of urban jobs and at least half of China’s tax revenue.  While businesses have benefited from China’s strong rebound this year, many are still trying to overcome weak consumer demand, rising operating costs and tight credit from banks that don’t want to sink more money into wounded companies.

Close to 19% of China’s small businesses shut down last year, compared with 6.7% in 2019.   While the insolvency rate is expected to be better this year, many companies still face serious cash-flow constraints.  A survey of more than 10,000 small businesses released in March by Peking University and Ant Group Co. found that 15% have sufficient cash flow to sustain operations for six months or longer, down from 19% in the third quarter of 2020.

Some economists argue that China’s rebound might have peaked, with an unbalanced recovery continuing to create challenges. Although retail sales soared in March, consumer spending overall has been weaker than some economists expected. The latest survey of factory-owner sentiment suggests that economic activity might wane through the rest of the year, with Western consumers expected to shift more spending to services, such as restaurants, instead of imported goods.

We still have a lot of major global issues in the economy but it's hard to get a real picture of what's happening with all this stimulus money being tossed about.  The general sentiment of Governments and Bankers is that they wouldn't dare cut it off so far – they are way too scared of what they'll be seeing when the music does finally stop…

9 Fed speakers this week and lots of Economic Data and lots of earnings to look forward to.  And the band plays on:



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  1. Good Morning.

  2. Good Morning.

  3. Any thoughts about the results from PETS?  Divided increase but stock is down even more today?

  4. Pets they show zero yield on TOS likes like they cut their div.

  5. Gold having a great day. Will add to GDX calls if gold can break over $1800 in the coming days…. 

  6. Good morning!

    PETS/Jeff – They are a bit late with the dividend but it's 2 in the first half and if there's two in the 2nd half, I'm happy.  We came in at $29.23 in late Oct and sold the $22.50 puts for $5.90 – so that wasn't very brave and we never did sell calls as we keep expecting them to do better (and we missed our chance in late Jan to sell calls).  


    The Board of Directors declared an increased quarterly dividend from $0.28 to $0.30 per share on its common stock. The dividend will be payable on May 21, 2021, to shareholders of record at the close of business on May 14, 2021. The Company intends to continue to pay regular quarterly dividends;

    There's certainly nothing wrong with the earnings, up 4% from last year:

    They should make about $32M this year ($1.59/share) and $29 is $600M in market cap so fairly priced for the long-term and we're in it for the dividends, not to profit from the stock so I don't see any reason to do anything with these guys.  The 2023 $30 calls are $6, that would drop our basis to $10.60 – that's why we bought this stock – great premiums to sell and that's why we're not in a hurry.

    Gold/Rick – Good for GOLD again:

    We have them in the LTP but, as a new play, I'd go with:

    • Sell 10 GOLD 2023 $23 puts at $4.60 ($4,600)
    • Buy 20 GOLD 2023 $18 calls for $6 ($12,000)
    • Sell 20 GOLD 2023 $25 calls for $2.85 ($5,700) 

    That's net $1,700 on the $14,000 spread so $12,300 (723%) upside potential if GOLD is over $25 in 18 months.  Worst case is owning 1,000 shares at $24.70 – 10% higher than it is now.  

