Glue-Sniffing on Wall Street: 'A Small Price to Pay for a Good High'

Considering the dour outlook for Q1 earnings, the stock market's exuberant run-up over the last month feels like Tennyson's Charge of the Light Brigade: "Into the valley of Death rode the 600...' And yet, we know from watching the shares of Boeing, Apple (see chart inset) and Facebook go vertical into a steady stream of negative news concerning each that Wall Street's '600' really don't give a damn about the news, or even about 'fundamentals'. Earnings are expected to come in around 4.5% lower than a year earlier, and this will be the first quarter in three years with negative earnings growth. Bank-stock profits in particular have come under pressure because of the yield curve's flatness, and financial shares are therefore likely to be laggards if the broad averages continue higher on vague emanations of possible Fed easing. This amounts to glue-sniffing, and although the habit will kill you, or at least your brain, eventually, at the time you are doing it, it probably seems like a small price to pay for a good high.

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