Wall Street is about as jammed with crowded trades as it’s ever been — retail guys, mutual funds and hedgies all loading up on the same, high-profile investments, according to Bank of America Merrill Lynch BAC, -0.18% .
When it works out as planned, like it has for years now, everybody wins, and the bull keeps flexing. So what happens when things go sideways? Well, obviously it’s been awhile, but if Kent Engelke of Capitol Securities Management, finally hits his mark, we could find out sooner rather than later.
Engelke told the Wall Street Journal that he’s been “miserable” in recent years because he’s avoided popular technology names like Apple AAPL, +1.11% , Amazon AMZN, -2.34% . Netflix NFLX, -1.30% and Alphabet GOOG, -1.21% , opting instead for what he believed to be undervalued corners of the market.
In retrospect he should have jumped on the bandwagon with everybody else.
But, in our call of the day, he’s not budging from his bear stance.
“The last three years have been among the most difficult ever out of 33 in the industry because we haven’t owned FAANG [Facebook, Apple, Amazon, Netflix and Alphabet’s Google]” he said, adding that he’s convinced the rally could fall apart if the Fed disappoints with its rate cuts.
He warned we then might see “a really big, ugly selloff.”
Such a move could happen as soon as this week, if the Fed doesn’t deliver Wednesday a quarter-point cut. That is, of course, unlikely, but if economic data keeps coming in strong and earnings show a clean bill of health for Corporate America, the path to lower rates the rest of the year could get muddied.
Nothing “big” or “ugly” so far this morning.
The market
The Dow Jones Industrial Average DJIA, +0.17% is up fractionally early, while both the Nasdaq Composite COMP, -0.60% and S&P 500 SPX, -0.19% are sitting just below breakeven. Gold GC.1, +0.32% is down fractionally. Oil CL.1, +0.39% and the dollar DXY, +0.09% are sneaking higher.
Europe stocks SXXP, +0.03% are higher, led by the FTSE 100 UKX, +1.82% , while Asian markets ADOW, -0.56% finished in the red, bogged down by selling on the Hang Seng HSI, -1.03% .
The buzz
We’ve got another busy stretch of earnings ahead, with Beyond Meat BYND, -6.20% , Apple AAPL, +1.11% , some chip makers and Big Oil all on the menu. While a bit quieter than last week, the coming week will have the second largest crowd of companies reporting this quarter
Big weekend for Hollywood with Disney’s DIS, +1.21% “The Lion King” easily topping the box office to bring its whopping 10-day total to $350 million. “Once Upon A Time... In Hollywood” also fared well, with writer and director Quentin Tarantino enjoying his biggest opening ever.
The chart
With reminders popping regularly of just how fragile a democracy can be, the Visual Capitalist blog posted this overview of which countries have been pulling it off the longest. As you can see, by these criteria, the U.S. tops the list:
The stat
$3 million — That’s how much American teenager Kyle Giersdorf won on Sunday by taking the top prize in a Fortnite tournament.
The quote
“Fox News rang the bell, the president salivated and his thumbs moved across his cell phone into action” — the Baltimore Sun’s editorial board, responding to President Trump’s attacks on Elijah Cummings and the city of Baltimore.
The tweet
One U.S. senator has clearly had enough:
The economy
It’s all eyes on the employment report this week, but we won’t see that until Friday. In the meantime, traders will keep an eye on the midweek Federal Open Market Committee (FOMC) meeting, where the Fed is expected to announced a quarter-point rate cut for the first time in more than a decade. Before that, the Dallas Fed manufacturing activity data for July hits at 10:30 Eastern on Monday, with pending home sales figures due out the following day.
Random reads
Chasing perfect weather around the world — 52 cities in 52 weeks.
Some knuckleheaded Tesla TSLA, +1.94% owner parked his car on a complete stranger’s lawn, and left it there charging for 12 hours.
NBA champion Jeremy Lin is having a really, REALLY tough time with free agency.
Remember that bus from “Into the Wild?” One woman just died trying to hike there. She drowned crossing a river.
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