Unless... I keep thinking it's an "unless" market, as in, we will go higher, "unless" this or that happens that could derail us.
My problem? There are an awful lot of unlesses out there that make me a little more concerned, even as we have been sluggish for days and working off the dreaded overbought conditions.
On this ho-hum day, let me tick down some unlesses that should be on your radar screen ,even if you are a raving, snorting, stampeding bull -- unless you are a Norman, the breeding bull we brought into impregnate our late long horn, Ambush, and he just charged around to no avail.
The first unless: Boeing (BA) . We interviewed Gary Kelly, CEO of Southwest Airlines (LUV) Thursday, and somehow he was able to have a good quarter, despite a ton of dependence on the grounded MAX aircraft. Gary's not happy, obviously. He talked about how earnings would have been dramatically higher if the MAX were flying, a number so big that I could easily see a 52-week high. He swore allegiance to the MAX and, perhaps more importantly, to Boeing itself as a great American company. Getting that plane back in the air is the most important thing that could happen to help Southwest and all of the other airlines that are dependent on the Max. If you knew when it was coming back, you would buy this stock aggressively, especially given that he said that he's confident that by the time this plane passes inspection, the public will not mind flying it. The pilots, he said, are the ones who know, and they wouldn't do anything that would injure themselves or the passengers.
At the same time, we got an upgrade of the stock of General Electric (GE) from Morgan Stanley, believing that a turnaround is at hand. The long-term care insurance woes? Sounds like they are at last behind the company. The black hole that was power? It's being fixed and should not be a problem. Oh, and how about the Mac Daddy division, how about aerospace? It's pristine, it couldn't be better, it's a total winner.
It's a total winner, unless, that is, Boeing doesn't get this plane certified. GE's one of a gigantic number of suppliers who will not able to make the estimates unless this darned thing goes back on line. The president's right: Boeing might shave as much as a half point of gross domestic product off this country's growth. Southwest and GE are among a host of other companies that are going to be great investments, unless the Federal Aviation Administration doesn't approve the MAX by July, the outside date that management has given us. We can only hope that date is UPOD, an "under promised and over deliver" deadline that seasoned hand David Calhoun, the CEO -- much liked by Gary Kelly by the way -- gave us in Wednesday's much-lauded conference call.
One of the most salient facts about this market is that despite hours' worth of hard-hitting attacks against President Donald Trump by the House Democrats, there seems to be a total unification by the Republicans that the whole shebang is a witch hunt. It's almost as if we have a "why bother" narrative about only the third impeachment hearing this nation has ever had. Hate him or like him, Trump has proven to be great for the economy and stupendous for the stock market. Who would ever think that such a monumental event could be a sideshow for stocks?
Unless ... the Democrats have some sort of smoking gun, some witness, some piece of paper nobody has seen that makes the case open and shut, or at least open enough to get some Republicans to break ranks with the leadership. Without some exhibit, it is shocking yawner. Unless, unless.
The coronavirus is a frightening thing, especially now that a city of 11 million people, Wuhan, is on lockdown. A total of 23 million people are effectively quarantined in the country.
The disease is not something out of "The Stand," Steven King's most chilling book about a virus that is lethal to almost all, it's not Ebola, either, which had a dreaded mortality rate, nor is it SARS. Some are wondering if it is even as bad as some of the flus that have gone around where we expect deaths when they strike. Still, it is frightening even as the casualty rate is low. The history is that we have been able to get these pandemics under control very quickly.
Unless, unless Chinese officials aren't telling the truth about the death rate and haven't really been forthcoming about how easily spread the disease might be. Nothing's more important than human life, but this is a period in China that's known for its travel and its eating and spending. If history is correct, we should not have to worry about this disease as it gets under control. The coronavirus is an unknown still and unless they get it under control, the economic ripples will be quite substantial for hotels, for casinos, for cruises, for luxury good makers and for airlines.
Do you know that Apple's (AAPL) stock is now the biggest in every major index? Seems reasonable. The company sells the most beloved products I have ever seen and now has tacked on a service revenue stream that could be growing by the second. Given the level of customer satisfaction, we should soon be able to model a life-time value for each phone sold.
The credit card, Apple TV, Apple Care, Cloud back-up, the eleven, it's all good, or even great.
Unless we have misjudged demand, something that could cause this red-hot stock to get crushed. I have been taught when you have this level of conviction about the quarter and the year as I have, there are going to be people who are cocky and who pile in at the last minute, and they are your enemy if there is any shortfall at all. One thing is for certain: This stock can't handle a disappointment and because of its size, the averages won't be able to handle it either.
The economic backdrop of this country is pretty close to perfect. We have nice growth, we have no inflation, and we have a Fed that stands ready to support us, so there's not a slowdown.
Just like we had two years ago going into next week, the lead up to the Super Bowl. That's when the employment number came in way too hot and we lost the Fed as a friend. That caused the unraveling of a whole set of strategies involving the Volatility (VIX.X) that put pressure on the S&P 500.
We've got clear sailing right now, unless history repeats itself.
Look, we could play this game at all times, but I just want to point out that I think the longer we go higher, the more likely that we can't afford an "unless" -- let alone two or three unlesses. So when you get too cocky, when you turn into Norman the bull remember, you are fine, unless these very big stumbling blocks get hit and the bear awakes from an extended slumber.