  7. I got my 2nd shot (Moderna) on Sat and I'm still out of it.  Bit of a sore throat too.

  8. Feel better soon Phil.

  9. Thanks.  Luckily it's a slow day.

    • Ford (F) says it will halt production at its German plants in Cologne and Saarlouis for several weeks due to a lack of semiconductors.
    • The two plants make about 2K vehicles a day combined during a normal production run.
    • "We will make up for the lost production as best as we can… We are working to improve the situation as soon as possible," updates the automaker in a statement.
    • A long list of automakers have seen production disrupted, including Jaguar Land Rover, Volvo and Mitsubishi Motors, General Motors and BMW.
    • AlixPartners estimates that the chip shortage could cost automakers $61B in lost sales in 2021.
    • Read through all of Seeking Alpha's extensive coverage of the global chip shortage.
    • Intel (NASDAQ:INTC) will invest $3.5B to expand its New Mexico manufacturing operations for the production of advanced semiconductor packaging technologies including the company's Foveros 3D packaging technology.
    • The investment will make Intel's Rio Rancho campus its domestic hub for advanced semiconductor manufacturing.
    • Planning activities will begin immediately and construction is expected to start later this year.
    • The multi-year investment is expected to create at least 700 high-tech jobs and 1,000 construction jobs.
    • “A key differentiator for our IDM 2.0 strategy is our unquestioned leadership in advanced packaging, which allows us to mix and match compute tiles to deliver the best products. We’re seeing tremendous interest in these capabilities from the industry, especially following the introduction of our new Intel Foundry Services. We’re proud to have invested in New Mexico for more than 40 years and we see our Rio Rancho campus continuing to play a critical role in Intel’s global manufacturing network in our new era of IDM 2.0," says Keyvan Esfarjani, Intel SVP and GM of Manufacturing and Operation.
    • Foveros allows Intel to build processors with compute tiles that are stacked vertically rather than side-by-side to offer stronger performance in a smaller footprint. Foveros also opens up the ability to mix and match tiles to improve cost and power efficiency to meet the performance needs of AI, 5G, and edge computing.
    • The New Mexico expansion was first mentioned during an episode of CBS' 60 Minutes that aired last night and Intel confirmed the investment today. During the episode, CEO Pat Gelsinger said Intel would shift its focus away from buybacks during its foundry push.
    • Related: Intel has also confirmed $600M investments in Israel and a $10B chip fab in the region.
    • A Brazilian oil labor union says it will launch an indefinite strike tomorrow to protest Petrobras' (PBR -0.8%) handling of COVID-19 outbreaks aboard offshore production platforms.
    • Petrobras so far has reported only minor disruptions in upstream activity because of COVID-19 infections, but the union, which is responsible for much of the production in Brazil's 750K bbl/day Campos basin, claims the company is not doing enough to protect workers.
    • Separately, Petrobras says it is adopting the U.S. Henry Hub benchmark as an index for its wholesale natural gas contracts, fulfilling a demand of distributors at a time of rising competition in the domestic gas market.
    • The company also will offer a broader range of contracts, including long-term, less flexible contracts under more favorable pricing terms, and distributors will have the option to maintain contracts indexed to Brent crude.
    • New Pertrobras CEO Joaquim Silva e Luna recently indicated he would preserve import parity for fuel prices and maintain the company's strategic focus on developing deepwater oil reserves.
    • Twitter (TWTR -1.6%) is paring heavier losses with a sudden uptick on news that Elliott Investment Management jumped in and bought the post-earnings dip.
    • Elliott boosted its stake in the social-media company by more than $200M, and is still buying, according to Bloomberg.
    • Twitter fell 15.2% on Friday after decent earnings disappointed investors and analysts.
    • It was down as much as 4.6% today before this rebound.
    • Elliott is telling analysts that the sell-off is overdone – and comparing the decline to one following an advertiser pullback during Black Lives Matter protests last year – and when Twitter banned the account of former President Donald Trump, according to the report.
    • Elliott hasn't reported the total size of its Twitter stake since February 2020, when it disclosed it had exposure equivalent to 30.1M shares (which would be valued around $1.6B today), according to the report. Elliott's deal for a board seat requires it to keep at least a 2% stake.
    • Hertz Global (OTCPK:HTZGQ) surged 15% on a report that it received a sweetened offer from rival bidder Knighthead Capital and Certares Management in a deal that may allow equity investors to recover $2.25 a share.
