Michael Santoli
CNBC talking head. Markets, mostly. Maybe some baseball and movies.
- Utter buying panic in Walmart. The stock now topping 43x forward earnings for the next 12 months. Echo of last year's momentum stampede into Costco (which peaked on Feb. 13)?
- Why would a bailout be necessary when "one bitcoin still equals one bitcoin," as the acolytes like to say?
- The way the market continues to remain supported through rotation is creditable for sure. And I know everyone finds it somehow virtuous to see a less-concentrated tape with value over growth, cyclical beating tech and equal weight outpacing market-cap weight....
- But the torque's getting extreme, with 1/3 of S&P 500 stocks moving 5% this week and 1/12 Nasdaq stocks making a 52-week low yesterday. And every day of this pro-cylcial action means non-tech gets more expensive, pricing in the expected "run it hot" theme. S&P 500 Value now ~19x forward earnings.
- It's not near the top of the list of concerns about AI, but the way the buildout has everyone using "compute" as a noun is so grating. A new hill to defend (futilely).
- Quick note on Kevin Warsh's views on the Fed balance sheet. To the degree the balance sheet ever created major distortions in markets, economy or fiscal path - and I'm not persuaded it has - then those effects have radically diminished. Balance sheet relative to all Federal debt at post-GFC lows.
- Obviously much the same picture as a percentage of GDP, though the Fed balance sheet is not quite at post-GFC lows. Not a very meaningful relationship but we're back to 2013 levels in terms of balance sheet as a proportion of annual economic output.
- An unusually kinetic capital-markets backdrop - momentum blowoffs in metals and memory chips, dollar bouncing from multiyear lows, hundreds of billions in AI fundraising in the wings - has so far spared the core equity indexes. For how long? New column with the market setup for the week...
- Usually this sentiment stuff is not a timely cue for market moves, but as of yesterday the long-running Investors Intelligence survey showed the ratio of Bulls to bears rise to 4x and into the 95th percentile of all readings. (Chart from Strategas Research)
- (Capitalizing Bulls and lower-casing bears above was a typo, not a value judgment)
- The unifying feature of the momentum stampedes in memory/ metals is a viral story of acute physical scarcity. True/sustainable or not, a tale of squeeze dynamics/forced buying activates these aggressive parabolic moves. Also see constant opening pops/reversals in MU out of overnight Asia trade.
- Ultimately these aren't long-term value-creating dynamics - sort of anti-innovation. Interestingly, they also run counter/are a reaction to the other pole of speculation in which the slimpier the fundamentals the greater meme potential (quantum, space, TSLA starving the EV biz for future robots).
