As is usually the case I have been bombarded with questions from friends and colleagues about my thoughts on the current gyrations in the “markets.” This is in direct contrast to the flip-side of my usual, as in: when the “markets” are vaulting higher and my phone doesn’t ring – I know it’s them.
So with that said, I felt it was appropriate to update what I said way back in February. Here’s a bit starting with the chart I used, again, back in February. To wit:
Will it play out this way? Hint: No one knows. However, with that said here’s the underlying premise coupled with a probable conclusion.
As you look at the above chart remember this…
Everyone, especially the so-called smartest of the smart paraded on media argued the above “cliff dive” was all but assured to not be in the cards. And there it is, and now sits in the #1 position of history as the most points lost – ever – in a single day, coupled with, these same people said that based on what they perceived as “all baked in” any and all QT (quantitative tightening) worries, i.e., “The market knows, it’s prepared, the economy is strong, not an issue, blah, blah, blah.” Or, my now personal favorite, “If you’re holding cash, you’re going to feel pretty stupid” That came from none other than Ray Dalio as he appeared with the fawning mainstream business/financial media press at Davos. Or said differently: If you’re not all in on stocks, you’re stupid.
Then the above happened, and now, it appears he’s changed his mind.
Funny how that happens as soon as The Fed. went from lip service of reducing the balance sheet, to full implementation as Janet walks out the door, is it not?
Then again, what do I know. Just ask the “experts.”
“So where are we today and how much have my first inclinations changed with the most recent action,” you may ask? Good question, for that’s what the most repeated theme of questions asked were like. Here’s the short answer of which I repeated many times:
“Why would I think or change anything? Were you not listening when you asked me last time? Are the ‘markets’ not doing the exact things like I said they might?”
Now some may take a bit of offense in the above thinking “Oh, that’s so rude!” However, I make statements like this not because I think I’m some form of market genius or holier-than-thou aficionado. I usually respond like this to others (to clarify: others I know well and that also know me as well) because, what happens more often than not is that they seek others’ insights not for insight per se. But rather, to help themselves bolster an already formed conclusion they want desperately to be correct. i.e., Some want the world to full of lollipops and rainbows therefore, they’ll only ask people whose viewpoint is lollipop and rainbow centric. Even though the world is anything but.
So here’s an updated view using a “picture” as they say in Silicon Valley. And as I used in the prior title: “I don’t want to scare the children, but…” Again, to wit:
As one can see the only thing that has changed is that I’ve now simplified it.
Remember, this inclination for where we may be heading was made way back in mid February. Also, this viewpoint was derided across the entire mainstream business/financial media with proclamations that anything that could derail this “market” was already “known and baked in.” (See Ray Dalio quote above for clues.)
The issue now to be resolved is this:
Exactly’s whose “known and baked in” inclination will prevail?
Theirs? i.e. All the paraded and glorified next-in-rotation fund-manager cabal and their so-called brethren of “smart crowd” aficionados.
As always, we shall see.
© 2018 Mark St.Cyr