A Dip In Liquidity

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The market has seen a dip in U.S. liquidity, and only 19% of all stocks are beating the S&P 500 over the last four weeks. That hasn’t happened in over 20 years -- and possibly longer (likely the Dot-Com bust).

Everyone should be nervous. However, everyone should still pay attention, because if the Weighted S&P 500 hits oversold, we’ll likely see a rebound. Despite this, we see record-low levels of short interest on both the SPY and QQQ. I think we’ll hit 6,000 and then peel back to 5,000 in 2025 or 2026. Barring a liquidity crisis, this thing will keep going.

Now, onto the next week's events.

Monday, June 24, 2024

  • Event: Marine Money Week conference

Monday will feature a big conference for investors in the January shipping names. Ardmore (ASC), International Seaways (INSW), and Teekay (TK) will all be part of this three-day conference.

There’s an opportunity to gain insight into innovation in the space, but, more importantly, it will provide a deeper dive into the economics of shipping and how competition from China may weigh on the sector. I remain very bullish on Ardmore because they have such a young fleet and operate in a very niche area of specialty chemicals.

Tuesday, June 25, 2024

  • Event: FedEx earnings (FDX)

So, how’s the global economy doing? FedEx will tell us. This is one of those stocks that if the company misses -- and misses badly -- you buy the dip, especially if the stock falls into the third or fourth standard deviation band.

It may be wise to keep a close eye on Expeditors International (EXPD) and Landstar System (LSTR), as both stocks correlate very strongly to FedEx's earnings performance.

Wednesday, June 25, 2024

  • Event: Chipotle (CMG) and its 50-1 stock split is upon us

If there were ever a stock that got away from me, it’s Chipotle. I wrote my graduate papers in agribusiness on their supply chains, and I never bought the thing. Shares were around $350 at the time. It happens.

Thursday, June 26, 2024

  • Event: Earnings from Nike (NKE), McCormick (MKC), and Walgreens Boots Alliance (WBA)

This is a trifecta of interest for us. We love Nike as a company, and the stock, from a liquidity perspective, seems to do badly when liquidity dries up globally. It may be wise to buy the dip.

U.S. liquidity fell by $50 billion last week. That was the biggest drop since April, and that’s why we’ve been negative (aside from the top 3 stocks in the market). Don’t worry, liquidity will increase again. It has to.

(Click on image to enlarge)

Friday, June 27, 2024

  • Event: The Core PCE price index report

Will we have a rate cut in 2024? We will find out on Friday. If Core PCE is over 0.3% for the month, not only should you have a glass of wine, but you should also give up on any rate cuts for the year.

The good news is that liquidity keeps expanding, and the stock market doesn’t represent the economy. But the bad news is that interest rates will remain elevated, and the private sector will continue to get kicked by central planners.

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Disclosure: None.

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