This morning, it occurred to me that the news about Europe is different in both tone and quantity today. The “ferocity” of news about the debt crisis seems to have abated, at least for today, and the news that is out there is soft. For example, the BBC online version didn’t even headline the ubiquitous debt crisis, nor did it mention the Italian bond sale today. The preoccupation with the BBC was the denigration and decline of the British economy because of the severe budget austerity imposed in 2010. In any case, even the Italian bond sale generated little coverage, and in my eyes, that is a big deal, a really big deal. One article I read pointed out that Italian bond yields rose again, but the success of the auction was a positive sign.
Stock index futures rose on Tuesday on investor relief over a well-received Italian bond auction that showed the highly indebted country still had access to capital markets … but borrowing costs continued to soar.
How’s that for softening the bad and massaging the good I like the balanced approach, but of greater interest right now is the lack of bad news coinciding with a rise in both the European and U.S. equity markets today. I know, the market rose hugely yesterday, but I attribute that to the sell-off on Friday. Today’s follow up is more telling. So what gives Is the reason the markets are going up today a lack of focus on the bad news out of Europe Perhaps, but I said “lack” of bad news, not no news at all. The strident voice of apocalyptic doom is still out there, even if it is just a bit muted today …
Two years into Europe’s sovereign debt crisis, investors are fleeing the euro zone bond market, European banks are dumping government debt, deposits are draining from south European banks and a looming recession is aggravating the pain, fuelling doubts about the survival of the single currency.
My point is it the market inherently wants to go up, even when things are bad, and today clearly exemplifies my thought. The world’s problems have not changed, and yet the market is pushing upward today. Is it a technical bounce Are the myriad shorts covering their exposed buns Maybe it is a bit of both, but, if so, it does beg the question: Did fear take the day off You see, shorts cover because the market is pushing up and, technically, traders trade on direction, so I ask, why is today different from Friday What has changed in the mind of the market
Frankly, I find this fascinating from an investment and sociological perspective. Could it be that the lack of doom and gloom news in a single day is enough to free the market from fear, thus suggesting the market inherently wants to go up If I am correct that the market inherently wants to go up, then, perhaps, we should all reconsider our sociological need for the news. Perhaps, if we just shut down all the news, then … No, no, that won’t work. Without the news, how would we know how to think and act from day to day What on earth would cause us to be afraid What would we do
Trade in the day – Invest in your life …
