Extremists of the world, unite! We can divide the bulls and conquer.
Sometimes I feel that really is the mantra of this market, a fundamental belief that it is all great or all bad, so we will either have an amazing run higher or we are going to get that fabled 10% correction, if not more.
The logic is seductive. If the delta variant can't be stopped, then we have some serious times, times that will freeze economic activity and put an end to the amazing service, travel and leisure boom we've had. That's been a gigantic influence on the Great Reopening. That can spell the end to everything from the nascent rally in Boeing (BA) to the attempts to get back into the black from Southwest (LUV) , United (UAL) or the hotels and restaurants and small retailers that had been booming.
And if the delta variant can be tamed, something that Dr. Scott Gottlieb, the former head of the Food and Drug Administration and a CNBC contributor, thinks could happen soon, then everything you would be buying under the first, the doomsday scenario, you would be selling and crushing it and be thanking your lucky stars that you didn't listen to the jeremiads of the myriad bears in the audience.
There's only one problem with this. Things are never this black-and-white. We don't have a disaster scenario or a heaven-sent bull run.
On "Mad Money" Wednesday night, We will be talking to Marvin Ellison, the CEO of Lowe's (LOW) whose stock fell from $193 to $181 in sympathy with the decline in the stock of Home Depot (HD) . Today the stock of Lowe's advanced more than 20 points. Why? Because its circumstances were much different from Home Depot. The company is in a major transformation to localize the stores and to make them more pro-friendly -- a market hitherto dominated by Home Depot, while not alienating the female shopper. She had consistently favored Lowe's over Home Depot, but had been switching allegiances before Ellison got there three years ago.
In other words, the doomsday-halcyon day wrap is a story-telling winner if you want to tell the tale, but it is, alas, a tale told by an idiot full of sound and fury signifying nothing.
Why is this anti-dichotomy, anti-zero sum stance to alien to Wall Street? Simple. Because it places way too much emphasis on aggregate numbers and then simply tries to bolster them with anecdotes to seduce you, typically into negativity.
For example, Tuesday we learned that retail sales were very light for July and we didn't know what to make of it. Then Home Depot came along and told us that its non-pro shoppers slowed down their spending at the stores, because they did other things and went other places once the reopening occurred. That made everyone suspicious of every retailer, even the good ones, like Walmart (WMT) , which reported a fine number, and the group was pummeled.
Wednesday, though, Lowe's and TJX (TJX) told terrific stories that called into question the worthwhile nature of that aggregate retail sales number. It may help an economist come up with some classroom theory, but in real life it made you no money.
Same thing goes with autos. We heard about general weakness in autoland associated with this retail sales number. But what if I told you that there are more chips around these days to make new cars and the fall buying season could be a great one? You still want to do some selling? I wouldn't. As I told Scott Wapner during my regular "Halftime" gig, the stock of Ford Motor (F) just sold down from $16 to $12 and all that happened is that availability for chips from Taiwan Semiconductor (TSM) , the biggest auto semi supplier isn't that bad these days.
We got the same horrendous aggregate news on Wednesday, this time about slowing home sales, largely because of sticker shock. Home prices have gone up radically given the price of many of the goods that have gone into the home and, because of a scarcity of product to sell. Now we are being told that, because houses are so expensive and mortgage rates are so low, the Fed must move fast to slow the market down.
I read it a total other way though. I think that housing isn't done at all. COVID originally drove an insane housing frenzy.
Now? Now, I think that the frenzy may be settling down and that's what has to happen for any sustainable housing business. The slowdown had been expected and the companies actually want it to replenish supply. One so called bad month does not demolition the totally bullish scenario of low rates, strong demographics -- 75 million millennials starting families, low supply, low mortgages and 10 years of pent-up demand.
All that said there are plenty of people worried about the biggest intangible out there, one that is indeed weighing on the market: Where are you going to go to work. If you live near center city Philadelphia or Manhattan and your business moves out to the suburbs, something that may require substantial interaction on a subway or bus, you could be buying a car.
But, if you don't know what's going to happen, which is the case for millions of Americans trying to figure out the new hybrid work style, it may freeze you into not buying anything. let's face it, if you are going back to the office after buying a place further away, you aren't going to throw a lot of money at the house.
So what can you do at this moment to be sure that you don't get blown out by a tougher market? How do you thread the needle if it is true that COVID cases go down beginning Saturday, which would be so joyful that you might be inclined to throw money at the market.
If you think we are on the verge of starting to beat COVID, then it is real easy: You buy the stock of Disney (DIS) , which has now given up pretty much everything it made after that amazing quarter. Lockdown, then Disney+. Outside: Disney theme parks. Inside Disney+. I love the optionality of this choice.
The good news here: Every single time the market takes its cue from an aggregate number, with the exception of the non-farm labor report that's from the first Friday of the month, you should have an outlier handy to pick up when the negative chatter heats up.
The bad news: You get days like Wednesday, where it simply doesn't matter. Almost everything goes down. This is day-two of a bigger selloff. All I ask is that as the market gets more and more hideous, you get more and more interested in buying something. This selloff is like all others that sever the head of the bull and bring it to you on a silver platter: It is not going to make you a ton of money right now. But I think that you will get an unfathomably good basis that sets you up for tremendous long-term performance when people realize it is not the end of the world.