Submitted by Mark St.Cyr,
We didn’t get what I first postulated yet (4 C’s That Could Change The Financial World As We Know It, Again. Those 4 C’s are: Confirmation, Crisis, Contagion, Catastrophe), what we did might be even more illuminating.
In my earlier article the 4C’s I set up the premise that if a Yes vote took place in Scotland there were possible ramifications within the markets than what was being expressed, as well as reported, throughout the financial media.
Well it turns out the cause for any worry has now been voted and booted away so far down the road it would make a can envious. However, what did we really get?
In my opinion we might have been shown there is even far more need to be concerned, for once again, the powers that be have seemingly demonstrate they truly are – the one’s in control.
What happened this week was exactly what a great many (including myself) expected out of the Federal Reserve’s meeting and press conference. i.e., Confirmation it was not only more of the same, but that the world was, and will be, “fine” under their guided hands of policy dictates. Strike a win for the first of the four C’s: confirmation.
However, for the remaining three? i.e., crisis, contagion, catastrophe? The markets were delighted to find any hints of turmoil now brushed firmly and neatly aside.
Crisis became calm. Contagion became cured. And last but not least catastrophe morphed into an even grander state of complacency.
On this note one could hear the call sounded Friday throughout Wall Street: Release the algos! (I mean hounds) And tip the pool boys extra at our Hamptons retreat and tell them to keep the pool open for another week! For these are truly glorious times to be buying the all time highs!!! Forget dips. Who cares about dips – we don’t need no stinkin’ dips!
Although that’s tongue in cheek (not by much I’ll argue) it was the reaction.
Again this issue alone might become more informative as to illustrate why even more concern and prudence should be taken with everything we now know as “the financial markets.”
Today, just the calling to attention these or other varying types of systemic time bombs by people like myself and others is met with a sheer total and wanton disregard for any rationale push back. Now nearly any, if not all, is met with glaring scorn and worse. It’s as if 2008 never happened.
Let’s forget about the market maven crowd for the moment and view the way all of this is being sliced, diced, and served up to the public at large. i.e., Anyone not on some form of public assistance that are trying to keep, save, or build what they now have left. Whom I might add; are the real group of people who if something were once again to happen as it did in 2008 and they indeed do pull any remaining funds – there would be no need for 70% (if not more) of all the financial world as it is now known.
For who needs brokers, advisers, financial media outlets, High Frequency Trading companies, et al if the markets hiccup in a fashion reminiscent of 2008 – and nobody comes to the blue light sale? At any price.
The issue today where this meme of “All clear everything is ducky!” is in that: its more acute with the potential of causing exponentially even more damage to both the wallets and psyche of a great many that make the economy work than possibly before. i.e., Business owners, 401K holders, people both currently working as well as those actually trying to get back to work.
Again, even with a systemic issue causing an event only 2/3rds in size of the prior fall; now, at these levels, with what they’ve been told to believe as gospel? (i.e.,”it was a once in a generation event”) What few remaining holders of any worth would do near immediately (if not sooner) is too pull anything and everything out and as far away from anything Wall Street related for a minimum of a generation. Period.
What leads me to say what many in financial media would call “hyperbolic” “Chicken Little-esque?” Easy.
Just look at what is currently being portrayed as “financial analysis” and “instructive insights” across most of the financial media today.
If you have the tenacity or testicular fortitude as to dare state that regardless of what is being portrayed as an economic success: you are pilloried, denounced, and if your lucky – you get off the set before the tomatoes arrive.
It doesn’t matter if you can logically and methodically present the case why caution should be of the first order. Even when you preface your argument and viewpoint stating fully and honestly that you understand that as of today the market has proved you “wrong.” Expect no absolution to discuss any relevant points further. For you have now opened the doors for an inquisition reminiscent of centuries past.
The only difference in days past and today is that now instead of being placed on “the rack” in helping to persuade one into accepting a canonized religion – you’re now placed staring down the hypothetical barrel of the Federal Reserve’s money blasting howitzer while trying tenaciously to hold onto what you believe is the equivalent of all you have left of your wealth (i.e., cash) while being asked by the inquisition panel led by Chair Yellen, “Well, do you feel lucky punk?”
Blatant examples of this thought process personified was seen on none other than the once darling of mom and pop 401K viewers CNBC™.
During a segment interview the host Jackie DeAngelis unabashedly posed a rhetorical ambush styled question/statement to a well-respected Wall Street veteran Bill Fleckenstein.
In a condescending snark laced tone the seemingly sister in arms inquisitor asked, “At what point are you willing to concede that you’ve misunderstood monetary policy?”
The whole problem with both this show host and the people who think like her is: That question should be asked of themselves! For it is they who both believe and are acting as if this new religion of monetary policy is what should be canonized. And if you don’t convert? Let the inquisition begin!
Maybe if they televised those with questioning viewpoints either on a rack or hung from ceiling chains they could get their viewership numbers out of the gutter, but that wont happen if this is where their journalistic morals are going to remain. Just saying.
