Last night before heading off to bed I checked the overnight futures market to see we were down 10 on the SP 500. This made sense given the new and potentially increasing trade war with China. (Gee ya think a trade war with China is a good thing since we need the kindness of strangers to buy our Treasuries?)
If this market were in true Bear mode we’d probably have added to the loss of 10 points, given the news. If you went to bed Short or in cash you’d be sleeping smugly……but don’t look now as we’re actually up 5. What Chinese Trade selloff?
Look, there are lots and loads and bunches of reasons to hate this market. Baskets of reasons to say: “We’ve run too far too fast” or “the market has disconnected from our reality” and I wouldn’t disagree with you. In fact, the Bearish reasons always sound more intelligent and thought out than astandard Bullish argument which always has a tendency to sound either insane (A Bull Market Birther: Show me the birth certificate for this Bull Market) or SweetSallySunshine.
Whats undeniable is that Central Bankers round the world are putting massive amounts of cash into their systems, and while banks may not be lending that doesn’t mean they’re not investing. Managers that I have enormous respect for are getting poked in the eye each time they lay out a new series of Shorts. I just have to wonder if they might actually enjoy the pain so self inflicted?
My point is….as I usually do have a conclusive point: The market at this point in time is eerily similar to other periods of economic transition such as 2003, major selloffs are not to be found. My most optimistic guess from this Spring was no major weakness till the first quarter of 2010. Until proven otherwise….that might be the correct path to assume.
On a side note: There is a flip side that’s not so endearing to years of forest fire prevention and trimming: Mountain Pine Beetles. I have hundreds of trees on my land and this year will lose at least a dozen old Lodgepole and Ponderosa Pines. It breaks your heart to see a 150 or 250 year old tree that is doomed and must be cut down. Somehow you always wonder by cutting it down in an effort to save the surrounding trees are you doing the right thing? Without a doubt the answer is always yes. The MPB seems to be natures way of saying “if you’re not going to allow fires and harvesting to take out your old trees I’ll give you a bug of mass destruction.”