    • Hertz is evaluating the offer that values the rental car company at more than $6.2B in enterprise value to see if its more than the current accepted offer from a group backed by Centerbridge, according to a Bloomberg report, which cites people familiar.
    • The latest bid from Knighthead and Certares includes fully committed debt and equity financing, according to the report. Hertz had set a May 2 deadline for final bankruptcy bids.
    • Under the Knighthead plan, Hertz bondholders would be paid in full and shareholders receive the opportunity to own a bigger portion of the reorganized company.
    • Last month, Hertz chooses Centerbridge-backed plan to exit bankruptcy.
    • By the end of the month, Pfizer (NYSE:PFE) will begin shipping packages of its COVID-19 vaccine with fewer doses to states in an effort to reduce waste, Axios reports.
    • Currently, 1,170 doses come in packaging, but the company will start shipping packages with just 450 doses later this month.
    • About 4.5M doses per week will come in the smaller packaging.
    • The smaller packages can be made available at physician offices, houses of worship, or recreations centers.
    • The CDC reported that as of late March, more than 182K vaccine doses has gone to waste, with CVS and Walgreens responsible for 70% of the number.
    • Pfizer shares are up 2.5% to $39.62 in morning trading.
    • Cyclical stocks are still rallying, but weakness in semiconductor stocks has pushed the Info Tech (NYSEARCA:XLK) sector into the red.
    • The Dow (DJI) +0.9% is still posting solid gains, led by big price moves in UnitedHealth and Home Depot, which landed a $360 price target from Baird as reopening worries ease.
    • The S&P (SP500) +0.4% is also up, but the Nasdaq (COMP.IND) -0.3% is hampered by the chip weakness.
    • Along with XLK, the other megacap homes, Communications Services (NYSEARCA:XLC) and Consumer Discretionary (NYSEARCA:XLY), are also down, as is Real Estate (NYSEARCA:XLRE).
    • Energy (NYSEARCA:XLE) is still the runaway leader, followed by Materials (NYSEARCA:XLB). But Financials (NYSEARCA:XLF) have pared some gains as rates fell.
    • The 10-year Treasury yield is down 2 basis points to 1.61% after the April ISM manufacturing index posted a surprise decline.
    • Among active stocks, Gap is one of the best performers in the S&P. It's an inaugural stock in Wells Fargo's new Signature Picks portfolio.
    • Estee Lauder, also a Signature Pick, is the biggest decliner on soft guidance.
    • The stock market's recent "lackluster performance may be a sign that a lot of the favorable news may already be discounted in stock prices and a pause to refresh may be needed," Guggenheim's Mike Schwager writes in a note. "For example, first quarter earnings season has been exceptionally strong but the reaction to the news has been generally muted, with the average stock falling 0.3% on the day that followed the release of results."
    • "In addition, the market is about to enter into the seasonally weak period ('sell in May, and go away'), bullish sentiment (a contrarian indicator) is above its 10-year average after more than doubling from the lows reached last July, and the market has reached technically 'overbought' levels in recent days. While none of these conditions are likely to prove fatal for the bull market, they could set the stage for a period of near-term consolidation."
    • BofA's Sell Side Indicator is at the highest level since the Financial Crisis and is just half a percentage point away from a contrarian Sell signal.
    • Mazda (OTCPK:MZDAY) reports unit sales increased 184.4% Y/Y to 31,117 in April.
    • Car sales jumped 137.3% to 6,621 units while Truck sales expanded 200.6% to 24,496 units.
    • CPO sales expanded 187 % to 6,880 units for the month.
    • YTD Mazda U.S. sales +45.5% to 114,375 units.
    • Honda (HMC +1.0%reports U.S. total sales rose 171% Y/Y to 156.452 units in April vs. consensus of 145,766 units
    • Car sales +125.1% and trucks sales +207.5% for the month.
    • Sales in the Honda division +165.7% to 140,023 units: Cars +122.3% and Trucks +202.1%.
    • Acura sales +226.2% to 16,459 units: Cars +168.9% and Trucks +251.8%.
    • "As the entire auto industry continues to rebound from the challenge of a global pandemic, Honda and Acura are gaining both momentum and market share," said Dave Gardner, executive vice president of Automobile Sales for American Honda Motor Co., Inc. "We're excited to have significant all-new products on the way in the form of the 2022 Honda Civic and 2021 Acura TLX Type S, but it's the strength of our existing product lineup that is driving our record sales."
    • Toyota (TM +1.2%) reports sales expanded 182.6% Y/Y to 239,311 units in April vs. consensus of 227,321 units.
    • Toyota division sales surged 183.3% Y/Y to 212,283 units and Lexus division sales grew 176.7% to 27,028 units.
    • APV sales saw triple digit growth in April +526.3% to 56,467 units.
    • SUV sales +224%, Sienna +1117% and Pickup sales +49.8% for the month.
    • Truck sales up 170.3% Y/Y to 159,550 and car sales +210.3% to 79,761 units