As blatant as the above was there was also just as an alarming exchange between host and guest that went unnoticed that occurred during this same week.
On Bloomberg Surveillance™ the host Tom Keene (TK being one of the few I have high regards for) asked a pointed question to then guest Frederick Lane of Raymond James™. The question was in relation to how investors feel about corrections in today’s markets and how many are now looking (or have the expectation) for a correction-free market. The response was, in my opinion, a pure instructive lesson on how and why those on Wall Street are not breathing rarefied air – they’re sucking on their own exhaust.
Here are few takeaways that just left me slack-jawed.
First: As far as news related events? You can pay attention because its “interesting” and probably informative, but if there’s something traumatic that happens, fine, pay attention. If there’s really a sea change, fine pay attention to that, but (and it’s a very big but) He does not equate volatility and risk.
I hung my head and thought: Here, it comes….wait for it! And I was not disappointed. He continued….
Risk is about diversification, volatility is markets go up and markets go down. The investor needs to ignore that. ( I wonder what category the outbreak of thermonuclear war or Janet Yellen pulling the punch bowl away all at once fits into? I only need the category, for I know the effect is the same for Wall Street. But I digress.)
And the coup de gras? When asked about investors emotional state when dealing with markets like when the market is down 5 or 6 or 7%, and he hears from an investor “Oh my god I lost money!” he thinks that’s an “odd phrase” for someone who’s already made 20% or 30% or 40% by being an investor.
He goes on: “No – you didn’t lose money. You lost value.” Then proceeds to say later in relation to a point being made about “gloomy.” If you’ve been an investment banker from that perspective the markets haven’t been that gloomy. (Insert what should be the greatest thank you homily ever sung to Janet, Ben, and everyone at the Federal Reserve here)
Is an “investor” no longer the individual mom and pop, small business owned entrepreneurs, professional executives, dentists, doctors, lawyers, solo practitioners, and others that try desperately to sock away their hard-earned money in a 401K or other vehicle?
Or, are they just the schlub and schleps that make up the fuel for the “investment banker” to pool and use to their advantage and liking? I know – it’s rhetorical, and redundant.
I would suggest you take the time and here it for yourself rather than take my opinion. You can find the original broadcast via many venues at Bloomberg.com/podcasts/surveillance/. (The segment appeared Tue. Sept. 16th, 2014 titled “James’ Lane Sees No Other Place”)
Back in 2007 when the economy appeared to truly have legs, as always, Wall Street made their case why you, me, and anyone with a dollar should be “invested.” For it was expressed everywhere that the average Joe and Jane Schmo were the most important Wall Street players with their booming and ever-growing 401K’s.
Flipped a house? Got a raise? Sold your business? Put your profits here (on Wall Street) and do it again! Rinse, repeat seemed to be the new war cry. Then 2008 happened.
What were many told when in October 2008 when the markets first began selling off 5, 6, 7% ? You know it – the same as they’re being told to do today. Only then it was “average in” not the more common moniker it is known as today – JBTFD. (just buy the f’n dip!)
If you did follow that advice only 5 short years ago, you lost 50% of your money and wealth over the next 12 months. And that was if you were lucky. Some lost far more, and some lost all.
Oh wait, how foolish of me. They didn’t lose money – “they lost value.” Whew, thank the Lord for that, because the mortgage, car payment, kids tuition, ex-wife’s alimony, child support, not to mention the credit cards, and utility payments are all due. And being so close to retirement if not just retired they might be a little nervous when they look at their balance over those next 12 months or so.
Adding to this hypothesis in tone displayed where an “investor” is up 20, 30, 40% and is looked upon as speaking “odd” when they express concern when markets today seem to flutter. Ponder this:
You would have not only needed to have held on, but also had not taken a single penny out of that beleaguered nest egg that many thought would be available, and many depended on for income for nearly 4 years till you got back to “even.”
Not made money, not generated income for living expenses, but even. Not until near May of 2013 did the market reach prior levels. Hope you as an “investor” with money under management by this crowd didn’t have any “expenses” over those years. Oh wait – regardless how little was in your account balance in 2009 you might have stopped buying food to reduce expenses, but you would still be liable for their “fee.” Taking food off your table is one thing, but don’t you dare reach for the food on theirs.
This whole thing cuts right to the chase that is just a disaster waiting to happen by the very people who want to tell anyone with any common sense they don’t know what they’re talking about.
The issue is we do know we’ve been “wrong” and not afraid to admit or state it. However, we also know we’ve been wrong for all the right reasons. And: we can not only live with that, we can also function, feel more secure, and be financially stable investors, entrepreneurs, business owners, and mom and pops knowing it.
What we don’t need – nor want – is another bowl of the 2008ish tripe washed down with this years new flavored Kool-aid™.
Here’s what a few of us also know that we are not “wrong” about.
When a monkey throwing darts can outperform most of today’s so-called “best of the best” hedge funds – we’re going to put our money on the monkey, rather than putting it anywhere close to where these people can put their hands on it for their own personal self-serving monkey business.