I’m not entirely certain I understood what happened on Friday.
While it’s easy to understand the “one – two” punch, such as memorialized in Tennessee Ernie Ford’s song “Sixteen Tons,” it’s less easy to understand what has happened when a gift is so suddenly snatched away.
After not having attended the previous year’s Kansas City Federal Reserve Bank hosted soiree in Jackson Hole, this year Janet Yellen was there.
She was scheduled to speak on Friday morning and the market seemed to be biding its time all through the week hoping that Friday would bring some ultimate clarity.
Most expected that she would strike a more hawkish tone, but would do so in a way as to offer some comfort, rather than to instill fear, but instead of demonstrating that anticipation by buying stocks earlier in the week, traders needed the news and not the rumor.
The week was shaping up like another in a string of weeks with little to no net movement. Despite the usual series of economic reports and despite having gone through another earnings season, there was little to send markets anywhere.
Most recently, the only thing that has had any kind of an impact has been the return of the association between oil prices and the stock market and we all know that the current association can’t be one that’s sustainable.
We are pretty much done with the most systemically important earnings reports for this most current earnings season.
To say that it has been a confusing mix of results and projections would be an understatement.
By the end of the week, we had our fourth consecutive week of almost no net change. Yet the market remained within easy striking distance of its all time closing highs.
Why it’s at those all time closing highs is another question, but for the past 2 months the climb higher, while confounding, hasn’t disappointed too many people even as it’s given no reason to really be hopeful for more to come.
However, technicians might say that the lack of large moves at these levels is a healthy thing as markets may be creating a sustainable support level.
That is an expression of hope.
Others may say that the clear lack of clarity gives no signal for committed movement in any direction.
That is an expression of avoidance, so as to preclude disappointment with whatever happens next. If you have no great hopes, you can’t really have great disappointment.
I buy into both of those outlooks, but have had an extraordinarily difficult time in believing that there is anything at immediate hand to use whatever support level is being created as a springboard to even more new highs.
When the news came that Thursday’s close brought concurrent record closing highs in the three major stock indexes for the first time since 1999, it seemed pretty clear what the theme of the week’s article should be.
But as I thought about the idea of partying like it was 1999, what became clear to me was I had no idea of why anyone was in a partying kind of mood on Thursday as those records finally fell.
Ostensibly, the market was helped out by the 16% or so climbs experienced by the first of the major national retailers to report their most recent quarterly earnings.
Both Macy’s (M) and Kohls (KSS) surged higher, but there really wasn’t a shred of truly good news.
At least not the kind of news that would make anyone believe that a consumer led economy was beginning to finally wake up.
The market seemed to like the news that Macy’s was going to close 100 of its stores, while overlooking the 3.9% revenue decline in the comparable quarter of 2015.
In the case of Kohls the market completely ignored lowered full year guidance and focused on a better than expected quarter, also overlooking a 2% decline in comparable quarter revenue.
For those looking to some good retail news as validating the belief that the FOMC would have some basis to institute an interest rate increase in 2016, there should have been some disappointment.
In the 57 years since “The Day the Music Died,” the S&P 500 has risen about 3800%
What’s not to like about that?
Among those perishing in that February plane crash was “The Big Bopper” whose signature hit song “Chantilly Lace” was telling the world what he liked.
While it may be cute when a child gives you that kind of information, not much good is to come when an adult lets free with those unfiltered thoughts.
It may be even worse when they act upon those thoughts that no one needed to hear in the first place.
The Big Bopper’s album cover makes the words of the song even more creepy, but there must have been strains of that admittedly catchy tune playing as investors were awaiting last Friday’s Employment Situation Report.
Of course, as we all know, there is nothing creepy at all about being in love with money or letting it know what you especially like about it.
It was pretty obvious what investors wanted and liked when the data was released and seemed to put a nail into the shockingly low number of new jobs reported back in June 2016.
I don’t know what the equivalent is to the obligatory “chantilly lace” in the song, but the market definitely decided it was time to put a pretty face on the impending likelihood of an interest rate increase.