Do you like dead bodies? If you do, the Nightcrawler is the movie for you. It stars Jake Gyllenhaal as a psychotic cameraman who listens to a police scanner for horrific accidents, murders and crimes that he can film for the local news. And as with most movies of this type, at some point the line between observer and actor gets crossed. Gyllenhaal pulls out all the tics in this comedy-horror, enough to make DFW.com’s Preston Jones call Nightcrawler ”a Taxi Driver for the TMZ age,” while the LA Times’ Kenneth Turan calls it “pulp with a purpose.” And in a week with very few choices at the cinemaplex, Nightcrawler also stands a good chance of leading at the box office with a $15 million haul, according to BoxOfficeMojo.com.
Open Road Films Don’t go looking for any dead bodies in the stock market–unless it’s those of the short sellers. The S&P 500 gained 2.7% to 2,018.05 this week, a new all-time high. Even more remarkable: After being down 5.6% to start the month of October, the S&P 500 finished up 2.3%.
Not to be left out of the fun, the Dow Jones Industrial Average advanced 3.5% this week to 17,390.52, also a record, while the Nasdaq Composite advanced 3.3% to 4,630.74, its highest since March 2000, and the small-company Russell 2000 jumped 4.9% to 1,173.51. Remember when the Russell 2000 was down on the year? Yeah, neither do we, as the index is now up 0.8% in 2014 after gaining 6.5% in October, its best month since July 2013.
What’s responsible for the sudden surge of enthusiasm? It certainly helped that the Bank of Japan surprised nearly everyone by announcing that it would buy even more assets as it tries to get the Japanese economy up and running. Citigroup’s Tobias Levkovich explains why the move has helped U.S. stocks:
The announcement by the Bank of Japan that it was adding to its purchase programs is a clear positive for the stock market that had been largely unexpected. Additionally, the decision by the Japanese pension fund to bump its holdings of foreign stocks to 25% of its monetary base (from roughly 16% currently) establishes a new incremental buyer of shares and the US should be a significant beneficiary. These new developments were not part of the Street's mindset a day ago and thus cannot be discounted as a flash in the pan since it provides some downside support to the broad market…
While the exact amount of money coming to the US is hard to calculate, the overall contribution to non-Japanese stocks could approach $60 billion of new purchases and we suspect that half could make its way into the US by the end of 2015. Moreover, foreign investors typically buy large cap stocks which have greater index impact. Thus, one cannot ignore the possibility that stock prices jump above our year-end 2014 S&P 500 target on this new news that few had perceived even one day ago, let alone last December/January or even during the summer when many targets were established or changed.
But there’s far more going on than just more monetary stimulus–especially since the Fed finally ended its quantitative easing this week. It certainly helped that U.S. GDP rose 3.5% during the third quarter of 2014, but investors had already moved beyond the growth fears by the middle of the month. Marketfield’s Michael Shaoul gives solid earnings some of the credit:
Although we were fairly sure the damage would be short lived and followed by a powerful rebound, we were still unsure as to whether the "market knew something we didn't". Having seen the quality of corporate earnings and the powerful stock-by-stock rally that greeted those companies that beat their forecast it would appear that the strength of US economic data was no mirage, and that the fears of weak European growth creating a deflationary hole in corporate earnings have been overblown.
This is important since better earnings should put something of a "bottom up" floor under the US equity market. It certainly would come as no surprise to see a portion of recent gains given up, but it will be rather more difficult to force the entire index lower without a new catalyst.
Until then, enjoy the ride.
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