Bored with the rally. I swear people are bored with what's going on, including today where once again we hit new highs. Either the critics don't want to say anything good about the market because of politics, as the president has done a very good job of linking himself with the performance of the averages, or they are obsessed with bitcoin.
But no matter how good stocks get, it doesn't seem to matter. I was on vacation last week. All I heard was bitcoin, bitcoin and more bitcoin. Never a stock. Never. The market's a yawn or an abstraction for most people. But the truth is that if you're bored by this incredible rally, you need to have your head examined. Sure, only 53% of the people in this country have exposure to stocks, and while I wish more Americans could afford to participate in the amazing engine of wealth creation that is the market, 53% is still a lot of people.
And if you're one of them, you should be feeling really good after last year's run. You feel good about retirement. You feel good about travel. You feel good about money for college. You feel good paying down debt with some of your profits. You feel good about buying a car or a house or doing a renovation.
There are stocks that fit into every aspect of that litany, and that's what wealth creation is all about. That's what progress is all about. Is it related to President Trump's policies? Look, love him or hate him, the answer is yes. The President has created a pro-growth environment along with a new tax code that will take money from the government and give it to the corporations. Whether they use it to expand or buy back stock or boost their dividends, it's going to be good for stock prices.
Just look at the president's tweets. He's as hands on about the stock market as Obama was hands off. Even though stocks did pretty well under Obama, he never wanted to take credit. The market's so important to Trump that I'm surprised he doesn't tweet, "buy on weakness," about stocks that happen to fall on any given day. When I was a judge for the Apprentice, I was always shocked at how competitive Trump was, at how much he cared about his ratings. Now he has a stock market for a rating system and, again, like it or not, those ratings are off the charts.
Now, there are plenty of opinion-makers from states like New York, New Jersey, Illinois and California that are pretty darned glum about their finances despite the Dow being up 25% in 2017. Their newfound inability to deduct state and local taxes is nullifying whatever gains they might have in the market. Fair enough -- I wish I had the state and local deduction back, too
But that doesn't change the fact that the market's en fuego. What makes it so great?
First, after a prolonged period where FAANG -- Facebook (FB) , Apple (AAPL) , Amazon (AMZN) , Netflix (NFLX) and Google, now Alphabet (GOOGL) -- kind of lounged around doing nothing, there's been a fire lit underneath them. We often talk about the notion of profit taking after a big run. The action in these stocks today indicates that the profit taking hangover from 2017 could finally be over.
How do I know this? Because of the morning's research. We didn't get anything about Facebook or Alphabet or Amazon. Nothing, yet those stocks rallied $4, $18 and $19 respectively. We got a positive narrative from a brokerage house about Netflix, which roared up $9, but the piece had nothing revelatory -- apparently people around the world like Netflix. Who knew? Apple, the second A in the new FAANG, got both a defense about battery-gate and a suggestion that sales for the 8 and the X are on plan, allowing it to advance 3 bucks.
That's a big difference from the survey last week indicating Apple's new phone sales have fallen behind. How many times have you heard these negative surveys? I think they've faked people out of the stock dozens of times. They are buy high sell low loss generators. I can't remember a single survey that was positive, other than those done by Katy Huberty, the godsend from Morgan Stanley.
Oh and battery-gate? Apple fixed it as soon as possible for a very low cost. The most amazing thing is that people thought Apple would hang its customers out to dry. But as I always say, Apple is the ultimate consumer product company, which means it wants customer satisfaction at all times. That's why I wish Apple's stock was covered by the same analysts who cover consumer goods. I think it would get a price to earnings multiple in excess of Colgate (CG) , Procter (PG) , Clorox (CLX) , Kraft Heinz (KHC) , or General Mills (GIS) . With that kind of valuation, this $171 stock could easily sell at $240. I don't know if the new phones are selling well at this very moment. I do know that Apple makes great products and I'm as thrilled about the I-Phone X I bought my wife as she is about the X she bought me. She's in India right now and that nation of 1.3 billion is just now getting cellphones in the areas outside of its major cities. Do the surveys include those potential customers?
Of course, it's not just FAANG. The semiconductor complex, under pressure all December, seems to be making a comeback, too. That matters. And the highest multiple tech stocks, the Adobes (ADBE) and the Salesforces (CRM) and the VMWares (VMW) , are finally on the move after being stuck in the mud during much of the fourth quarter. I think they're all buys and VMWare isn't up nearly enough since its blowout quarter.
What else should wake people from their rally-induced slumber? How about the oils breaking out because of $60 crude? That group's been a huge millstone around the neck of the market. I almost can't believe these moves we're now seeing. Finally a stock like Schlumberger (SLB) , such a terrific company, is getting its due, something that I've told club members of actionalertsplus.com could happen in 2018 until I became blue in the face. You should subscribe to learn more.
Or the retailers. I know that noted analyst turned manager Gene Munster said that Amazon might buy Target (TGT) . I don't think they will. But people are taking it seriously because retail is better. The stock of Kohl's has been screaming. Macy's (M) has come back to life. Best Buy's (BBY) hitting highs. The bedraggled L Brands (LB) just caught a buy recommendation on better traffic at Victoria's Secret and Bath and Body Works. Matthew Boss over at JP Morgan went from a sell to a hold on Nordstrom and it made me wonder will the buyout talks begin again? So why not speculate on Target?
Meanwhile, the transports are at it again, running like the wind. UPS (UPS) and FedEx (FDX) have are on fire because of e-commerce, although the former feels like one buyer going nuts and about two make a stink. The stock of CSX (CSX) , the big railroad that lost its spectacular CEO, Hunter Harrison, to an illness a few weeks ago, something that caused the stock to plummet, is now above where it was when he passed.
Once again the commodity stocks are roaring. Alcoa's (ARNC) been a superstar. Freeport McMoRan (FCX) , the copper company, has been trading like it's all gold. If the dollar stays as weak as it's been, the rally could still be in its early innings, and never forget we have a stock shortage in the commodity department. We just don't have enough of them.
We thought that Disney (DIS) might be done moving up now that it's trying to buy Fox (FOXA) . Today, though, the stock took off because of the continuing strength of its latest Star Wars movie, which crashed through the $1 billion barrier over the weekend. That's a good way to put the woes of ESPN in the rearview mirror, and the stock closed at $111, up 4 bucks.
I could go on and on. But the bottom line is simple: for whatever reason, the animal spirits triggered by the president's focus on deregulation, the bonuses being given to workers after the tax cut, the weaker dollar going into earnings, the boom in the southeast because of a glut of natural gas, the coming boost in earnings estimates thanks to the slashing of corporate taxes, we have an incredible rally, and this kind of move is never boring. It's not a bull; it's a beast.