F.T.W.S.I.J.D.G.I.G.T.

(For those who say I just don’t get it…Get this!)

A few days ago I posted an article titled “If It Ain’t Broke.” The theme of that article inferred that for as long as politicians or central bankers can manipulate the markets with words that’s exactly what they will do. I also stated the following:

“Remember the Wizard of Oz? It’s all the financial education one needs to know in today’s market. Commonsense, business prowess, balance sheets, CEO’s acumen, along with any $200K education in business. All of it, irrelevant. The only thing that matters is what a politician or central banker says over tea or tee time.”

Well that short paragraph had some in a little bit of a huff. So I just thought I would defend my position and argument in real-time.

As of the writing of this post the market that was teetering on the edge of the abyss once again has erased everything bad in the market and gone even higher! How could all this bad be so good for the markets? Is it fundamental analysis of corporate earnings? No, they are actually faltering. Was it the unemployment statistics released today? No, although the headlines at first blush looked promising, they actually appear to be just shy of where a dismal print would be. The more you looked the worse they were. If my math is correct 8.3 is worse than 8.2 but who am I to say anymore. How about stability in markets where you feel safe with your broker? No, actually once again another major broker (Knight Capital Group) used by many large firms and banks teeters on collapse with rumors of “will customers money be safe?” So why would everything be just hunky dory again? And in less than 24hrs? It must be that everything is solved correct? Alas, no. Just like Mr. Draghi of the ECB (European Central Bank) rumored that he had what it takes to solve everything with the Euro only to find out the other day “The Emperor had no clothes.” and reversed any gains, lo and behold all that has been nullified and it’s back to the gravy train mentality. But how you ask? I reply, “Surely you jest?”

Just like clockwork on a Friday before going into the weekend, and before the markets here in the U.S. opened as they were up over 1% even before the so-called “better than expected” jobs numbers were released. The European markets were on fire. Up some 2 then 3 then 4%! Closing on their highest points of the session. What could cause such a move? Without further ado I give you the line that came out right before the European markets closed (Source Bloomberg):

Merkel Coalition Members Show Acceptance of ECB Bond-Buying

“Members of German Chancellor Angela Merkel’s coalition parties signaled they won’t stand in the way of European Central Bank chief Mario Draghi’s plan to buy government bonds.” (You can read the entire article by clicking the headline)

Just so we’re all clear, “signaled” is a term that’s used when you want plausible denial. As long as it’s a “signal” it’s no more than a rumor. But for the purposes of getting broken markets where the computers are in control (or out of control as demonstrated by Knight Capital Group) to push higher on innuendo. Rumor mills trump any specialized knowledge of markets. And as long as the markets remain broken, then there will be no shortage of jawboning because what today proves:
Why do anything if just talking about that you’re discussing that maybe you might talk about resolving talks about discussing the talks works just fine.

Till it doesn’t.

© 2012 Mark St.Cyr