Wall Street Believes There's "No Collusion, No Obstruction"

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Posted: Apr 18, 2019 8:16 AM
Wall Street Believes There's "No Collusion, No Obstruction"

Source: AP Photo/Andrew Harnik

Wednesday was just one of those sessions where the market could never get in gear. A series of half-hearted rally attempts finally saw major indices slump into the close. The market breadth got more bearish as the 72 new lows on the NASDAQ Composite was the highest level since March 25. 

I was asked yesterday if I thought today’s release of the Mueller report would cast a shadow over the market, I said no, but I’m not sure. Wall Street believes there is “no collusion, no obstruction.” However, the greater risk is the potential for an outright political meltdown. Already, there are signs of no letting up as Democrats chase Donald Trump’s life.

So, as the opening bell rings this morning, U.S. Attorney General William Barr will speak to the American public, and about two hours later, the world will see the Mueller report. It will be a redacted version of the Mueller report to protect folks not under investigations and government secrets. It’s not a move that’s not unusual, but it will be treated as an act of treason today.

This whole brouhaha reminds me of the time Hewlett Packard fought its own shareholders for three years before there was a heavily redacted settlement. 

The fact that no one could make out what the settlement was saying made no difference to HP - they wanted the settlement documents sealed, too.

Judge Charles Breyer wasn’t amused by the request, but his reply was an amusingly heavily redacted (see above) statement rejecting all eight of HP’s requests.

Stealth Recovery

The economy continues to rebound faster than anticipated during the meltdown amid the fear-mongering in December. 

The Fed Beige Book is backward-looking, but it did show some signs of recovery, especially in manufacturing. 

 Meanwhile, the first-quarter (1Q) Gross Domestic Product (GDP) is coming up soon. It keeps getting edged higher after the U.S. trade deficit came in better than expected when imports from China declined more than 20%. 

  • JP Morgan 2.5% from 2.0%
  • Atlanta Fed 2.4% from 2.3% (was once estimated to be 0.2%)

Portfolio Approach

Communication Services

1

Consumer Discretionary

4

Consumer Staples

1

Energy

1

Financials

1

Healthcare

1

Industrial

3

Materials

3

Real Estate

0

Technology

2

Utilities

0

Cash

3

 

IPOs Take Off

I'm searching for that silver lining

Horizons that I've never seen

Oh, I'd like to take just a moment

And dream my dreams, oh dream my dream

Zoom, I'd like to fly far away, yeah

Where my mind can be fresh and clear

-Commodores

PIN or ZOOM

There are two big Initial Public Offering (IPOs) today, and while some folks will be worried about the aftermath of Lyft (LYFT), I think both will open strongly. I think Zoom would be the name I would chase, in part because there have only been five rounds of fundraising, and the company is doubling the top line and making big operating profits.

I am intrigued by the Pinterest model as a “discovery” sight more so than showing off on the Gram .

Pinterest

  • 15 funding rounds (2013 to 2018)
  • $1.5 billion raised
  • Valuation, last round $12.3 billion
  • IPO range $15 to $17 – upped to $19 yesterday

Zoom

  • 5 rounds (2011 to 2017)
  • $160.5 million raised
  • Valuation, last round $1.0 billion
  • IPO range $33 to $35 up from $28 to $32