Wall Street ticks up to extend record streak

For the second day the Dow has seen another all-time new high even if it's just to the tune of a modest 24 points.  And ditto for the S&P on a third consecutive day, all on continued upbeat Q2 and a belief in the continuing strengthening of the economy.  Tomorrow the Bank of England meets to talk about their own version of QE so volume was a little bit on the light side at 6.5 billion in anticipation of that outcome.  Generally speaking, Q2 is expected to be in good shape, and Q3 & 4 in better.  But before we have too big a party, let's just keep in mind that there are a few minor things in our future such as the presidential election that can potentially change everything.

S&P and Dow hit records as growth bets boost Wall Street

Yesterday the S&P reached a new all-time high and the Dow was lagging just 70 points behind another all-time high.  With the S&P gaining another 15 today and the Dow up 120, both are now at new all-time highs.  Investors are sending a strong message that the U.S. economy, despite a slow start to the year, is on solid footing.  Q2 is underway and while some believe it will be a repeat of Q1 with another 5% decrease in earnings, others believe that Q1 was the bottom and that Q2 is bringing bright news.  This was bolstered by United Continental, Seagate, and Western Digital all turning in good reports.  Energy also came in with a more than 2% gain with crude leading with 5 percent.  Part of the rally is attributed to the belief that the central banks here and globally will keep interest rates low due to the Brexit.  7.6 billion shares were traded which is right in line with recent averages.

Strong economy, earnings bets propel S&P 500 to record high

7 more points on the S&P finally sent that index to another all-time high, something it's been flirting with for several weeks now.  80 more points on the Dow, now also just 70 points shy of its all-time high reached 3 years ago.  With global markets pretty much at a standstill, the strong U.S. market is being lauded as proof of the remarkable resilience of our economy.  The debate still rages whether the stock rallies are being artificially triggered by low interest rates or legitimately by improving industry performance.  (I personally subscribe to the latter view.)

How the American Revolution Trashed the British Markets 1770-1790

So we begin this Sunday's edition with the bonus which is a fascinating graphic showing how the American Exit from the British Empire (Amexit) wreaked havoc on their financial markets for 20 years.  This actually appeared in The Economist on July 4th so we're a week behind picking it up.  But it's worth the pickup.  The summary of the week's events is presented below the graph with all the great post-Brexit comeback news the week had to offer.  Hope everyone had a great weekend.

Hedge Funds Worst First Half Since ’11 on Turmoil

Our Saturday kernel of wisdom this week is the graph below that shows not surprisingly that hedge funds seem to do well mostly only in falling markets.  When things are going well, hedge funds seriously underperform, which makes a certain amount of sense in view of the fact that the only really big secret about these kinds of funds is that they do a lot of short selling, a strategy that can be hugely profitable but that works best in a falling market and can be fraught with calamitous risk otherwise.  This has been especially true in the last six years when there's been so much wild seesawing on practically a daily basis.  When the market goes down triple digits one day, then up again triple the next day, and this happens over and over ... let's just say these are not exactly ideal conditions for successful hedge fund management.

S&P 500 brushes record high after blowout jobs report

Well, this morning's payroll report came in boffo and that caused another huge rally shooting the Dow up a big 250 points putting the index now back a big 135 points above the pre-Brexit level and the VIX "fear gauge" at its lowest level since late May.  It wasn't just a big number, it was huge, coming in with a hundred thousand more jobs than predicted, 287,000 new jobs or 65% higher than the forecast.  There is now much more confidence that the poor Q1 performance was a fluke and that we are back on track with the growth we had enjoyed in prior quarters.  Q2 earnings season begins next week and then we'll have a whole new ballgame.  Meanwhile, today's volume was just a little below recent averages at 7.1 billion.

Energy weighs on Wall St. but Costco shines

Another mild correction today and it actually was looking more like a major correction as the Dow fell over a hundred points throughout most of the session only to rebound near the close to regain all but 22 points.  Crude fell again, this time 5 percent on reports that inventories were still higher than expected.  And with the market becoming more and more comfortable with the Brexit, the safe havens of gold and utilities which everyone had initially rushed to are now taking a downturn.  The bright spot was the employment report showing 13,000 more jobs than forecast.  But the real report, the monthly payrolls report, comes in on Friday and, if it's in agreement, that should boost things further.  The new job numbers have placated concerns about the weak May data and has everyone hoping the Fed will be reassured.  At 6.7 billion shares, volume was below the 4-week average of 7.8 billion.