We can have some fun with FANG, the acronym for Facebook (FB), Amazon (AMZN), Netflix (NFLX) and Google (GOOGL), the stocks that are "working" in this environment. It's a nice respite from the woes of the world to think of some great American companies that can withstand the Chinese bear and the Fed's hawkishness.
But I want people to know, loud and clear, that FANG -- the isolation of a handful of stocks that can seem to power higher in spurts that we haven't see in ages -- is a BAD thing, not a good thing for the market.
First, understand that this market's looking for growth. Right now, the funnel for growth seems to become smaller every day, which sends the proven stories -- and I know that Facebook isn't even proven yet, as it reports Wednesday and has acted poorly before, following its report -- ever higher, but leaves behind a host of others.
Put frankly, this market at this very moment is truly a treacherous one. People are selling pretty much everything except for a couple of stocks, and that's a sign of desperation and exasperation, not a sign of health.
Right now we ostensibly have two sources of tension: the Chinese stock market and the Fed's willingness to tighten. The Fed gave the market a pass last time around because of Greece. Most people I talk to think the Fed is done with the passes, which is why Wednesday is regarded as so frightful. Traders have both feet out the door because of these two events.
I don't blame them. The invincibility of the Communist Party has long been assumed. You read the lead story in the New York Times Sunday: "China's Global Ambitions Cash and String Attached," you get the sense that the Communists are on top of the world. But when you hear about their admittedly small stock market and the damage it is doing, you aren't as clear exactly how strong that government may be. I don't know a soul who figures that the Chinese government will get the kinks out of the market. It's just a given that people are going to lose fortunes.
I am not as gloomy about China as others, if only because of articles like that in the Times. Let's face it; the Chinese are flush. They don't play fair in trade. They can put people to work in myriad ways, the way Mao used to do with the Eighth Route Army.
Can't be sanguine with so many stocks halted. But you know that the stock market here, where many were in the pool, didn't destroy U.S. demand when it crashed in 2001 and it was coincident with, not leading to, the Great Recession losses.
No matter; both inspire selling in pretty much every sector. International industrials are tagged by a strong dollar that will get stronger. Financials had been looking good, but the reactions to Capital One's sudden increase in provisioning is a reminder that credit has, once again, gotten easy, although that firm has always been among the most aggressive.
The rate-sensitive stocks aren't just REITs and utes, they are consumer-related and hang in because of their yields, which will seem paltry in a matter of time.
But the big changes have to do with the reaction to news. The health care tie-ups aren't helping the market. Cigna (CI) -- Anthem (ANTM) was distinctly negative. Two semis reported terrific numbers last week, Cypress (CY) and Skyworks (SWKS), and they were pummeled. Biogen disappointed, but it was a disappointment that wiped out an entire leadership group.
Worst of all: anything commodities. That's the real point of pain in this market. I think we all forget that there was a huge number of oil and gas and master limited partnerships related to them that were created since the shale revolution, and they are all coming unglued. Rarely have I ever seen no snapbacks in a group. It's relentless. We just presume it now. We presume we will lose owning oils. Oil's not coal. It's not in secular declines. It sure acts that way, though.
Which bring me back to FANG. When you have an acronym that can represent really about the only stocks that are working in this market, that says be careful. Thin markets are bad markets, and this is the thinnest I have seen in ages. Let's get past this Fed meeting to see if that's the chief ailment. But FANG's a symptom, not a cure.