NASDAQ

With the Nasdaq having finally eclisped its bubble-era record, the weight of the tech investing world now rests on the shoulders (or should we say "wrists") of just one company...

"What is different this time? Central banks are driving all investment decisions, and what this implies is that they are in this trade so  deeply that there is no obvious or practical exit.... This is a dangerous situation. The focus must return to the REAL economy; we cannot trade our way out of past mistakes."

Well, the Nasdaq finally did it. So if you invested in the Nasdaq at the peak of the dotcom bubble, you are just finally breaking even 15 years later.  Unfortunately, the truth is that stocks have not been soaring because the U.S. economy is fundamentally strong.  Just like the last two times, what we are witnessing is an irrational financial bubble.  Sometimes these irrational bubbles can last for a surprisingly long time, but in the end they always burst.  And even now there are signs of economic trouble bubbling to the surface all around us. 

Operating and reported earnings have turned sharply lower over recent quarters which has historically been associated with major market peaks. As shown below, it is also important to notice that revenue has tended to lag these downturns in earnings previously. This is because the measures used to substantially boost profitability from each dollar of revenue generated through accounting gimmickry, share repurchases, and cost cutting are finite in nature. When the effect of those manipulations fade, so does the inflated profitability generated from each dollar of revenue. This will be something worth watching closely over the next few quarters particular as the commentary of a "continued secular bull market" continues to hit the headlines.

Warning, some high school students were injured in the making of this Nasdaq Trader analogy...

A gentle reminder that next week sees the beginning of the market's seven-and-a-half year itch...

Today, China remains central to the notion that the world is in recovery.  It is believed to be growing at 7%: not as rapid as the 9% growth we’re used to seeing, but still dramatically higher than any of large country... Only the whole thing is bogus.

Amid the 'glorious' earnings last night, Nasdaq is on its own today, surging to higher highs as The Dow and S&P are unch to down. As this exuberance exudes, gold and silver are being smashed lower... which is odd given The ECB's threat to pull Greek financing. Crude prices are also tumbling post-Durable Goods.

All the comparisons to 2000 seemed a little far-fetched.........until today.

• Obama’s Drone-Strike Rules to Be Reviewed (WSJ)
• Hostage locations difficult to track - and may be getting harder (Reuters)
• Varoufakis Said to Take Hammering From Riled EU Ministers (BBG)
• EU Frustration Mounts as Greeks Try to Bypass Aid Process (BBG)
• Kleiner Perkins seeks almost $1 million in costs in Pao case (Reuters)
• Google Misses, Caps Costs as Growth Slows (WSJ)... stock surges 
• Oil prices trade near 2015 highs on Yemen worries (Reuters)
• Pentagon Announces New Strategy for Cyberwarfare (NYT)
• Bloomberg Oil at $65 Seen Freeing 500,000 Barrels From Shale Fracklog (BBG)
• ‘Flash Crash’ Trader Navinder Sarao: It Was Wits, Not Bits (WSJ)

Even though no rational person expected that the Greek situation would be resolved at today's talks in Riga, Latvia, apparently the algos were so caught up in spoofing each other to new record highs that futures, after surging once more overnight following the latest Google miss which sent the company and the Nasdaq soaring, actually dipped modestly into the red following headlines that the latest Greek talks have broken down after a "hostile" Troika "hammered" the Greek finmin, who was accused by European finmins of "being a time-waster, a gambler and an amateur."

Just because...