As usual some highly pragmatic observations on the roller coaster stock market from the Fermentation Committee chairman.
Art Cashin On The Possibility Of A "Christmas Rally", And The Certainty Of "The Post Christmas Crash" That Will FollowSubmitted by Tyler Durden on 12/06/2011 10:09 -0400
Are we going to get a Christmas Rally in stocks? Perhaps. So thinks Art Cashin quoting Tom DeMark (whose predictions lately have all been about as good as those of another Tom: the infamous Stolper from Goldman Sachs). Either way, any fake rally for purely Career Risk purposes (most hedge funds still underperform the market with two weeks of trading left in the year) will be met with an even more aggressive sell off in the new, "no fiscal stimulus" year. Aka: "the bill."
Nassim Taleb rants against it all the time: the propensity for the media to frame a narrative, or a plotline, to explain market moves. His contention is that for the human mind it is always far more reasonable to have a cause and effect relationship to what is effectively an engine of chaos at the margin, especially these days when the margin is defined 70% by various algorithms, all of which engage in often times illogical feedback loops (such as the ES is high because of a high EURUSD, which however is high due to stressed French banks liquidating USD-assets and repatriating the funds to shore capital) and/or with levered synthetic products such as ETFs, amplifying the noise. On the other hand, sometimes a narrative fits: what Art Cashin describes today as the "post hoc" syndrome. Is he right, or is the human mind desperately grasping to attribute a pattern, and thus pretend it is in control, when faced with the strange attractor that modern capital markets have become. You decide. Here is Art explaining the basics of "post hoc", aka Monday Morning quarterbacking.
Forget any overly complex and meandering explanation you have heard about today's market action. The real reason for the bounce is simple: oversold market coupled with yet another short squeeze (NYSE Group biweekly short interest data showing shorts spiking in the first two weeks of November due out today). Art Cashin explains.
The FoF Chairman speaks.
One can always rely on Art Cashin and the Friends Of The Fermentation (FoF) to provide a novel perspective on pretty much everything.
As usual, nothing but pure concentrated essence from the Fermentation Supercommittee Chairman
The best thing about veteran traders, such as Art Cashin, is that they have truly seen it all, not just one or two gyrations of the business cycle, or in most cases, half. Which is why we are delighted to share this anecdote from the grizzled UBS trader and Fermentation committee chairman, of his personal remembrances on this anniversary of the day in which the Dow Jones plunged than 22%, and has since entered popular folklore as Black Monday.
Art Cashin shares this amusing market "performance" anecdote which should come as no surprise to anyone who follows the uber-volatile chaos that the stock market has become.
Today, instead of the traditional market observations by the Chairman of the Fermentation Committee, we share with readers a critical historical lesson from Art Cashin, focusing on an event that took place 89 years ago, which as Cashin says is "one of the most devastating economic events in recorded history and an important backdrop to Europe today. It all began with the efforts of a few, well-intentioned government officials." Many will know what we are talking about already...
When a few weeks ago we coined the term "plan to plan to plan" we didn't realize we should have also trademarked it. Royalties and all that... That said, when it comes to the Chairman of the Fermentation Committee, we grant him a lifetime license of usage.
The daily dose of truth from the UBS veteran, as indispensable as morning coffee. Today, he covers Steve Jobs passing, the "Barroso" market, and the Occupy Wall Street movement in his unique and traditionally laconic way.
Art Cashin On Bernanke Quoting Shakespeare In Swahili, And Everything Else In Yesterday's Surreal Trading DaySubmitted by Tyler Durden on 10/05/2011 10:22 -0400
To some, yesterday's ridiculous 400 point move in the DJIA in just over 30 minutes on nothing but yet another denied FT rumor, is still mindboggling. Make that to most. Although making things far easier would be to finally accept that the market is completely broken. It is. But in the meantime, here is one way of enjoying it, courtesy of the perspective of the Fermentation Chairman who summarizes all that happened though his veteran eyes.
The Day Ahead - Here is an email that went out as daylight hit the East River:
Dexia, the Belgian bank alluded to in rumors yesterday now at center stage. Authorities climbing all over each other with guarantees and assurances. Even some talk of splitting into good bank/bad bank. Trouble here is that this bank was said to have passed the stress test with flying colors.Market unsettled by new talk that “official” haircuts may be set at 50% vs. prior 21%. Once again, markets unsettled by eroding confidence in financial markets rather than by a single event/entity. Traders see neither lifeboats or fire engines. What happens if a real crisis breaks out? Is there a plan? So, far looks like rerun of yesterday – worries and wariness rather than panicky selling. DAX -3%. FTSE & CAC -2%.
Unfortunately, markets have weakened further still. The questions raised about the stress test and the bank that it passed may linger through the day.
The Fermentation committee will be heard on where the market has been and where it is headed. The Chairman has the floor.