Better than expected. What can I say? Better sales, higher profits from our great American companies are why this market at times can buck anything, even a plunging oil price and a tax plan that sure seems like it could be a real stretch to get through Congress.
First, let me say I have been consistent in saying this market is all about companies doing very well, not about President Trump, not about tax cuts and not about the Fed, interest rates and whether the economy's slowing down.
I am not saying Washington is a sideshow. Not at all. Not when it's all over the front pages every single day. After listening to the president's men yesterday talking about their plans to reform taxes, I was somewhat hopeful that something could get done in Washington, that we would see some lower taxes for corporations and for individuals, that there could be even faster growth spurred by changes the president wants.
But after listening to the incredible Squawk Box show from the Capitol this morning, I have to believe it's entirely possible that very little gets done. The House Republicans interviewed today, and of course the House Democrats, truly seem to be at total loggerheads over everything from rates to timing of health care reform versus economic relief. I am now saying that if you are buying stocks, looking for any help from Washington beyond deregulation, then you may be betting on fantasy. Yes, it could be that bad.
Second, at one point this entire market was being rocked by the declining price in oil. I have been saying that when oil was at $53 it would fail and fail badly because that's the price when our oil companies make a huge amount of money and turn the spigot on big.
Now there are domino-like ramifications when oil gets crushed as it did today, although it managed to recover from its intraday lows, the main reason why the Dow Jones Industrials spent the morning in decline even as the Nasdaq kept going higher. Remember, we know oil's going down because of too much U.S. supply. We know that oversupply is happening because our finding costs have gotten so low we keep pumping and pumping and pumping.
Even as it is U.S. supply that is overwhelming worldwide demand -- and not softer demand itself -- there are plenty of global money managers who refuse to believe that's the case and immediately start selling stocks and buying bonds when they see oil falling. They don't stop themselves and analyze why oil's falling, they just say, "Demand must be weak, sell stocks, buy bonds."
That's' domino one.
Domino two: When rates go down, hedge funds presume there must be much less demand in the entire economy, even as oil's going down because of the 100,000 barrels per month we are adding as our technological ingenuity keeps bringing cheap oil to market at the same time that OPEC is having trouble curtailing production.
When interest rates go down, they knock over two more dominoes: a decline in the financials and a collapse in the industrials.
The financials get crushed because when interest rates go down, money managers presume that there isn't enough strength in the economy to raise rates. The financials need not one but two rate hikes to make their numbers. So those stocks get hammered.
The industrials get hit because money managers presume that business has to be getting worse or rates would be going higher.
You layer on the congressional gridlock that could be caused by Congress' inability to take action on a tax plan that truly would stimulate the economy and you have another reason why rates are going down.
Why do I find this absurd? Because if anything, the world's economies are growing faster than we thought. What makes me say that?
Because while I am not ignoring oil, I know about the supply side from what the oil companies tell me and I know the demand side from what the big industrial CEOs are saying in their conference calls. Demand worldwide is pretty good in this country and much better than expected around the world.
Oil is what we call a false tell. It is signaling the wrong thing. In fact, its decline is acting as a tax cut, further stimulating worldwide growth.
Which brings me to the last domino: a shift in what investors are buying today. Instead of plunging into the red-hot industrials, they are buying the stocks of companies that do well when demand is slow and economies are losing steam. They are buying the stocks of companies that don't need the tailwind of great growth to make their numbers.
Classic example? The stock of Bristol-Myers (BMY) . So many were worried about this company's quarter that it's been one of those stocks left behind by the entire market. But this morning we learned that its best anti-cancer drug, Opdivo, saw its sales grow by more than 60%.
They are buying the stock of AbbVie (ABBV) because its blockbuster Humira drug for arthritis and psoriasis just won't quit.
They are buying the stock of Xilinx (XLNX) , the semiconductor company that I recommended last week that is showing furious growth and still might be a takeover target, as I suggested.
They are buying the stocks of two companies on Mad Money tonight, PayPal (PYPL) and ServiceNow (NOW) , because their earnings far exceeded expectations. PayPal is riding the internet's incredible versatility to create an online payment ecosystem that is taking the world by storm. ServiceNow has harnessed the cloud to create incredible enterprise productivity.
They are buying the stock of my employer, Comcast (CMCSA) , which is riding a wave of demand for fast internet and better WiFi reception that is accelerating its broadband growth sign-up -- more than 400,000 subs this quarter alone -- and giving the business a monster 25% increase in cash flow, although to be fair, theme parks and television have much higher profits than analysts were expecting. (Comcast is part of TheStreet's Action Alerts PLUS portfolio.)
It is true that some upside surprises caused stocks to soar that don't fit the parameters of high-growth tech or health care.
UnderArmour (UA) presented a story of improving demand after many estimate cuts and its stock's flying. Union Pacific (UNP) put up a number that was almost too good to be true, but that's been the style of the rails in keeping with better economic growth and improving worldwide coal demand.
Now, I expect when oil bottoms, and I think it will shortly as today was a big capitulation day, the funds will reverse a bit and it won't be all about fast-growth tech and health care.
The good news for the bulls here, though, is that the dominoes and Washington's insanity can't stop the best of the best that reported today.