The meaninglessness of quarters must not be lost on you. On Monday, we had a host of companies whose stocks went nuts despite the fact that as recently as a couple of weeks ago -- or even a few days ago -- they reported widely panned numbers. Take Caterpillar (CAT) . When CAT reported, it was plum ugly. The great machinery maker cuts its forecast and told a pretty darned negative story about the world. The stock was looking down six to $129 and change at 8:15 a.m. ET -- and there was no sign that it could possibly be bottoming.
Freefall.
Now it's at $146 and breaking out as if the quarter were a fantastic one. It was anything but -- the best thing you got was a commitment to the dividend and the buyback.
Or take Union Pacific (UNP) . Its stock got slugged when it reported weaker carloads and weaker earnings and I thought gave a pretty downbeat forecast. It stung: This is a fabulous railroad but it could be considered hostage to China, coal and oil, all softer end markets.
It just went up twelve points in two days on no news at all.
And then there's Federal Express (FDX) , which doesn't report for a while but with a stock that rallied eight points in one session completely out of nowhere. Based on what? Trade rumors? Oh please. Nothing's happening even if the Phase One of talks go well. China's slowing regardless. Who really knows how FedEx is really doing?
Oh and it's not just transports. Chevron (CVX) reported an extremely light quarter Friday, both top and bottom line. You can see why it needed Anadarko Petroleum (APC) as much as Occidental Petroleum (OXY) ; It needed to buy some growth. It should have sold off on that disappointing quarter, and ultimately did fall a couple of bucks in pre-market trading. Then it flatlined back at the previous close. Then yesterday it rallied five dollars and thirty-six cents. Make sense to you? It shouldn't. It was all some sort of strong economy buy program.
I wish I could tell you how all of this can happen. The un-inverted yield curve? Some good trade talk chatter? A better overall tone to earnings? A weaker dollar?
But I can't.
In fact, I will go one step further. I am thinking this is a rally based on vicious ETF buying where there aren't enough sellers materializing. These ETFs suck the liquidity out of the market.
It's phoney, to that extent. The buying is robotic. Real buyers -- human buyers -- do not pay up 8 points for FedEx on no news, unless they think there is going to be some sort of a takeover. Real buyers work an order. They wait for sellers to come to them.
I swear if there hadn't been a machine behind these orders, here's what would have occurred. The stock could have been up, say, two bucks. If the buyer had simply walked away then, the offerings would have built up and the sellers would be looking for that buyer offering stock up, say $2.25 trying to catch him. Then the buyer could either take the offer or sit on the bid side.
Instead, the buyer blitzed the sellers all the way up and you have to believe that there was NO ATTEMPT to get a good price. None. It's almost as if getting a good price simply doesn't matter at all.
I find that increasingly to be the case on these up days. Your instinct is to say that everyone who wants to sell has sold and that's why you have so little stock between say, $156 and $164 for FedEx.
But that's just wrong.
What is really driving it is the inability of the machines to moderate their buying. They simply buy too fast, faster than the sellers can offer stock.
Now, I want to make this point for a particular reason. Far too often my myriad critics on Twitter start babbling about how I don't mind it when the market goes up on programs -- only when it goes down.
These people are knaves and mountebanks and total jokers.
I hate it when stocks go up like this. It destroys what makes the market great -- deep liquidity --and it's totally artificial. These stocks shouldn't be going up like this.
If you ask me, one of the many reasons why retail investors are no longer involved in stocks is because what can go up 8 can go down 8. So, remember my view: I hate markets that rip up. I like markets that give me the best prices.
And I despise those who say otherwise about me. These markets are too thin. They are almost manipulated by instant buying. Everyone knows it. No one does a thing about it. That might curtail trading. That might curtail fees. That, not orderly markets, is what matters.
What a travesty.
