Editor's Note: Todd posts his vibes in real time each day on
Buzz & Banter
The Devolution of Social Mood
plenty in these parts; everything from
The Short-Sale of American Icons
Quantitative Easing Could Trigger War Games
Why Kim Kardashian Matters to the Markets.
The basic premise is, or has been, that social mood and risk
appetites shape financial markets. We often point to how the Great
Depression caused the stock market crash of 1929 rather than the
other way around, as the history books would have you believe.
While many believe this causal consequence is akin to the chicken
and the egg, the sequence has profound implications for the
These topics are food for thought given the latest example of
societal acrimony on the world stage that is Washington, DC. While
the prevailing wisdom is that the government shutdown will prove
transitory and a relief rally will follow, we would be wise to note
the stark differences between modern-day markets and the last time
the government shuttered its doors 17 years ago.
We can debate the "what" (massive government intervention) or the
"why" (growth is anemic and the financial fabric remains entangled
despite trillions of reasons not to be), but for purposes of this
discussion, let's look at the tape at face value. Demand,
artificial or otherwise, has outpaced supply since early 2009, and
the attendant price action evolved perception to the point where
most everyone now believes the Federal Reserve has backstopped
perception is reality in financial markets
, it is also subject to change. In fact, one could argue that the
dynamic chasm between perception and reality is where profits
reside. Through that lens,
The Waning Integrity of US Financial Markets
the "other side" of Fed policy
, and the inability of politicians to find middle ground -- with a
debt ceiling looming on the horizon -- are very much intertwined.
After 23 years on Wall Street, I would be remiss if I didn't pay
homage to the percolating performance anxiety; if the past is a
prologue to the future, the buyers will be higher and the sellers
will be lower. Given the run we've seen -- not just this year, but
for the last five years -- it's understandable that folks are
conditioned for higher prices still, as evidenced by the price
action this morning.
That will prove to be self-fulfilling if it works, but it also
lays the groundwork for widespread denial
as and if the landscape shifts. See both sides as we together find
- Last week we touched on the
previous head-fakes to all-time highs this
, in which one pullback measured 8% and the other 5%; this
pullback, thus far, is in and around 3%.
- The question, of course, is whether this is the requisite
pullback before another push higher or
the beginning of a stampede in the other
- And then, of course, we'll have a better understanding
if Tesla (
) is a modern-day JDS Uniphase (
- We flagged
(the 50-day moving average) as a level of lore, which is the
level that held the first test this morning. S&P 1660 (the
trend line from last November) is waiting in the wings below
- Is it time to buy
on a dollar-neutral pairs basis, per the second chart below?
- Happy 11th online birthday to Minyanville.com; our first
article published on October 1, 2002 and what a long strange trip
it's been! Thank you for your continued support; without you,
there would be no us.