So far today's market action appears to be reasonably tame, with no economic data on the horizon, no real update out of Europe, rumors largely ignored at this point, and all signs indicating a quiet trading session for the rest of the day. But will it be? The only market veteran whose opinion actually matters, Art Cashin, says not so fast, especially if one looks at historical precedent, with a focus on 1987 (which incidentally is the last year in which the S&P moved up as much as it has YTD, only to culminate with Black Friday). Could it be that the quietest day ends up surprising everyone?
Though it won't come as a surprise to too many who have seen us point to US equity outflows and the dreadfully declining volume on the NYSE, we leave it to UBS' Art Cashin to uncover where the real action is - and more importantly where it really is not. The experienced Cashin points to the early excitement as Asia and Europe remain active and the dramatic ebb as both of these markets head off to supper, leaving just US traders (and investors we assume) sitting on their hands, twiddling their thumbs, and generally not playing the game (aside from the general rumor-mongery that appears to be rising day by day).
While it is already known that the first Friday the 13th of 2012 will be very memorable, at least for France, a bigger, and more philosophical question is, whether Friday the 13th is in general unlucky for stocks. UBS' Art Cashin provides the veteran perspective, as well as unravel some false myths about the term Triskaidekaphobia.
While economic data may be manipulated daily, and markets can be pumped in any of many different ways (such as the ongoing preparation by the ECB to accept any collateral for the upcoming LTRO which will bring the ECB's deposit facility usage to $1 trillion), there is one true indicator of economic prospects: immigration. Long a target for immigrants from all over the world, something has changed very drastically for Italy in recent days. Art Cashin explains why the one indicator that matters - Italy's desirability for immigrants from countries such as Afghanistan and Bangladesh, means everything has changed now.
Despite the barrage of geopolitical headlines involving Iran, and as of today, the US and Israel, especially as pertains to wargame exercises in the Straits of Hormuz, a different, and potentially much more important story is to be found in the country's capital markets, and specifically its currency, which has continued to tumble ever since Obama signed the Iran financial boycott on New Year's Day as reported here. And, as we predicted, it is the aftershocks of the boycott which may have the most adverse impact on geopolitics. Because if the Iran regime finds itself in a lose-lose situation with its economy imploding and its currency crashing, the opportunity cost of doing something very irrational, from a military standpoint or otherwise, gets lower and lower. Then again, something tells us the US administration has been well aware of this sequence of events all along. Here is Art Cashing explaining it all.
We are always amused by technicians trying to predict what the market will do based on something that may have happened some time in the past, when in reality the only thing that matters is the distinction: "Pre-Central Planning" and "Post-Central Planning" or PCP (for both) - in other words, anything prior to 2009 is completely irrelevant when it comes to analyzing the market. Yet people continue doing it. And while the predictive pattern of such formerly "self-fulfilling prophecies" is now gone, courtesy of whatever side the Chairman wakes up on, traders habits die slowly. Here is Art Cashin with his summary of what trading patterns are relevant for the new year. That said, we remind readers that the first trading day of 2011 saw the S&P rise from 1257 and close at 1272, something which #CarbonCopy2012 seems dead set on imitating. After all, with central planning, why recreate the wheel - Brian Sack can just hit the "repeat 2011" program button and all shall be well. All the way up to a 2012 year end close at 1257.
It may not be iambic pentameter or Shakespearean sonnet-worthy but the venerable Art Cashin delivers his now traditional year-end poetic summation of all things newsworthy - old and new.
Now that we have had a day to digest the move from yesterday, we go to the only voice in the market worth listening to, that of Art Cashin. Not surprisingly, he doesn' tell us anything we did not already report or know, but good to hear the confirmation nonetheless.
Think "all is fine" in Europe after today's largely irrelevant Italian bill auction (the auction was for 6 month debt - even Greece can raise that kind of money)? Think again. Here is the Fermentation Committee Chairman explaining why Europe is so hard pressed to create a fake sense of calm, allowing those who know the real story to take advantage of the situation while they still can, and sharing the behind the scenes truth you won't get anywhere else. Certainly not SWIFT.
As the year grinds to a close, we bring you the most poetic ending possible. That of the veteran trader artiste-cum-fermentation committee chairman himself...
One of the most idiotic concepts we have heard to come out of the current depression has been the completely meaningless "muddle through" which we took to the toolshed back in September (together with presenting BCG's proposal for a global financial tax - a concept which we believe will see far more play in 2012). Today we were delighted to hear the chairman of the fermentation committee also agree with us, by quoting none other than the ECRI's Achutan who said on 'muddling through' - "I would point out that that’s never happened. We never muddle through." Correct: the current economic situation merely continues to be the eye of the hurricane which has been made artificially and untenably larger only courtesy of the world's central banks. And in the battle of central planning against the laws of nature, we know who our money is on.
Art Cashin On The "Rumormonger Convention" And Why Traders Have Put Santa's Picture On A Milk CartonSubmitted by Tyler Durden on 12/14/2011 09:09 -0500
With fundamentals, technicals, and now even headlines out of Europe largely irrelevant, it only leaves one market-moving thing: rumors. And yesterday was a terrific example of precisely this. Art Cashin does a "rumor by rumor" expose of the key "events", however unfactual, that moved stocks yesterday. If history is any indication, and it is, today will likely see the rumor brigade unleashed all over again shortly.
It is always amsuing to listen to market narratives, however goal seeked they may be, when presented by market veterans such as Art Cashin, who in this case deconstructs the violent clash between reality and post-summit hype as represented by yesterday's amusing market action.
Confused why Tim Geithner has seemingly booked a weekly round trip ticket to Brussels to give the Eurocrats their weekly pep talk (much to his endless humiliation as Europe Tells Geithner To Take His Advice And Shove It reminds us)? Art Cashin explains not only this, but why the biggest threat to Obama's reelection chances is not who the GOP candidate is in November, but what happens in the EURUSD as early as today. Lastly, by implication, Cashin shoots down any hope that US decoupling from Europe is even remotely possible... something anyone who actually has seen a full business cycle, which automatically excludes 90% of all traders today, will know too well.
As usual some highly pragmatic observations on the roller coaster stock market from the Fermentation Committee chairman.