Salamanca is one small, but beautifully old city. I absorbed the breadth and depth of the oldest parts, some seven hours of walking on cobblestone streets. It has an air of educated pride and a lively energy from the youth who release their freshness on street corners, in restaurants, in the plazas, and on the ancient campus, a place that speaks to knowing, to learning, to understanding what it is that makes it all go round …
And speaking of knowing … Those of us who write about the market “know” the market. Well, I may know about the market – its machinations, its behaviors, its habits, its possibilities – but the thing I don’t know, and will never know, is its mind, how it thinks from moment to moment. Although the market is not sentient, it is a reflection of the human mind, a collection of minds, if you will. As I have said before, the market R us, and when you put a mass of humans in a place, ask them to behave in a confined way, over time, you end up with a reflection of the general mindset, a culture. That is what we can know about the market – its culture, a describable aspect of it. It is the smaller, more powerful influences of the culture that we cannot know – the thoughts of big money players, the impact of hidden corruption, the worries or hopes of what other players will say or do and the fear or elation that inspires. In this context, I give you the excerpt below, a thought from a writer who “knows” the market, a thought that makes me wonder how we writers can be so bold as to suggest we actually know the mind of the market.
A sure recipe for getting fired is under-performing your peers [money managers]. So, when you combine a near-panic mood driven by sub-par performance, with a Fed chief who would sooner shave his beard than let the economy slip back in to recession, then you bundle it all up within an election year, “short, violent corrections” of the 2 -3% variety are to be expected.
In the above light, I will answer a question from a reader, and in that same light, I write my answer with humility knowing that whatever I write is subject to the irrational thinking of the market’s mind. The question is a prime example of my point …
Do you feel this deal with Greece is gonna crash the market. On the flip side, they say the DOW should reach 14,000 this year, yet, I also heard Spain and Portugal are next to go the way of Greece. I would appreciate your input.
No, I think the deal Greece put together will inspire the market to move forward. Yes, the DOW could reach 14,000 this year. Yes, Spain and Portugal have serious debt issues, but, like Italy, Ireland, the U.S., France, Britain, and just about every other country on the planet, those issues are now front and center. The status quo has ended and a new era of fiscal restraint is dawning. In the meantime, those with the power of the purse will do what it takes to keep the whole thing up and running, and in time, the world will once again move into a cycle of prosperity.
Companies increased their hiring in February, shoring up expectations that the labor market’s recovery has moved into a higher gear. Separate data on Wednesday showed wages grew much more quickly at the end of last year than originally estimated, good news for consumers, but a potential inflation problem for the Federal Reserve.
Okay, so how will the mind of the market react to the idea that increasing wages are a good thing and increasing wages are a bad thing? Got me. I am just a writer who writes about the market.
Trade in the day – Invest in your life …
