Morning Note: More Slices Don’t Make More Pie…

It was risk-on overnight in Asia, with 14 of the 16 markets we track closing higher. Europe’s feeling it as well this morning; 17 of the 19 indices we follow comfortably in the green so far. The U.S. too; Dow up 270 (+0.97%), S&P 500 up 0.69%, Nasdaq up 0.35%, Russell 2000 up 0.84%.

The VIX (SP500 implied volatility) is up 0.31% this morning, and VXN (Nasdaq vol) is up a not-small 3.60%. I.e., options traders are pricing in a bit less optimism so far this morning… Hmm…

Oil futures are up 0.68%, gold’s down 0.31%, silver’s down 0.56%, copper futures are up 0.17% and the ag complex is flat as I type.

The 10-year treasury and the dollar are both flat…

Our core portfolio is starting off decent this morning, up 0.51%, with our Eurozone and cyclical US exposures more than offsetting weakness in our currency and commodity exposures.

As we’ve discussed herein, far and away the largest net buyer of stocks during the recently-ended longest bull market on record — the listed companies themselves (share buybacks) — are not likely (to put it mildly) to be in positions to match their previous share-pumping, exec-bonus-producing ways (save for Intel last week) for some time going forward. Ah, but another long-forgotten shenanigan  — the stock split — may be seeing a resurgence; Tesla and Apple happen to be slicing their respective pies as I type…

Yep, “shenanigan” — if you believe, any more than slicing a pie into more pieces creates more pie, that share buybacks add a molecule of net real fundamental value to the share-splitting company — is the correct characterization of the stock split.

Here’s Bloomberg’s “Macro Man” Cameron Crise this morning with his own analogy:

“It’s a measure of the irrationality of equity markets that stock
splits are once again an apparently insanely bullish development,
two decades after the last such episode. To some extent all you can
do is stand back and admire the parabolic rise of the two famous
names that have announced splits; certainly you cannot stand in front of it.

But let’s not pretend that five $20 bills are somehow worth
more than a $100 note, or that it makes sense to pay 110 singles
for the privilege of owning them. And while it is easy to simply
point at Spooz and say “who cares?,” anyone trafficking in
single names other than the handful of Megacap Tech Elect can
attest to the fact that bad breadth does in fact confer economic

Have a great day!


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