Let’s hope for a blowout

Happy Friday!

This week I interviewed a surprise guest. Not sure how your clients will find it. The Luddites will probably buy more ammo, while the early adopters’ heads may explode – especially over the haiku.

Moving along…

Is this a bull market?

The stock market has had a good start to 2023, and as we discussed last week, a good January tends to bode well for the rest of the year. Here’s data from Ryan Detrick at the Carson Group to back it up.

But not so fast! Jim Cramer tweeted this on Tuesday:

It may seem strange to counter a bullish stance by Mr. Detrick with a bullish tweet from Cramer. Most debates involve matching a bullish statement with a bearish one, but it’s Cramer, and many view him as a contra-indicator. 

As in, if he’s bullish, then sell everything no matter what the bid. If he’s bearish, take out a second mortgage and go all in on short-dated, deep out of the money call options on the triple-levered Nasdaq 100 (ticker: TQQQ). 

Now, I’m not one to bash pundits by name for two reasons. First, this is a small world we all work in, and I don’t see any advantage to drawing first blood against anyone. I have nothing against Cramer; by all accounts, he’s had a wildly successful career.

Second, the Twitter mob will do it for me, so there’s no reason to waste time walking the halls of the Department of Redundancy Department. For example, here are just a few of the replies to that tweet:

My view is that we’re six weeks into a year. Who knows if this is a bull market? A lot of high growth and junk stocks have exploded, which makes me think it could just be a lot of gamblers who refuse to give up this “risk has no price, so let’s do insane stuff like make markets in NFTs” paradigm the Fed created by keeping rates near zero for so long. 

Or it could be more fundamentally grounded as  (1) an indication of investors betting on a soft landing or (2) investors looking past any recession that could be on the horizon. Your guess is as good as mine.

But, like I’ve said countless times before, markets don’t operate on calendars. They are event-driven, and completing another revolution around a massive ball of gas doesn’t count as an event. So, I’m not taking sides with either Cramer or Inverse Cramer just yet.

Frankly, I raise my glass to anyone who feels confident in their 2023 forecast right now. Take that jobs report from last Friday. Leading indicators like retail sales and manufacturing point to contraction, and then that comes out of nowhere. Just savage.

In fact, the odds moved in the futures market for interest rates thanks to that jobs report and Powell’s hawkish speech earlier in the week. Traders are now betting we get a 25 bps hike in the next two meetings and a 38% chance of a third in June. A little over a week ago, it was just one hike in March.

This job was so much easier back when NFTs were a thing.

Let’s hope for a blowout.

Mr. Detrick also had some interesting commentary regarding the Superbowl. His point is that it doesn’t matter which conference wins but rather the size of the win.

The S&P 500 is up 13.6% on average if there’s a blowout of 21 or more points and higher 85% of the time. 

To be abundantly clear, this is purely meant for fun and has no statistical significance. I’m talking zero. But after a year like 2022, it’s safe to say that we all could use something to believe in. 

This is what a monopoly looks like.

Facebook has been in the news a lot lately. They crushed earnings expectations, the stock is up over 50% so far this year, and Zuck once again made the FTC look like a clown show by prevailing in court.

I don’t talk stocks all that often, and this is in no way investment advice on Meta, but they had been getting hammered from every direction before this round of good news. Some of it was warranted. They tried to hire half of Northern California in 2021, and that wasn’t smart for a multitude of reasons.

They’re also investing hugely into a risky, long-term endeavor in the metaverse. This may appeal to some investors, but not everyone has a decade-long horizon for owning a stock, so they’ve clearly lost a lot of institutional support.

But I came across this chart earlier in the week, and it was a reminder of just how dominant Facebook has become.

Yep. Almost 40% of internet users log into Facebook every day. Wow!

Oh, and this doesn’t include their other properties like WhatsApp, Messenger, and Instagram. Those combined reported 2.96 billion daily active users. Add it all up, and about 60% of all internet users log into a Meta product daily. 

Enjoy the weekend and the big game…