I have stated many times over the years, all I need to get the sarcasm train rolling is to make an observation followed with a possible conclusion on the way I see it – and the light in that tunnel ahead, more often than not, will be the freight train known as “The Sarcasm Express.” As I’ve also iterated, I take no issue with it, for if you’re going to make calls or observations at my level – it comes with the territory.
So with that said I’d like to share a rebuttal I gave the other day during a conversation as I was staring down the tracks as this “engineer” scoffed, “Looks like the markets don’t agree with your insights.” Then went on to use as example the current move that can only be described as a “rocket ship” over the last few days.
I told him “It’s a fair point.” Yet, as confident in his assessment as he now seemed, I asked if I might ask him a question. Here’s that question…
“In regards to how or why, just answer for me how you square this circle? As of little more than a week ago the markets were seen as to be “falling apart” since the latest decision to raise rates via the Fed. Then there was the G20 meeting that was supposed to foster “accommodation unity.” This, once again, proved to be a total bust.
All the latest data releases over the last week or so have once again shown more reasons for concern than relief. And: China is once again sending out mixed messages for policy stability. i.e., States no need to intervene in their currency – then goes right ahead and intervenes more than previously. Now the Asian markets are once again gyrating massively. All this in just the last week or so. And this is the backdrop where you are taking solace in the U.S. markets jumping up over 1000 points and seem to be going higher. Fantastic we’ll say. Except for one thing.
Does this now mean the Fed. was right to raise and should raise at the next meeting this month? I mean, after all, everything’s now fixed right? Why should there be any further concern? I mean, you just had Fed. officials come out and jawbone that they are “at the ready” with further accommodation if needed because the markets were looking so frail they felt they needed to say it. And, if you also listen to many of the so-called “smart crowd” talking head, as of today, the implied tone is “The bottom held (1812-ish in the SPX aka “The Bullard Bottom”) so see – we really are doing much better.”
Again, fair points or observations I’d say. So again, I’ll ask: Does this mean they now raise again? Or, does this mean they stand pat? And if so – why so? And how would you know? Can you base it on what the Fed. said at their last presser? Or, do you go on what they’ve implied or said specifically at current meetings or interviews? And what happens if they (the Fed.) now agrees with your assessment that “the economy is far better and healthier” and indeed does raise just like they’ve implied they want to? Take your time to answer, I’ll order the appetizers while you sort it out.
Oh, and by the way, in case I forgot to mention it? All the markets have done during this “rocket ship ride” is come back to precisely the same level we were at in September of 2015. You know…the same where the Fed. decided to “punt” on a rate increase after we rocketed up in a mirror image of today’s ride from the August panic lows that halted the markets with historical measures. A move they inferred would not happen – and then did just that. Surely one can use what was said there for clues today. Or, do you discount any or all of what was said in your thinking? After all, It’s surely different this time, right?”
Maybe I should order you another drink with the appetizers? You look like you might need one. After all, there’s no need for concern. For that thing you’re driving is on rails, right?
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