Let’s call it the reverse CP Effect. The market rose out of the gate with a head of steam, only to stumble into the close - exhausted and vulnerable.

There was a lot of scuttlebutt over the stimulus, but there was nothing by the end of trading. Supposedly, yesterday was the deadline, and we won’t have to hear about it again until after the election. While I have been pushing for another round of stimulus, not getting it now or even never getting it would not be the end of the world. 

Or should I say, it’s not the end of the world for everyone? Lawmakers would continue to get paid, while the absence of additional stimulus would mean massive economic damage to the most vulnerable people and businesses.

This has been a rare opportunity where lawmakers could show motivations not driven by political ideology or calculus. Especially when it seems something inevitably will happen, and the longer Congress waits, the larger the ultimate bill will become. 

Every Day & Everything is Doomsday

In 2020, we faced real fear. An oncoming and unstoppable scourge that was slowed by travel bands, but ultimately determined to spread throughout the world.  In the early days and weeks, we were paralyzed and could only hide in our foxholes. Now, cases are on the rise, but positive tests and death rates are on the decline. We must show the diseases its proper respect, but fewer people see this as Armageddon now, and that’s great news.             

Home Sweet - Home Market

Yesterday, housing starts came in below consensus, but single-family home starts and permits continue their meteoric rise. In fact, single-family homes were 78% of the total home building starts, the highest percentage in 13 years, and the highest total since 2010.

The Stock of the Day

General Motors (GM) is making a strong case for the best stock in the past six months. Shares are up 67.3%, including an 11.5% spurt in the past five days, as it broke out from a cup-and-handle formation.

 

After the Close

Streaming Stumbles

Netflix (NFLX) came up short of its guidance on net subscribers, and the stock took one of its patented earnings nose dives. This doesn’t bode well for a space that is too crowded and will have to see consolidation, and a few companies go out of business. Paging Joseph Schumpeter?

Social Screams High

Oh, Snap. Don’t look now, but Snapchat (SNAP) blew away Wall Street consensus, sending the shares up 20%, and putting a spark in rivals Facebook (FB) and Twitter (TWTR). 

Semis Shine

Texas Instruments (TXN) posted strong results, beating on the top and bottom lines, and management raised guidance to boot. Other chip names were trading higher after the close, including Teradyne (TER).

Hotline Model Portfolio Approach

Note: the model portfolio is almost fully vested, and there are ideas we want to buy. We are assessing the need to close certain names and to add fresher names. But for those with more than $400,000 in the market, we are going to share names we think are intriguing.

Today’s Session

The yield is not getting any press, which is fine with me, but the yield curve continues to augur for a robust 2021 economy. Please keep this in mind. And think with a clear mind, even if your heart is troubled during this election period.

2-10 year yield

 

Comments

Come on Charles! We love you in Florida. Come on down! John Masselli on 10/22/2020 3:02:05 PM

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