(For those who say I just don’t get it…Get this!)
Nothing brings on the chance for people to point fingers, or sing like schoolchildren the old, “Nah, nah, na, nah nahhhh!” when you’re in the public eye faster than saying one thing – and having the opposite happen.
I can not begin to count just how many people I know, (let alone only vaguely familiar with) that are looking at the financial markets today as they rocket higher wanting me to explain myself. My initial response almost to a person was, “What do you mean me? Ask your financial adviser!” That’s when I could see (if not feel through an email) the absolute frustration many are having.
All kidding aside, it is with good reason they’re upset. In actuality many are coming around to an all too frightening idea that many of the people they’ve listened to (or been advised by) as well as the explanations they have relied on as “fact” is dissolving right before their eyes. They are beginning to see for themselves 1+1 is not adding up to what they’ve been told.
They knew it should be 2, but have allowed themselves to be lulled into it equaling “whatever” as long as that “whatever” was more than it was before. The “whatever” was then OK. But now? Not so much. And they can’t make heads or tails of it. (if you yourself fall into this category please continue reading. I’ll try to make it worth your while.)
As I write this the financial markets are once again on an absolute tear higher. Since my original post this weekend we have recovered nearly 2/3rds of all the losses over the last few weeks it less than a few days. Today alone is setting up for a 2% gain in the S&P 500™. What could be better right?
Well to start, what could be better is – if this gain was what you, or I, have believed over the years of being in business, Good earnings = higher markets. Or better yet, Great earnings = even higher markets.
So then why when some of the largest names in these very indexes report terrible earnings, and their stock prices have in effect what I described and said to watch for i.e., “trap door” like events, does the markets rise?
Easy. As I’ve said till I’m near blue in the face: “It’s all about the Federal Reserve and their interventionist policies. Not business as you or I once understood it.”
McDonald’s™, Coca-Cola™, IBM™, just to name a few tumbled in outright “trapdoor like” fashion as they reported their earning. And Netflix™? The once darling of Wall St. (and I still believe there are more to mirror this fate) seems to have been thrown under the bus, let alone left at the curb.
But what changed “bad” to “Let the good times roll?” Well to start, as I alluded previously it’s all about the Central Banks. And not just our Fed.
The initial “ignition moment” was done on Friday and then another Fed. official piled on Monday agreeing and jawboning the chorus theme of maybe QE (quantitative easing) should be extended.
Then as some of that momentum fell by the wayside Monday evening none other than ECB (European Central Bank) was reportedly getting into the game in a more dramatic fashion.
Again, what’s not to love right? Obviously the meme is intact “The Fed.’s got your back!” Great! But what does that mean for all you know about business if that’s all it is now?
For if that’s what the financial markets are currently, that is, nothing more than what a Mario Draghi, or Janet Yellen, or other official decides. If you lose money or even make money, is it now “their” fault or prowess? Because it’s impossible to be anything else. For it’s now evidenced prima facie by the very timing and movements within the markets they only respond to one thing: Not business, not indicators, not earnings, not unemployment, not housing, not ____________(fill in the blank) but the only indicator that now matters – what a Central Banker says, or doesn’t say. Period.
I just saved you about $250,000.00 and 6 years of your life in that one statement. You can now go work on Wall Street and compete with all the current MBA’s holders for you now know – all you need to know about Wall Street and the markets. Welcome to the “new normal.”
Not only that, you may just as much know more than the poor saps that are just finding this out, while just receiving their first student loan book. Harsh? Yes. Based in truth and fact? Absolutely, as far as I’m concerned.
Add onto this the fact that all day the markets have done nothing but experience major issues dealing with “breaking markets, ” “stock halts and trading halts” in the very largest of trading names. Apple™ shares itself were un-tradable due to “issues.” The list is absolutely staggering. The markets are acting as if they are suddenly switched over to vacuum tubes let alone the “‘efficient” markets they’re touted as.
For what it’s worth, I’m going to post a few headlines you won’t see elsewhere but for ZeroHedge™. They’ve been following the markets today and listing these issues at a break-neck pace, and they deserve Kudo’s. I’m not a “link type guy” however the amount of information along with the analysis should be required reading for any and all whether they be a seasoned, or a budding entrepreneur. As well as any businessperson from the global conglomerate CEO, to the solo practitioner.
Having a working understanding of the financial markets is not something to be looked upon as “work for others.” It is a must for any serious business person. For we all, one way or another, are directly correlated, as well as connected too it. Period.
To wit: Just today on ZeroHedge. Some headlines and links.
There are more however those show best exactly what is going on within these markets. You needn’t be a financial market maven to understand what is implied. You just have to be a businessperson. And if you are, just these 4 should make one’s blood run cold.
As for me many of you know I’m not a financial adviser, nor have I ever worked on Wall St. I don’t pretend to know anything more than anyone else. I’m just a business man and I know from hands on experience unicorns and rainbows have their place: in children’s books.
However, when someone wants to try and explain to me that balancing the books of a business is similar to reading a children’s novel I’ll have none of it, and I’m not bashful about calling it out either.
There is a place and a time for fairy-tales. However – there is NO place for such within the most important financial markets in the world.
Saying different isn’t storybook thinking – that’s just plain ole lunacy that even Alice would find disturbing.
© 2014 Mark St.Cyr