Since we are in the Thanksgiving lull of the “markets.” I wanted to express something that takes place in my own head around these times. Where I (and believe others) may also share some of the same conflicted feelings as we not only try to give thanks, we simultaneously ponder thoughts to what the future might portend, and how we are going to move with it. For in the game of business as is life: the decision process never rests.
I used the term “conflicted” for a reason. If you’re anything like me (and I believe we’re all the same, it’s only how we deal with things that makes all the difference) they run the gamut from not just the good or bad, but some may range from the exuberantly spectacular – to the down right terrifying.
Then last, but certainly not least, buffeted with either a single-minded focus – to outright scatter-brained confusion, notwithstanding the myriad of combinations of some, if not all of them at once.
Nobody knows what the future may portend. Everything (and I do mean everything) is a best guess with whatever evidence you have at your disposal; a willingness to believe in your gut, and your abilities; and the willingness and fortitude to live with/by your decisions. That sounds simple enough, yes. However, it’s in the application, and the willingness of follow through, which makes all the difference. That’s the hard part.
So why am I making these observations today one might ask? Well, it all started the other day when I received a note from a colleague questioning my thoughts after they read the following headline. To wit:
Their question? “Have you rethought your call about the Fed. in December? It would seem you’re not just in the minority: you are the minority!”
It’s a fair question, as well as a point. However, with that said: No. (as I’ve previously stated I’m currently 85/15 favoring that they won’t.)
This isn’t some form of relentless death-grip to be contrarian just for the sake of it. Far from it. Rather, I am becoming even more steadfast in that position based on what I believe or “see” as compelling evidence that the Fed., regardless of what it may want to do, will have their hands tied (once again) by “international developments.” e.g. China.
Whether or not that turns out to be correct is anyone’s guess. For it is all guessing, no matter who says differently.
Yet, here is where a “spectacular” bull____ run up in “markets” may turn into a truly “terrifying” off-a-cliff stampede should just one metric change. That metric? The Yuan.
As I sit here today typing, the Chinese currency is not only still in free fall, it is resting precariously so close to the “cliffs edge” (e.g. 7.00 USD/CNY) if it falls over – it will take all markets with it. Emphasis on all. For if one thinks Aug. of 2015 was scary? Let me use this for analogy:
Aug. 2015 will look like a kiddie rollercoaster as compared to what the “markets” newest amusement park has constructed in the last few weeks if it all goes awry. And China – not the Fed. – is the one contemplating on whether or not it will open sooner, rather than later. And the clock is ticking.
Dec. 14th is the Fed’s stated “grand opening.” i.e., (they’re really, really, really going to “do it” this time) Any day in between now and then – is China’s to decide. In other words: whether to preempt or not. Or stated differently: Whatever China decides it will, or won’t do during this period dictates what the Fed. will, or won’t be able to do. Period.
If you think China is going to sit idly by so the Fed. can just raise rates, to then watch their currency tumble into oblivion forced by circumstances not of their own volition, causing capital outflows of historic proportions, which may, or may not exacerbate civil unrest within its borders, when it has (as in knows precisely the mechanism as to manipulate a possible delay to their own benefit) I believe is fool-hearty at best, willingly blind at worst.
Since I used the term “amusement” and “rollercoaster” for an analogy, let me use a current chart (or charts) to express precisely what I’m speaking to. For there seems to be quite a lot of P.T. Barnum-ing when it comes to describing these “markets” post U.S. election. And it’s not just the main-stream media, but also every next in rotation fund manager, or Ivory Towered economist who can get to a microphone or camera. And be careful not to get in their way – for you will be trampled upon. So here’s that chart. To wit:
The problem? Again, to wit:
Much like you have seen the U.S. markets with its most nascent accent, so too was DryShips.
For all intents and purposes this company was at one time regarded and held as the be-all, tell-all, bellwether (especially for one CNBC™ buy,buy,buy king) for global trade. And when the “markets” displayed a “Trump winning means we’re building again!” Everything jumped in unison to match what the so-called “smart crowd” was touting as more causation, rather than correlation. i.e., “The markets are a forward-looking indicator. So get on the bandwagon quick before it passes you by!”
As I’ve said many times before: “Beware when everyone’s on the bandwagon – except the band.”
And it would seem that’s precisely what a lot of people noticed (or at least recognized one mother of a short squeeze for what it was) and thought better of it. Sadly, for those who bought into that whole “causation” premise that was being touted across the financial/business media at large and did the whole “Buy,buy, buy!” thing? You have my sympathies – once again.
So here we are, and one needs to ponder which way, or view, is the correct one?
Here’s what I know: Nobody knows. And I mean just that: no – body.
It’s all a best guess scenario regardless of who says different. All you can do is try to decipher clues from the clutter as best you can, make a decision as to what you believe is the most probable outcome if correct, put yourself in the best place as to if it works in your favor (or if your proved to be right) you can, at the least, benefit from it. Whether benefit means capitalize, or alleviate any potential harm. Then, and most importantly – live with, and by, your decisions.
You can always reevaluate and adjust going forward.
I say this because I’ve been there. I’ve made some bad decisions, (actually more like terrible) and some good ones. Many of those decisions were in direct opposition to people (and what seemed to be the world-at-large) who were touted to be smarter, more experienced, better looking (much better actually) more seasoned, better educated, and with far more money or wealth than I ever had. That, and a whole lot more.
I have stood in the face of all of that saying : “What makes you so right?” And then demanded they either give a cogent argument, or, just shut up and go away. Especially when it has come down to business and/or life decisions. More often than not, the “cogent” part never materialized. My record (I’m proud to say) of right or wrong stands on its own. Yes, warts and all.
You find out as one moves along in life more things are based on “because I said/think so” rather than anything resembling a real thought process. You need to research, evaluate, then decide for yourself. Then, let the chips fall where they may.
That isn’t always easy. (Trust me, I know!) But it is the only way.
So once again, who knows what will happen from here, but I’ll end all this using a video link and song that pretty much sums up my stand today as my battle cry in response to my colleague’s inquiry to what I think may, or may not think happen as it pertains to the Fed.
I believe it fits today as it did for me back long ago. Where I remember and give thanks during this holiday time. For it wasn’t all that long ago when it wasn’t only myself contemplating going up against a world that said “What makes you think you can? ” as to try and grasp the “brass ring” of life. But also, for few friends of mine that were facing the same issues, at the same time. I know because we discussed them. (you can read a little about that here, and here if you wish)
The song and video title says it all, “I Stand Alone” And the name of those friends? They’re known as Godsmack.
What comes next? Again, nobody knows for sure. All I know is the clock is now ticking into December 14th, that is irrefutable. That, and believing the “alarm” doesn’t go off before, and is totally under the Fed’s purview, is the only thing which everyone seems complacent in. Which to my mind – is just plain nuts.
© 2016 Mark St.Cyr