Sometimes we have stealth moves that defy close scrutiny simply because they happen in dribs and drabs without any focus.
The two biggest stealth moves of the year? I think they are the stocks of JPMorgan Chase (JPM) and UnitedHealth Group (UNH) . They have been relentlessly rallying since September and they have taken two of the biggest sectors -- health care and financials -- with them.
These two companies, UnitedHealth and JPMorgan, are what I consider to be the remaining blue chips in this market, well-run companies with good balance sheets that are the most respected members of their cohort. David Wichman, the CEO of UnitedHealth has put together a company that has both lowered the cost of health care and increased the measurement of outcomes to do so. He's been a passionate advocate of keeping the status quo but improving on it.
Jamie Dimon, the CEO of JPMorgan, has similarly been a defender of the American banking system and its methods of providing credit and banking -- not just to the rich but to the masses.
In September, their stocks plummeted pretty much endlessly, with UnitedHealth's stock taking out the $216 bottom that occurred at around the time when Wichman, a non-political CEO, went off hard on the politicians who would switch to a single-payer system, saying "Medicare for all would destabilize the nation's health system," and "surely jeopardize the relationship people have with their doctors, destabilize the nation's healthcare system and limit the ability of clinicians to practice medicine at their best."
But at that point of maximum September pain, when the double bottom did not hold, a remarkable thing occurred: CNN ran a story entitled "Elizabeth Warren is Rising Everywhere." The Warren presidential campaign, the article contended: "is, to quote NBA Jam, on fire." A highly respected Quinnipiac University National Poll showed her passing centrist Joe Biden 27% to 25%.
JPMorgan's stock? Pretty much the same thing. After trading in the $100s, it had rallied to $121 and quickly shed 10 points at the time of that Quinnipiac poll.
It looks, in retrospect, that was the apex of Warren's run, at least so far. Ever since then, these stocks have become the market's leaders, two highly visible Dow stocks that have become irrepressible without anything happening to them. In fact, I would go one step further: If all we cared about was the Fed -- the total obsession of many who make the Fed a cottage industry -- JPMorgan's stock should be going lower. Weren't we taught that when we have a flattened yield curve you are supposed to sell these stocks? UnitedHealth? If the economy is getting better, as the Fed seems to indicate with the so-called end to easing -- then you should be selling this stock and selling it hard, not embracing what is a huge run ahead of a big analyst meeting tomorrow.
So what do these moves really say? I think they show you that if you look at only the Fed and the yield curve, as so many people have taught us to or insist on pushing -- kind of like opioids on an unsuspecting investing public -- you miss what's really driving stocks: the election and the fact that the Democrat horse race is directly impacting stocks now.
I think the last part of the UnitedHealth stock's rally had two elements to it: one, the faltering of Warren for being too extreme; and, two, the decision by her, perhaps to stem her decline in the polls, to push back when she would act on health care for all until three years in, typically when nothing gets done.
So, if you look at the two strongest stocks in this rally, you know that they are not hostage to the Fed, not hostage to the Chinese-U.S. talks, not hostage to the impeachment hearings: They are about the polls, and the polls show that the extreme end of the Democratic field is fading and the moderate end is uniting around beating Trump, not just fighting for a European-style government with socialist leanings that, in the end, may be too far for the American people, even those disenfranchised by this administration, to go.