(
UPDATE: had to clean up the post a bit since it got recommended by someone. No, I didn't delete the swear words, I just tried to tie off a few loose ends.)
In the words of Galileo, "
eppur si muove".
Basically, the Pope put Galileo on trial and forced him to recant his belief that the earth moves around the sun. So he did; then as he was leaving the inquisition, he was purportedly heard to mumble "eppur, si muove", which meant:
Nevertheless, it still moves.
I find I've figured the market the best when using a sociological, "mass narrative" approach to things; I see what the market's doing, then I look for the explanations from the bloggers as to why it's happening. I don't believe any of the explanations; they're all
post hoc anyway. But, according to
social constructionism, we live in a reality that we constantly create through our conversations. And since the market is a
cybernetic system - i.e. one whose outputs determine its own inputs, through O-I translation mechanisms that are tuned differently over time - and one major input is the mood of the market itself, the narratives (whether correct or incorrect) still impact the market.
But it doesn't mean they're right.
So I find it funny that, without even going to permabear sites like ZeroHedge or Mike Shedlock or Hussman, I can still find people foaming at the mouth about how (basically) the market is not realistically pricing forward earnings, and it has to go back down, this bull run can't last. Ooh, US gasoline usage is down; ooh, copper is failing to confirm; ooh, seen the Dow Transports?; ooh, look, the Baltic Dry has collapsed; ooh, 98% of this move was Apple and Caterpillar; ooh, blah blah Greece blah blah; and so on.
Look, if you go to a dispassionate data-watcher blog like
Bonddad, you'll find that the US economy is rip-roarin'. It's gotten through a housing collapse and liquidity crisis, and yet it's still been showing growth - and now, US unemployment is plummeting down through the 8% barrier; that should mean the economy even gets better. Oh, and the US is still the world's largest economy, so how they're doing affects
the rest of the world.
(By the way: the US will affect the Greek economy far more than the Greek economy will affect anyone. Saying that any Greek problems will hurt the US is like expecting a mouse to bring down an elephant. Give me a fucking break.)
As for all the other bullshit? $BDI is down because there's an oversupply of container ships, entirely because in 2006-7 too many new ship orders were placed. That affects the transports (strangely, US intermodal rail and trucking are showing good numbers). US gasoline usage (and mileage) are down, but that's post hoc - you're not seeing that reflected in a collapse in production, and just because you'd think it has often been correlative in the past doesn't mean there's not a good reason for the correlation to break down today. Yes, Apple has skyrocketed, but that's because everyone and their granny bought an iPhone this month (which... um... should be reflected in Apple's price, and therefore should reflect in the NASDAQ average since Apple's not operating in a vacuum); and Cat skyrocketing is actually a fantastic indicator of the return of world demographic growth as a market driver, no? Like, mining and tractors and stuff?
People (except, supposedly, the recently-converted ex-permabears) are all trying to find reasons to disbelieve the advance.
Greece? Give me a fucking break. The problem with Greece was originally that a Greek bankruptcy would drive up yields in the other peripherals (cos everyone would be betting on who's next), eventually causing a banking system collapse due to heavy peripheral exposures and the leverage based on them.
That can't happen now. The ECB is printing money to buy peripheral bonds (see Italy's 10Y yield drop from 8% down to under 6%?) while also taking on toxic peripheral debt through their LTRO, thus recapitalizing (and possibly de-risking the leverage of) the banks.
As Kiron Sarkar keeps pointing out,
this is a QE program, an incredibly vast one, and it ends the chance of Greek doom.
Basically, there's all this chatter about doom. And yet the market is still going up.
Eppur si muove! No narrative about the market has any value to you if it fails to explain why the market is still going up.
What's really going on is, everyone is holding their breath, expecting an imminent chainsaw assrape by a 20% market crash, like last fall all over again. It's the
recency effect. Eppur si muove.
Basically, the market's going up from here. Things are better now than they were in the fall. Fall isn't going to happen again. There is no longer a dooooom. (Except maybe a China collapse, as I keep saying - um, but you should probably see an early warning sign in an unambiguous waterfall collapse in commodities, like we saw last fall.) And when there's no dooooom, the logical place for any market to go is up. Because when things aren't getting worse, they're getting better.
Don't hold your breath for the next 3-5% correction to be the next 25% market
armageddon.
Now if only gold miners didn't suck.
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/images/quotes_7a.gif)
There's a Canadian "double-long" style volatility ETF. You obviously don't want to hold it when $VIX is descending down from 50... but is it a good buy when $VIX is down to 16 and change?
