Splitting Winners

Shares of AMZN are on the move higher this morning, up 5%, after the mega cap tech leader announced a 20-for-1 stock split coupled with a $10 billion buyback. For new CEO Andy Jassy, this is sure to please some of the smaller retail players who wanted in on AMZN but did not want to touch a firm with a share price around $3000. Thus, despite a mixed tape after another hot CPI reading with rates on the rise, Amazon is among the very best performers in tech today. 

That said, the timing of this stock split seems awfully suspect to me. When a rock star CEO like Jeff Bezos steps down with this share price and valuation in the stratosphere, and the new CEO finally acquiesces with a major stock split, I have a hard time believing that very much big and/or smart money will be interested buyers in this spot for anything more than a quick trade. Recall that a stock split, mechanically, creates no new value for the firm or stock--It is merely a function of trying to make the share price more palatable to smaller market players. 

Longer-term, the issue of higher rates is too menacing for me to entertain buying growth names. Inflation simply eats into those future cash flows. And with the valuation cycle we are exiting, even though AMZN should continue to execute brilliantly as a business the good news will not be a surprise in the least. 

In other words, dare I say that news of the AMZN split is an excellent selling opportunity on all timeframes. 

As for the market at-large, a fade in oil gave equity bulls hope, but as i write this QQQ is losing yesterday''s lows and putting the rally in imminent danger. Watch AAPL below $160 again, too, for clues.