Did the Centers for Disease Control give us an all-clear sign today, a sign that the pandemic is over for those who have been vaccinated - and you can go back to normal life? It sure seems like it, as those of us who have gotten jabbed can get rid of our masks and stand next to each other and maybe even, if you don't mind risky behavior, shake hands or even hug.
One thing is certain: The CDC told you that you are going to get clobbered if you own stocks of companies that do well when America is closed, and you have to buy stocks of companies that do well when the economy roars. As CDC Director Rochelle Walensky said, "Anyone who is fully vaccinated can participate in indoor and outdoor activities large or small without wearing a mask or physical distancing."
I don't blame you for being confused. Director Walensky is the same person who broke down in tears on March 30, and said "I'm going to lose the script, and I'm going to reflect on the recurring feeling I have of impending doom."
You could say her impending doom comment worked, it scared us into getting vaccinated. Or you can say that this is one of the most confusing moments you can ever recall.
No matter. We were about to have still one more day of everything rolling over, led by the stocks of companies that are losing gobs of money, and her positive comments had the inverse impact of what seemed like a Stephen King-inspired moment, not unlike that classic Lincoln Tunnel scene in "The Stand" when New Jersey couldn't keep infected New Yorkers contained.
I know that it's a big deal. I know that it's worth some celebrating. But let's break this rally down into its sustenance and figure out what really happened, because it has as much to do with real world prices of assets as it did with the end of our impending doom.
This market's all about keeping inflation tame enough so that the economy can growth but not overheat.
There are those of us who believe that inflation can be tamed if we just give it time to recede and manufacturing to catch up and commodities to stop soaring.
And then there are those of us who think it is already too late and everything should be sold.
The latter group's been in charge for months now and that worldview was taking apart first the stocks of companies with no sales and no earnings, then the stock of good sales but no earnings, then the stock of great sales and some earnings and it had just gotten to the companies with great sales and great earnings, companies that had been sacrosanct until these last five days.
Instead, money reverted to a handful of companies that only do well when inflation is raging. I always say I can find the bull market for you, but in the last few days, the bull market was limited to companies that dig up resources and sell them, a handful of companies, indeed. That's because almost every day commodities of all kinds went up and that's untenable to all but those who like to own copper, oil and iron, steel and grains.
Today, though, we got a stunning confluence. First, in a pretty big surprise, a major commodity, one that is front and center, got crushed. I am talking about oil, where the traders got the surprise of their lives when the Colonial Pipeline company apparently paid $5 million ransom to the bad guys, perhaps to get things going again. We don't even know if it is a quid pro quo, but it was shocking and those who had been hoarding oil on this incident suddenly had to give it up. When oil ticked down before the market opened, that caused interest rates to go down and even though we had another hot number this morning, the producer price index, oil's decline startled commodity traders who have been betting that there could be no ceiling on anything, least of all oil.
Now, it wouldn't have mattered if it were just oil. But lumber, perhaps the most egregious of commodities seems, at last, to have reach a peak. Lumber's been on a tear, running from about $300 to $1,625, but we have just had three down limit days for lumber.
Commodities tend to trade together, because these days there are so many exchange-traded funds that link them. The combination of the two of the hottest commodities, oil and lumber, getting smashed has spilled into the whole complex causing almost every commodity to trade down and down hard.
But that was only a part of the story. This market has been gripped with speculation to the point where anything crypto threatened to explode. We are going to talk to CoinBase (COIN) on "Mad Money," but just like lumber-led commodities down, speculators got crushed, too, when Elon Musk, the pied piper of all things crypto, announced he wouldn't take bitcoin for cars anymore. Here's a guy who went from trashing Dogecoin on Saturday Night Live, his own hilarious creation by the way, to decking bitcoin itself, the cow bell of the entire speculative conceit.
Now, remember, I have been saying that the bond market is calling the tune and the bond market hates rallying commodities and it despises rampant speculation. You slay both of them, even for a day, and that made it so interest rates didn't climb even as we got an economic green light from the CDC.
This insanely positive market, where all but the most speculative stocks, the crypto equivalent of equities, and the stay-at-home plays, roared. Remember, as long as commodities roared and speculation raged Fed Chief Jay Powell looked foolish with his belief that inflation is temporary. Today he looked like the most prescient man in the world and right now anything that allows you to believe that we can have growth without inflation is going to send you to pretty much everything from the financials, to the techs, to the consumer products.
If you think that's all way too pat let me tell you what else has been way too pat: For the last week, stocks of all sorts have been mowed down and doom was in the air. That has led to a sudden resurgence of shortselling, betting against stocks, because, well, how can you buy stocks ahead of a red-hot sales number like we are going to get tomorrow.
But what happens if it isn't that hot? What happens if Washington stops trying to jam through more stimulus? What happens if unemployment benefits get cut back? What happens if we don't raise taxes on the people who own stock and have been selling ever since we learned about capital gains?
What happens is what happened today.
Can it happen again? I say it all depends on four things, the dreaded four speculative horsemen of the stock market apocalypse: oil, lumber, bitcoin and yes, Woodstocks, the highly speculative stocks that the once-hottest portfolio hand ever, Cathie Wood, adores and buys every day. If those four go down in tandem as they did today, then you will have more days like today. If not, then this will be just a reprieve, a well earned one, but a reprieve nonetheless.