Peak? Are you out of your mind with peak?
You have to be kidding me. We may be just getting started. That's how steamed I am about the theme that is roiling the research right now, and the market is saying that the thesis is dead wrong. I could not agree more.
When we speak of peak, we think of performance or of a mountain, both strong connotations. Give me Everest. Bring it on.
But on Wall Street, peak is a curse word. Peak means done. Stick a fork in it. Bury that market in a shallow grave and give me a tombstone with a death date of, well, now. Today.
Why is it so vile a moniker?
Because when you hear the term peak, it means that it's all down from here. You have reached the end of the line, where gross domestic product growth and therefore earnings growth have stopped climbing and are now going to tumble down. This is no successful mount of Everest with a victory lap on the way down. It's the equivalent, at least in stocks, of plummeting into a crevasse never to be found again.
Like many terms on Wall Street, this peak term is pretty arcane. It makes very little sense, if you are a casual observer of the market or are new to it. So let me spend a minute or two on what it means.
Most people own stocks that trade separately from the economy. These are known as secular growers. It has nothing to do with a separation from religion. It's about growth endemic and organic to the company involved.
But then there are other companies that surf the great wave of economic development, like the one we are having now, with the Great Reopening where there is a seismic, tectonic shift, a radical change in what people are going to do, everything from going out to eat, to traveling, to constructing buildings to building roads and tunnels and bridges. If you have never seen an economic expansion and subsequent contraction, usually brought on by Federal Reserve tightening, you don't know the drill. Most of the portfolio managers who run huge pools of money have been conscious that this recovery is gigantic, fed by federal stimulus, checks from the Treasury, rent abatements and even private commitments, like Apple's (AAPL) awesome $430 billion pledge to crank up the U.S. economy, something which would add 20,000 jobs here.
This Apple commitment is a substantial increase over the original five year goal of $350 billion that Tim Cook laid out on "Mad Money" three years ago. These kinds of pledges work, as anyone who is going to benefit from a $1 billion research center that Apple is now beginning to construct in North Carolina.
Admittedly, Apple's outsized and achievable goal is unusually large but it's part of the emphasis on American growth. Ironically, it's not unlike the $50 billion commitment by the federal government to build semiconductor foundries, to be traced out as part of President Biden's plan to create new jobs and create a secure source of semis in this country, except for Apple's plan, it is more than eight-times bigger. But then again, Apple's got a better balance sheet.
All of this stimulus, I think is going to ensure that we could have real momentum the whole year, especially because even if Fed Chief Jay Powell started the process of tapering the Fed's bond purchases or even raised rates as early as Wednesday, it wouldn't slow this monster of a recovery.
Which brings me full circle to my historical knowledge. It's been ages since I have seen the kind of recovery I think we will have and it's so strong that I think we can't even see the top of it. I think we are probably at base camp two out of four and you can't even see the top from that fourth camp.
I totally get why you could think that we are at a peak, which would cause these big managers to run from this group right now. I mean a wholesale departure, because they run so much money they can't even wait until we get to the top of the cycle. Why do I so vehemently disagree? Because we haven't seen what happens when Americans start spending on travel and entertainment. Americans love to spend; that was the rap against us vs. the rest of the world. We had what was basically an enforced ban on spending unless it was a Costco (COST) or Home Depot (HD) or Lowes (LOW) , Walmart (WMT) and Target (TGT) and a few other stragglers.
We are just now starting to get travel under way, this summer we will be able to go to Europe. We are just beginning to be allowed to eat inside en masse. It's the start of a new cycle not a conclusion.
Stocks have figure this out. For example today we witnessed a classic tug of war about peak versus miles from the top: Cleveland Cliffs (CLF) , the iron and steel maker that is now number two in this country after Nucor (NUE) . The stock of Cleveland Cliffs caught a downgrade today from one firm and a boost from another. The stock's up big on huge volume, an affirmative vote for a much longer cycle. Fortunately, we have the CEO of Cleveland Cliffs on "Mad Money" tonight, so we can hear from him where we are in the cycle.
The schism between secular growth and cyclical growth gets played out all over the place. This morning Otis (OTIS) , the leader in the S&P for most of the day, gave you data that was so much better than anyone thought, with an order growth of 18% across all geographies with organic sales up a shocking ten percent. This is an elevator company. As the CEO, Judy Marks, told me there is construction beginning all over the world, and the U.S. is seeing unprecedented growth. Given how eye-popping those figures were to Wall Street - a big-cap stock doesn't move 6% to an all-time high for nothing -you can measure how far from that peak we are.
Now, a whole bunch of stocks that have been running, like the copper and lumbers companies that signal big-time construction of all kinds in keeping with Otis, you also saw commitments by managers to forgotten stories.
On Friday American Express (AXP) reported, and the CEO, Stephen Squeri, told a story about how thing were just beginning to get good for individual spending and corporate spending. The zeitgeist said Friday that it didn't matter and the stock was crushed, the vying for the biggest loser with Honeywell (HON) in the Dow Jones average. But today it roared to the top of the Dow Jones list. I bet Honeywell does the same tomorrow.
But nothing today took off like a group that had been kept down by this peak talk for weeks now: the semiconductors.
Early in the morning Skyworks (SWKS) , benefiting from a new, powerful acquisition of the industrial and automotive lines from Silicon Labs (SLAB) rallied and rallied hard, aided by our interview with CEO Liam Griffing who talked about how his company will now be diversified and not beholden to cellphones.
Soon after believers in all the most cyclical semiconductor stock came off the sidelines and started furious buying of semiconductors of all kinds.
How can you spot this kind of thing if you are just learning how stocks work? I always say it is like Watergate, the scandal that brought down President Richard Nixon: Follow the money.
You could see the money pour out of the food, drug and packaged goods stocks, going right into the cyclicals. That's peak talk being refuted by the most important of harbingers - which stocks went down and which ones went up.
So we can be obsessed about bitcoin. Blinded by dogecoin. And driven by Tesla (TSLA) .
But what matters is today's market said there's no peak to be seen and it isn't just because it is cloudy outside. In fact, on Wall Street, it was as clear as it can get. It's just too far away to matter.