We learned our lessons from 2007 to 2009. We realized that you shouldn't take on too much debt. That you should live within your means. That you shouldn't flip houses or create abstruse financial instruments no one can understand. You shouldn't over-expand. You shouldn't take loans you had no idea how you could repay, if the asset you bought went down big in price. That you shouldn't offer loans to people with no documentation and no hope of ever being able to pay them back.
It's just a fact. It's what happened. We got smarter. We got frugal. We got less reckless.We got prudent.
Everybody seemed to learn this sea change, except the bears in the stock market led by the Armageddonists and their saturnine fellow travelers. They refuse to understand how human behavior could change and how regulators could get more vigilant. They think the whole recovery is a sham, some pumped-up Federal Reserve drama in three acts: the slump, the come back and now the denouement where everything goes kerflooey and we are back to where we started 10 years ago.
I think that every day that goes by something good happens to this economy. Tuesday, for example, we got a housing permit number that was the highest in 12 years. No sooner did we get this number than I saw in my Twitter (TWTR) feed and heard sentiments that I can only describe as incredibly negative. The number was regarded as a harbinger of what happened in 2007 to 2009 a genuine precursor to the Great Recession.
I did not hear anyone or read anyone who said that the Fed was able to reverse the trashing it gave to the economy a year ago. I don't know a soul who told us what good news that was, because housing punches above its weight and it means some positive sales not just for the home builders and the banks, but also the retailers and, perhaps most important, all the service people whom you can't see in the facts and figures involving housing. But they are such incredibly important drivers to the economy. This number is such a force multiplier it's incredible.
And its about time. When the Great Recession began, we had 301 million people in this country. Now we have about 330 million, and all we have done is get back to where we were for permits. That's actually pathetic given our growth.
Yet, when the numbers are announced, the Armageddonists immediately tell us that you have to sell now, lest you be in the market for the repeat performance.
What else did I see just Tuesday that made me feel that things are better? Caterpillar (CAT) management rang the bell celebrating its 90th anniversary. A decade ago the old Caterpillar used to be a sink or swim affair. The company was busy making an ill-advised acquisition of Bucyrus, the mining equipment company. This Caterpillar would never make such a reckless acquisition. This Caterpillar, run by Jim Umpleby, runs lean and balanced, is no longer letting China rule its fortunes -- in fact oil and gas is a more important contributor -- and it returns cash consistently to shareholders, with ever bigger dividends and consistent buybacks. It has learned its lesson from the Great Recession and isn't going to lever up to reach for the stars only to find that the fault is in themselves.
Or how about the two most called out stocks for their wild valuations: Netflix (NFLX) and Tesla (TSLA) . For months we have heard that the domestic sign-ups of Netflix have been weakening. We've gotten all sorts of surveys about how it is going to be the big loser when it comes to all of these new streaming products in this country, especially Disney+ (DIS) . But we learned Tuesday that Netflix has more than 90 million customers outside of the U.S. and Canada. Netflix has 47.4 million customers in Europe, the Middle East and Africa. It's got almost 30 million in Latin America much of this because it makes brilliant local content that's loved in their home countries. So maybe Netflix is going to do just fine, anyway.
Tesla? It's been getting some accolades from former bears, because it is so far ahead of the competition when it comes to electrification and its solar rooftop panels that cost the same as regular shingles, but are guaranteed. It's nice to hear when the stock hit its highest level since 2018 that its going up not on tweets from founder Elon Musk, but from car prowess. It is in the end a vehicle company.
Why doesn't anyone care that the super smart people at Blackstone (BX) just bought Tallgrass Energy for $2.2. billion, a pipeline company that yielded more than 10%. That's a wowza, because the pipeline stocks have been incredible dogs, I mean just terrible ones. And this one, Tallgrass, isn't even all that great with pipes running from Ohio to Wyoming to Oklahoma. Could there be hope for this disastrous group that has cost individual investors billions of dollars? That would be something because that might mean the long national pipeline nightmare is over.
For months we have watched the stocks of Macy's (M) and Kohl's (KSS) languish as bear after bear pound them into submission. Now they are rallying. Phony? Stupid? Do we have to judge? The fact is the consumer is strong enough that even these companies can be profiting. Same with Bed, Bath & Beyond (BBBY) , where the new CEO Mark Tritton broomed the lot of old execs, sending the stock up 11%. Maybe that big dividend is safe after all.
Finally, what irritates the Armageddonists most -- and once again a nod to JP Morgan strategist Michael Cembalest -- the banks keep hitting new highs as bulls tiptoe into these stocks with above average dividends and below average price-to-earnings multiples, a hangover from the Great Recession.
OK, you have heard the good news, what has mattered to this market? The foregone conclusion that Boeing (BA) has to stop making its 737 MAX because it isn't allowed to sell them until they are certified. Over and over again, we heard about how jarring and harrowing that will be, not just to Boeing but the U.S. economy.
And how much was the stock of Boeing down? Was it 10%, 5%, 3%? How about unchanged.
Yep, what people have to be thinking about here is not how the world is coming to an end, but the long national nightmare that was the Great Recession is finally being put behind us. It's been done kicking and screaming, with many people refusing to believe that things really are better in a more prudent way, either because they refuse to look at the data or they hate President Donald Trump so much they think it's all phony. I say hate him or like him, the data's good and getting better and the market will stay buoyant until the Armageddonist generation dies or retires. Given how young so many of them are, maybe they can keep propelling us higher with their negativity spewed harder and thicker than the green vomit projecting out of Regan's mouth in that seminal movie, "The Exorcist," which, need I remind the pessimists, is fictional even if, for you, it smacks of facts spewed right in your face.
