At the end of this day, will anything be different in the world we now know as Greece At the end of this day, will the DIJA finish above 12,000 or will it end up closer to 11,700 The answer to the second depends on the answer to the first, and both depend on whether the Papandreou government falls or it achieves a deal with the opposition party. It feels as if the market is betting on a deal, as that would mean the end of the crazy referendum idea, but the funny thing about betting is that someone wins and someone loses. In this bet, the stakes are extremely high, so the winner will win big, and the loser will lose big. As always, we will see …
It is difficult, as the whole world is talking about it as it unfolds, but let’s put the drama in Greece aside for a moment. I want to write about something equally important – ambivalence.
Since the “collapse” in 2008, the market has gained back much of what it lost, but since the early part of this year, the word that best describes the market is “ambivalence.” Notice, I did not elect the word “uncertain,” although the word does describe the current market state. No, ambivalence is better because it suggests a market desire to move in a certain direction, whereas uncertain suggests a lack of desire to move in a certain direction. I know the distinction is subtle, but it is important …
Despite the tepid month, retailers by and large did not lower their own sales and profit forecasts.
The above points to the distinction I am making. Throughout this year, the market has tried time and again to go up strongly, but each time, some newsworthy issue has created uncertainty, and the news around the uncertainty has lowered confidence in the ability of the global economy to continue growing. Yet, even though confidence diminished, the consumer and business kept on doing what they do – create and spend, spend and create. True, in some months to a lesser degree than in other months. Nevertheless, the trend is clear.
So, even though the numbers for retail in October were less than expectations (an increase of 3.4% v. 4.5%), the retailers did not lower their guidance. Clearly, since the game is about beating expectations, and the retailers did not lower expectations, they must believe the consumer will keep spending.
Now, this is what the market wants, a stronger economy, and it is certain it will happen, if only the “calamities” that have plagued the global economy this year will abate. I write this because of what the market is doing today. It wants to go up big time, but the calamity of Greece is holding it back. Now, if this referendum deal goes the right way, the market will jump big time, which tells me the market wants to go higher because it believes the economic forces, if freed from the shackles of political uncertainty, will naturally begin to create growth again …
U.S. nonfarm productivity increased during the third quarter while growth in wages and benefits slowed sharply.
Workers are working hard, and as soon as the shackles are gone, businesses will hire help to keep the productivity levels up. At some point, to keep productivity up, businesses will have to pay more to workers. The market understands this is how it works, always has, always will. No uncertainty there. Its ambivalence rests not on if, but when …
Trade in the day – Invest in your life …
