The bullish gods were listening to last night's "Mad Money" show and they decided to slaughter a few bears on the altar of higher prices.
I don't know how else to explain such a robust rally other than a small increase in interest rates, enough to get the financials going, and another day of dollar weakness to get the multinationals to start acting jiggy.
Remember last night I said that we can't have a real, trustworthy rally unless we see some stocks of the banks catching fire and one of a couple of other sectors, health care, the industrials or the transports would all work for me.
We've got almost all of them and it's a glorious thing.
Let's talk about the most visible leaders in today's rally and you can see the staying power despite uncertainty in trade and a lack of big macro figures to justify anything beyond what I told you would be important, which is last Friday's employment number. That dominant statistic which showed growth with low inflation is the mother's milk that all groups feed off of and today is no different.
First, JPMorgan's stock (JPM) screamed higher, all on that itty bitty increase in rates. This move is classic, just classic as desperate, left-behind bulls glom on to anything that is still available. JPMorgan's having the time of its life lending here and taking share there and I mean there, as in Europe, because Deutsche Bank (DB) keeps cutting and cutting and cutting and someone's going to take up that slack. I think it is going to be the house of Morgan, or "the bank" as it is called in New York. I am not kidding when you hear "the bank" in Manhattan it's not like "take that to the bank," it's the house that Dimon built.
What could the bulls know? I think that they are looking at what happens in the second half of the year after the government releases the results of its stress tests on the last day of the June.
What's been the outcome the last couple of years for JPMorgan's stock? For the first six months last year and the year before JPMorgan's stock was up 2% and down 5% respectively.
But Post CCAR? JP Morgan's stock rallied 21.45% in 2017 and 37.6% in 2016.
I think the smart money's buying the stock now to get ahead of that monster performance. I know everyone's putting the hate on my alma mater Goldman Sachs (GS) . I say, not so fast: in 2017 it did the same thing, falling 8% in the first half. But then it rallied 15% after CCAR. In 2016 it plummeted 17% but then soared 61% post CCAR. I think the latter would be nirvana and is unlikely. But I believe Goldman will announce a large buyback when it gets its report card and that will clear the air.
Next, while we don't have enough drug stocks stampeding higher for my taste, we have the sainted health insurers back in the plus column. Every time these stocks are down for a couple of days some analyst comes calling and gets things back on track. Today Goldman Sachs upgrades Cigna (CI) which has been a total dog ever since it decided to buy Express Scripts. We had management on after the deal was announced and it sounded real good to me. But the analysts community had hated it...until today. I saw nothing new in the upgrade, just the same story about how terrific the deal will be, but it worked.
In the meantime United Health (UNH) unceremoniously announces one of the largest buybacks I have ever seen, one hundred million shares or 10% of the company and gives you an incredible dividend boost from 75 cents to 90 cents and initially everyone yawns. But upon further review the stock takes off. I think it's got another ten coming when the investing community launches their last buys before heading to East Egg or West Egg for the summer.
Ever since we decided to get tough on trade, as opposed to lying down there and letting China give us the business, the stock of Boeing (BA) trades like it's about to lose a big order from Chairman Mao airlines or whatever. But today it hit its all-time high and the darned thing is back. Boeing is the quintessential industrial and our biggest exporter so this move is a terrific sign. CEO Dennis Muilenburg has been demonstrably quiet on China so let me just say that there are literally a dozen airline purchasers who would like to get in the queue if China drops out and that's despite the decline in the stocks of many airlines including here because of the 50% increase in fuel.
Muilenburg may be quiet about China but he is reiterating that he is not going to let Elon Musk or anyone else beat him to Mars. Today, it may not be a focus of Musk's as his Tesla (TSLA) stock soared on predictions, made by him, of course, that the company will soon be swimming in cash because of an insanely positive build schedule that's now kicking in for Tesla's mammoth order book. Cash flow positive. Earnings coming. What me worry and no cash raise needed. You have to love his moxie.
It's not just Boeing. Two other industrials that have been hobbled of late, Caterpillar (CAT) and 3M (MMM) got some attention. I think that CAT's got great demand for engines and 3M's in the not-as-bad-as-it's-been category. That's enough for this tape.
Now the stalwarts from the last couple of days keep delivering. Retail remains a bright spot with the unlikely Signet Jewelers (SIG) as the leader. Unlikely unless you watched last week's gameplan where I suggested that new CEO Virginia Drosos could hit it out of the park which is exactly what she did beating the top, beating the bottom and trouncing same-store sales, this time, though with total integrity as she is fixing the culture and making the place once known more for its lending against jewelry than jewelry itself into a vendor that buyers seek to get the best, most affordable diamond brooches among assorted other pieces imaginable. Who says everything has to be Tiffany's (TIF) , a stock I still like even after this run.
And tech refuses to quit, this time led by some unsung heroes -- at least by me of late: Advance Micro Devices (AMD) , which has put out some very competitive chips of late for personal computers and data centers and Broadcom (AVGO) , that's right the house that Hock Tan built, which reports tomorrow. We've got Steve Mollenkopf, CEO of prey Qualcomm (QCOM) later on "Mad Money" if you want more insight into the chip market.
Alas it wasn't all done in fair weather. Alphaet's stock (GOOGL) chafed on rumors of a big European fine. Let's get that over with already. Facebook (FB) had still another New York Times hatchet job about how the company may have given your data to Chinese phone companies. I get that. As Marc Benioff of Salesforce.com (CRM) has been saying, Facebook has let the truth become a byproduct of business. That's not what anyone wants and the stock is deservedly in the red. Politicians want another crack it including a couple who would walk a mile for a camera.
But all in all, it's a pleasure to see leadership away from FAANG although I figure that tomorrow we hear how FAANG had to go to the orthodontist, or the periodontist or endo whatever to get pulled and is therefore officially dead.
At least until Friday.
