This time it's Different?

The weakness continued.....as growth stocks get pummeled causing the Nasdaq to break down and through 4000. Many now wonder if this selloff - which began in the tech, biotech and social media will spread to the broader mkt. This sell-off is perhaps not surprising with valuations being ignored as new age analysts try to tell us that "this time it's different"......right!

For those of us that were here in 2000 - How many times did we hear that phrase during the tech dot com boom of 1998-2000? - Today - we are hearing it again - "This time it's different"........ is it?

The listing of high profile social media names like Facebook, LinkedIn, Candy Crush and Twitter has contributed to an age where new style analysts think nothing of assigning stratospheric valuations to create a new buzz. "It's a new world and everything you thought you knew about stock valuations are no longer relevant....." Vaguely familiar.....? And this is only reinforced in the minds of many when they hear that FB paid some $19 billion for 'WhatsApp'.

Recall that WhatsApp is a "cross platform mobile messaging app which allows you to exchange messages without having to pay for SMS. It is available for iPhone, Blackberry, Android, Windows and Nokia and YES, those phones can all message each other!"

What did we do before we had these 'cross platform devices'? And to think - they can message each other too.....kind of like when I used to want to speak to someone - I would just call them up and have a conversation...now the conversations just happen by themselves because the phone knows what I am thinking and who it should call.....Amazing.

Today these new analysts they tell us that stock prices are no longer about earnings or valuations... We look at

'Facebook Likes', 'Number of Followers vs. the Potential Field of Followers' and 'LinkedIn Requests over a rolling 5, 10 and 100 day moving avg' and 'the number of people in the world vs. the potential who will commit to play a game on their phone and connect to everyone else that is playing...' to extrapolate valuation and future price moves...."

And so you have it.....stock prices that do not move in concert with any traditional measure, allowing for prices to get somewhat ahead of themselves...so when they begin to collapse - why are traders even asking why? Oh right - it's that 'new paradigm'.....

Now that being said - I am not calling for the 50% correction in the Nasdaq from 2000 - 2001 or the 50% correction we witnessed in the broader mkt during the 2008-2009 GFC - but I am saying that it should serve as a wakeup call - a call that reminds us that the mkt can turn on a dime once the party stops - especially if conventional valuations are ignored and stretched beyond 'the reasonable man standard'.

So - are we seeing the beginning of a 'correction'? Maybe - but I remain in the camp that this will not be as sharp or as ugly as some are predicting. I do not see a bear mkt coming... US eco data continues to improve and globally, the economic picture continues to brighten. Central banks stand ready to calm financial markets, if they in fact begin to implode.

Today we will get retail sales - exp of 0.9%, tomorrow will be Empire Manf exp of 8, CPI exp of 0.1% , ex food and energy of 0.1%. Wednesday will bring us mortgage apps and Housing starts of 975K. In addition we are now well into earnings season and look for GS, C, MS, JNJ, GE, PEP, UNH, BLK.

On the latter note, watch for the 'Janet Show' as she will be speaking at a couple of events this week. Investors/traders will no doubt hang on every word. I would expect that she will continue to toe the party line and reassure the mkts of continued loose policies and even more so if we begin to see a broader meltdown in the mkts.

US futures are flat - international mkts were mixed. In Asia - investors await the deluge of Chinese eco data this week. Tensions in Ukraine continue to simmer under the surface causing investors to remain cautious. Even with the mkts under a bit of pressure - there is no reason to run out and buy them aggressively at all...
Expect that many will wait and see what the momentum stocks do in early trading. Any sense that they have stabilized - might cause a bit of a rally - but not one that I think lasts. Earnings will dominate and after Friday's disappointment - investors will be patient as they listen to the results.

HFT Update:

Apparently - Tradeworx CEO - Manoj Narang - the outspoken HFTrading cheerleader continues to sing his song as he tries to justify how "scalping" institutional order flow is 'healthy and good for the US capital mkts'........ It is mind boggling to listen to this guy as he talks in circles with no real understanding about WHAT the US capital mkts are and should be.

Funny how after "Flash Boys" was published that so many institutions are finally standing up and discussing their disgust with current mkt structure and rule sets. So much so - that even Fidelity is getting into the fray - announcing that they have begun the process to create a "NEW STOCK EXCHANGE that will allow big money managers to sidestep current mkt structure - It's name: SAKURA - the Japanese word for Cherry Blossom.

"The venue if successfully launched, would represent an ambitious effort to reduce costs and streamline trading.....Sakura would also PREVENT HF Traders from interacting with these orders.."

Considering that Fidelity manages over $1 tril of investor assets - I guess his opinion counts more than some Hi Freq guy with no skin in the game that just wants to 'pick off' the mkts..... Break out the popcorn - the night is young...

Grilled Pork Chops/w Sweet Vinegar Peppers

This is an easy dish and not one that you might think of readily...but make it easy on yourself.....for this you will need only 4 things really. You need center cut bone-in thick pork chops, olive oil, sweet vinegar peppers (you can use hot if you prefer), s&p and chopped scallions.
Preheat the grill.

Rub the chops with olive oil, salt and pepper - just enough to massage the chops and prepare them for the grill. Place chops on grill and sear for about 3 mins then turn over and continue cooking for another 4 or so mins on reduced heat. Do not burn them.

While the chops are cooking - open the jar of sweet vinegar peppers, slice in half and sauté quickly with some of the juice in a sauté pan - really just to warm them up - you are not "cooking them".

Now remove the chops from the grill - place on a warmed plate. Top with the sweet vinegar peppers. Serve a lg salad - maybe mixed - romaine, some spinach, Boston bib, sliced red onions, and tomatoes. Dress with a simple balsamic vinaigrette.


Buon Appetito.