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Waiting for a Reality Check

Stocks soar, as inflation gets forgotten...for now. Plus, NBC’s golden opportunity.

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New Week, Same Volatility Last Monday, the Dow Jones Industrial Average tumbled 1,175 points, as investors worried about inflation and an overheating economy. New government data later this week will provide the best look at whether inflation is actually picking up, but investors aren’t waiting around for details from that consumer price index report. The Dow soared 410 points today, or 1.7%, to 24,601, led by Apple’s 4% gain.

After six trading days when it seemed the market was on the verge of collapse, things no longer seem quite so calamitous. Year to date, the Dow is down just 118 points, or 0.5%.

Here’s how Vito Racanelli summarized the situation in the Barron’s cover story over the weekend: “While market bulls remain uncowed in their enthusiasm, they also acknowledge the market wounds aren’t superficial, and that volatility isn’t going away soon.”

The VIX, the popular volatility measure more formally known as the Cboe Volatility Index, fell 12% today to 25.61. That’s down from a high of 37 last week, but still double last month’s low.

DJIA: +1.70% to 24,601.27
S&P 500: +1.39% to 2656.00
Nasdaq: +1.56% to 6981.96

The Hot Stock: CSRA +31%
The Biggest Loser: Ulta Beauty -4.2%

Best Sector: Energy +2.2%
Worst Sector: Utilities +0.6%

Twitter ’s Short Story

Twitter’s stock has made made an impressive turnaround, with shares up 94% in the last six months. The company justified the excitement with a better-than-expected earnings report, which included the company’s first-ever quarterly profit. Shares jumped 22% on the news last week.

The move has burned Twitter skeptics who hold short positions on the stock. Those shorts lost $232 million in last week’s rally, according to S3 Partners, a financial analytics firm. So far this year, Twitter shorts are down $299 million or 32%, S3 says.

Twitter remains a distant No. 2 among the big social-networking shorts, though. Some 6.4% of Twitter’s publicly traded stock is held short versus 26% for Snap, according to S3.

Of course, the short interest is part of what catapulted Twitter and Snap shares higher last week. As short-sellers worried they made the wrong bet, they were forced to buy shares to “cover” their position. If Twitter and Snap continue to defy expectations, the elevated short interest could juice the stocks even more.

NBC’s Big Moment...

I spent a good part of the weekend watching the Olympics, though my main interest was NBC’s evolving technology, not the latest Slopestyle run. NBC has promised 1,800 hours of streamed coverage from PyeongChang, including live feeds, alternative angles, and behind-the-scenes views. Four years ago, at the Sochi winter games, NBC streamed a total of 1,000 hours.

A lot has changed since 2014. Cord-cutting is no longer a question as much as an inevitability, and networks are rushing to create their own “over-the-top” (cable-free) distribution platforms. That reality is driving Disney ’s $66 billion deal to buy most of Fox. (And it’s probably why NBC-owner Comcast can’t seem to quit its own interest in Fox.)

This Olympics, NBC has little choice but to offer a compelling stream via mobile devices and connected TVs. Apologies to the real cord-cutters -- NBC’s full stream is still only available to cable subscribers who are able to authenticate their subscriptions via the NBC Sports app.

For these games, I was excited to see what NBC had up its sleeve, mostly because I’ve shifted my own home sports viewership to apps on connected platforms like the Apple TV and Amazon Fire TV. These over-the-top technologies are no longer just about finding ways to get away from cable subscriptions. Done right, they’re actually a better way to watch sports.

Major League Baseball has this figured out -- the league’s MLB.TV app allows live streaming of multiple games on the same screen, and it’s all easy to navigate.

...And Comcast’s Slippery Slope

So far, NBC is struggling to recreate MLB’s formula. I wasn’t able to combine ice hockey, ski jumping, and curling on the same screen. My young daughters were enamored by the NBC Sports app on our Apple TV, but it had nothing to do with coverage. They just liked the amateur take on “live coverage” from the PyeongChang practice skating rink. The feed is fixed on one corner of the rink, so we watched -- and laughed -- for 10 minutes each time an ice-dancing couple skated briefly through the screen.

Why not program the camera to move occasionally? Or how about using a 180-degree camera?

NBC is walking a fine line with all this because owner Comcast still has to think about retaining cable TV customers. By the end of the weekend, I had turned off my Apple TV app and headed back to NBC on the cable box. That might be exactly what Comcast wanted.

What We’re Reading

• No Place to Hide: Managed Futures Funds Fall With Stocks Barron’s
• Facebook Haters Going to Hate – but What Will Investors Do? Barron’s
• High-Speed Traders Profit From Return of Loophole at CME WSJ
• Inside the Two Years That Shook Facebook--And the World Wired

On Wednesday, we’ll get reports on the consumer price index and retail sales. While those are likely to be the most important data points of the week, earnings season is over yet, and there are still big names left to report: PepsiCo and Under Armour on Tuesday, Cisco on Wednesday, CBS on Thursday, and Coca-Cola and Deere on Friday.

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