1/20/2021

Summary

• Mortgage and Sales Data continues to improve and look good.
• Banks continue to kill it with Morgan Stanley blowing out earnings.
• Market roars forward mainly on the back of big cap tech and cyclicals that have underperformed and takes the day off to celebrate Biden's inaugeration.

1/20/2021

DATA SUMMARY: Everything is awesome!!!

Redbook: Same store sales up 2.2% Y/Y. Great numbers considering we are in the middle of THE pandemic. Consumer spending still looks strong and the savings rate is extremely high. What a strange world we live in, maybe its not going to end next week?

Housing Market Index – came in at 83, still a very strong number even with a pullback from previous highs. These are looking SEXY.

MBA Mortgage Applications – up 3%. What more do you want, housing market is STRONG LIKE BULL. Interest rates are also historically low even though they have risen over the past couple weeks.

TODAY IN THE MARKET:

Joe Biden was sworn in and the market took a day off (for real, its true). Overwhelming sentiment was positive about Biden becoming president and the market rallied on that – plus Donald Trump was not good for the market with all of his wild and crazy antics. Netflix’s earnings colored the future as green around tech and tech related plays and BABA continues to rally on the hopes that China and the U.S. will start to deescalate under Biden. Felt like the market took the day off to celebrate, right?

EARNINGS:

MORGAN STANLEY: Blew earnings out of the water – 1.92 vs 1.28 - just as we all expected. And what happened, stock drops. Same thing happened to Goldman Sachs after they made a ton of money this quarter too. Makes sense since its rallied 44% over the last six months, more than Goldman Sachs. Have to be careful out there after these stocks rally too much, the pullbacks can be unenjoyable. Imagine if Morgan Stanley had actually missed earnings?! It would’ve been down HUGE. But we knew that wasn’t going to happen. Consensus earnings feel like they don’t matter anyway since every company works these projections into their reports so that they beat every quarter barring a catastrophe. I wonder if there is some connection/understanding between analysts and companies where they give them the inside scoop but ask them to keep those estimates LOW LOW LOW LOW LOW.

BUYS TODAY:

U, CRM, AMD

SELL TODAY:

Why would you even do this?

MAP SUMMARY:

When I look at this map my eye is drawn to all of the red in financials, healthcare and small/mid cap stocks. The major tech companies rallied hard across the board and energy, basic materials and other sectors which are generally considered lackluster are up but it looks acceptable at best. I’ve always been told and heard that broad support is better than a few big leaders and this map looks to be the big cap tech and cyclical companies moving forward while the rest of the market stays neutral to positive.