They keep confounding the bears. They keep doing things that aren't supposed to happen and don't fit the negative scenario. And today's stunningly good news finally put an end to the eight-day Dow losing streak.
Bears love to growl. You give them some honey and they are in heaven. But this market's way short of honey and filled with niggling bees that sting, and when you get enough collective stings you head for the hills.
What were today's stings, the ones that took our minds off Washington, where the bears keep frolicking after the GOP fizzled in its seven-year struggle to repeal and replace?
First, let's start with consumer confidence, which came in at 126, the best since December 2000. Now this is a tough survey for the bears to believe. They thought it would be much worse than that. That's because the bears had somehow decided that the only reason stocks were going up was because of Trump, and once Trump fell into the swamp, he had no more ability to drain the darned thing than a guy with a couple of buckets and a skimmer.
I have said over and over that while Trump's a part of the advance, there's much else happening away from Trump that's positive, and the most important thing that Trump has accomplished is to deregulate the overregulated economy. Please remember that for every law that was passed under Obama, there were 25 rules promulgated, and that rollback is the most important thing that can happen to business right now.
Remember, the bears are now banking on House Speaker Paul Ryan, a self-styled Einstein, to complicate tax reform and tax cuts so that nothing happens. He'll probably be as ineffectual with taxes as he was with repeal and replace, although there's a heck of a lot more people, even the far right in Congress, who want lower taxes.
I say it will happen eventually, but what matters more is that rules being rolled back embolden confidence and that's exactly what the consumer confidence is measuring.
Second bear confounder? Some stocks just refuse to roll over and play or be dead. Take Tesla (TSLA) . The big rap against Tesla has always been that it makes great cars but it doesn't make any money. Eventually companies that don't make money fold and their stocks crumple. That's why Tesla has to keep doing these equity offerings. But something happened this morning that basically ended the bear case. Tencent, the gigantic Chinese internet company, took a 5% stake in Tesla, paying $1.8 billion for 8.17 million shares. Tencent has enough money to allow Tesla to lose money until it gets to its self-styled 500,000-car goal. I don't know how the shorts can stay short anymore. This investment ended the debate.
What's the worst group in this market right now? The ones that sell at the lowest valuations? The automakers that compete with Tesla. Ford (F) just missed the quarter and brought down it and its doppelganger, General Motors (GM) . But this morning we learned that hedge fund magnate David Einhorn has taken a stake in the company and wants it to develop two types of stock, which would highlight the dividend and unlock between $18 billion and $38 billion.
Einhorn's got a point. GM's price to earnings ratio is the lowest in the entire S&P 500. People just hate this stock. It's been a fabulous plaything for the bears. I think, though, now that Einhorn's in, the free short may be over.
I know lots of people were thinking tech's about to roll over, but the bears feasting at that trough got stung by wasps all over the place today.
First, Red Hat (RHT) , which is a direct play on cloud adoption, put up the best number it's ever done last night and analysts were downright ecstatic. One even cited the company's breathtaking orders, including a $100 million piece of business. It is incredible but this company actually grew faster than it has at any time in the last decade when it was a much smaller company. Read-throughs? Amazon's (AMZN) web service must be booming, same with Microsoft's (MSFT) Azure cloud. The call was so bullish that you have to believe there is more information technology spending out there than anyone -- bullish or bearish -- expected. Red Hat, which, at times, has been a tad inconsistent, delivered everything it had promised and more. It can still go higher. (Amazon is part of TheStreet's Growth Seeker portfolio.)
Then how about Apple (AAPL) ? I know a bunch of wiseguys who were laying down shorts with the stock stuck at $140. I mean, enough is enough, right?
Wrong. This morning Steve Milunovich at UBS put out a piece that talked about the new iPhone super cycle, the possibility of further service revenue streams and some inventiveness that could move this $142 stock up to $200 in two or three years. On the bullish call, the stock just caught fire and shorts, who were playing it in part because the chart looked so overextended, found themselves scrambling.
I say own Apple, don't trade it.
Apple's got big coattails, so all the usual semiconductor and semi equipment stocks charged higher. Talk about another area where the bears had been roaming.
Yesterday, we got a gaggle of analysts who came out and pushed Snap (SNAP) -- the newly minted social media camera company -- hard, talking about how exceptional it is. Today Facebook (FB) introduced a new set of features that almost exactly mimics the favorite parts of Snap. I told you last night that those who underestimate CEO Mark Zuckerberg's competitiveness are doomed to a stock lifetime of disappointment. Suddenly, Snap doesn't seem like such a Snap as it was yesterday. Remember, by the way, the principal reason why many kids use Snap: Their parents can't see their images. There's been a lot of brouhaha about advertisers angry at Google (GOOGL) for having ads next to scatological programming. I have to wonder, does Procter & Gamble (PG) feel comfortable advertising against something that's not meant for parents to see? Is that better than Google? Oh please. (Apple, Facebook and Google are part of TheStreet's Action Alerts PLUS portfolio.)
You know the bears had been coming of late with this rap that the consumer's tapped out and isn't spending. That had lots of their ilk betting against Darden (DRI) parent of Olive Garden. Ouch. The company not only blew away the numbers but it made a $780 million acquisition of Cheddar's Scratch Kitchen. If the best operator in the industry's in buy mood, who are we to be short?
Aberration? Nope, not when you reviewed the quarter reported from Carnival Cruise (CCL) , another beat-and-raise situation. The consumer's not frozen in place, wallowing in disappointment over Ryan's failure to live up to a seven-year promise. The consumer's cruising and eating out and having a jolly old time.
Finally, there are bonds, oil and commodities. The bears were so excited when interest rates kept going down showing there's no real recovery. But this morning we saw an actual failed bond auction in Germany. The country tried to raise 4 billion euros by floating two-year notes, but there was demand for only 3 billion euros. I think that money's coming here and that's what's driving our rates lower. Oil? Some murmurs from OPEC cuts and strife in Libya caused oil to stabilize. Commodities? The Baltic Freight Index, a key measure of Chinese commerce, hit an 18-month high this morning. That can't be idle.
I know when you are a bull it's tough to deal with the bear cases when they play out. Believe me, after eight straight down days in the Dow, the bears should have realized something could be afoot. Maybe they are too busy reading Trump tweets and drawing conclusions that things in Washington are out of control.
Hmm, maybe it is time to unfollow the president and stay focused on the facts. Unless you don't want them to get in the way of the negative story that's endlessly driven into our heads by almost every single pundit in the business media.