    • Wells Fargo introduces its new Signature Picks portfolio this week, identifying 35 stocks.
    • The stocks have an average expected return to their price target of 15% and the portfolio is tilted towards momentum.
    • The criteria for inclusion are:
    1. Attractive risk/reward profile over the next 12 months.
    2. Rated Overweight and "high conviction" by Wells Fargo research analysts.
    3. Passing peer review by the Signature Picks committee.
    4. Six-month ADV of at least $5M.
    • "Our Signature Picks typically will be more risky and more aggressively positioned than our former QQP model portfolio, which concentrated on defense first and offense second," Wells Fargo Senior Equity Analyst Christopher P. Harvey writes in a note. "However, Signature Picks on occasion will take a more risk-averse stance based on internal metrics and fundamental stock outlooks."
    • The active stock weights (the stock's weight in the portfolio minus the stock's benchmark weight) are plus or minus 5% vs. the index weighting.
    • The most overweight stocks are: Norfolk Southern (NYSE:NSC), price target of $315, Johnson & Johnson (NYSE:JNJ), price target of $190, Ametek (NYSE:AME), price target of $160, Medtronic (NYSE:MDT), price target of $135 and Bank of America (NYSE:BAC), with a price target of $48.
    • Four megacaps also appear: Apple (NASDAQ:AAPL), price target of $160, Amazon (NASDAQ:AMZN), price target of $4,500, Facebook (NASDAQ:FB), price target of $415 and Alphabet (NASDAQ:GOOG) (NASDAQ:GOOGL), with a price target of $2,850.
    • The full portfolio:
    • Communications Services (NYSEARCA:XLC), portfolio weighting of 14.8%: Facebook, Alphabet, Cardlytics (NASDAQ:CDLX), Cable One (NYSE:CABO).
    • Consumer Discretionary (NYSEARCA:XLY), portfolio weighting of 12.8%: Amazon, Autozone (NYSE:AZO), Expedia (NASDAQ:EXPE), Gap (NYSE:GPS), Marriott (NASDAQ:MAR), Restaurant Brands (NYSE:QSR).
    • Consumer Staples (NYSEARCA:XLP), portfolio weighting of 5.2%: Estee Lauder (NYSE:EL), Sysco (NYSE:SYY).
    • Energy (NYSEARCA:XLE), portfolio weighting 2.6%: Devon Energy (NYSE:DVN).
    • Financials (NYSEARCA:XLF), portfolio weighting of 11.6%: Bank of America, Arch Capital (NASDAQ:ACGL), Signature Bank (NASDAQ:SBNY), T Rowe Price (NASDAQ:TROW).
    • Healthcare (NYSEARCA:XLV), portfolio weighting of 13.1%: J&J, Avantor (NYSE:AVTR), Medtronic (MDT), Zimmer Biomet (NYSE:ZBH).
    • Industrials (NYSEARCA:XLI), portfolio weighting of 8.2%: Ametek, Norfolk Southern, Uber (NYSE:UBER).
    • Information Technology (NYSEARCA:XLK), portfolio weighting of 23%: Apple, Cisco (NASDAQ:CSCO), Mastercard (NYSE:MA), NXP Semiconductor (NASDAQ:NXPI), Qorvo (NASDAQ:QRVO), Synopsis (NASDAQ:SNPS).
    • Materials (NYSEARCA:XLB), portfolio weighting of 3%: Dow (NYSE:DOW), Olin (NYSE:OLN).
    • Real Estate (NYSEARCA:XLRE), portfolio weighting of 2.5%: Stag Industrials (NYSE:STAG).
    • Utilities (NYSEARCA:XLU), portfolio weighting of 3.2%: CMS Energy (NYSE:CMS), Southern (NYSE:SO).
    • BofA made some changes on its U.S. 1 list of favorite stocks today, including adding Disney.

    • Of the 182,874 wasted COVID-19 vaccine doses recorded by the Centers for Disease Control and Prevention ("CDC") as of the end of March, CVS (NYSE:CVS) and Walgreens (NASDAQ:WBA) were responsible for ~125,000 — 70% — of them, according to Kaiser Health News.
    • Based on that number, the two drugstore chains have wasted more doses than U.S. states, territories, and federal agencies combined.
    • CDC data showed that CVS accounts for 49% of the waste, while for Walgreens, the figure is 21%.
    • CVS told KHN that "nearly all" of the wasted dose occurred early in the vaccine rollout when the Trump administration relied heavily on drugstore chains to inoculate staff and residents of long-term care facilities.
    • A CVS spokesperson also said that the company encountered limitations on redirecting unused doses.
    • CVS shares are up 2% to $77.95 and Walgreens Boots Alliance shares are up 1.6% to $53.96 in morning trading.
    • Six Flags Entertainment (SIX -0.6%) says it landed clearance in Quebec to reopen the La Ronde theme park.
    • The park will open to the general public on May 22 at reduced attendance levels, in accordance with Québec public health’s reopening guidelines for theme parks. Six Flags will utilize a reservation system and other extensive safety measures already in use at the company's parks throughout the system.
    • "With today’s announcement, all of our parks will be welcoming guests this season," notes Senior Vice President of Park Operations, Bonnie Weber.
    • Read more details about the reopening in Quebec.
    • Read more details on Six Flags' overall summer plans in the earnings call transcript.
    • April ISM Manufacturing Index: 60.7 vs. 65.0 expected and 64.7 prior.
    • Still, the number indicates overall economic expansion for the 11th straight month. A Manufacturing PMI over 43.1%, over a period of time, generally indicates an expansion of the overall economy.
    • New Orders to 64.3 from 68.0; Production to 62.5 from 68.1.
    • Employment to 55.1 from 59.6; Supplier Deliveries to 75 from 76.6; Backlogs to 68.2 from 67.5.
    • Prices to 89.6 from 85.6.
    • "Recent record-long lead times, wide-scale shortages of critical basic materials, rising commodities prices and difficulties in transporting products are continuing to affect all segments of the manufacturing economy," said Timothy R. Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee.
    • "Worker absenteeism, short-term shutdowns due to part shortages, and difficulties in filling open positions continue to be issues that limit manufacturing-growth potential," he added.
    • Optimistic panel sentiment increased with 11 positive comments for each cautious comment vs. 8-to-1 in March
    • BofA Securities' measure of Wall Street sell-side sentiment is pushing into euphoria territory, at the highest level since the Financial Crisis.
    • The Sell Side Indicator, which tracks the recommended equity allocation by sell-side strategists rose to 59.8% from 59.4%, the highest it's been in 13 years.
    • It has risen four month in the row and is just 50 basis points away from a contrarian Sell signal (60.3%). That's the closest it's been to a sell signal since May 2007, with the S&P 500 (SP500) (NYSEARCA:SPY) seeing a drop of 7% over the next 12 months.
    • "Increasingly euphoric sentiment is a driver of our more cautious outlook as we believe that vaccine deployment, economic reopening, stimulus, etc. are largely priced in," BofA strategists led by Savita Subramaniam, wrote in a note. "We have not seen a 5% pullback in six months (they have occurred on average 3x per year) nor have we experienced a 10% correction in 14 months (a once per year phenomenon, historically)."
    • "Sentiment continues to climb as market gains continue: the year-over-year rise in our Sell Side Indicator is in the 85th percentile of our data history and above 1 std. deviation," they add. "Since March 2020, equity allocations have risen >3.5x faster than they typically do following bear markets."
    • "Lofty valuations, juxtaposed against the potential for bad inflation, rising rates, and higher taxes on corporates and consumers. But we are bullish on economic/profits/capex growth, driving our preference for cyclical stocks."
    • While at a 13-year high, the indicator is still technically in Neutral territory, indicating positive returns over the next 12 months.
    • But it is forecasting returns of just 6%, well below the average 12-month forecast of 14% since the financial crisis.
    • Other sentiment measures are also at historically high levels.
    • The Citi Panic/Euphoria sentiment measure ticked up to 1.22 from an upwardly revised 1.17 the week before, near the peaks of positive sentiment seen during the dot-com bubble (euphoria is anything above 0.38).
    • But Cannacord analyst Tony Dwyer says that the type of questions asked at Federal Reserve Chairman Jay Powell's press conference last week may indicate an inflection point on sentiment.

  10.  Phil/anyone

    Besides the seemingly positive news on NFL coverage, any thoughts on the cause for Amzn tanking? Dragged down by Nasdaq?


  11. AMZN/8800 – Still trading at 50x earnings and what happens when things go back to normal?  AMZN has benefitted from the virus but normal will likely be downshifting for sales and profits at AMZN.  Also, this is right where they topped out in the summer: