Ahhh, a new month, spring is in the air, and time to digest a fresh media-master’s pronouncement that we have reached the start of a new bull market. Okay, “Sumner”, if that’s your real name (I’m kidding! it must be–a name only a mother could love), whatever you say! Granted, you’re a zillionaire media mogul and I’m Schmoey Smurf with a broken trading account full of fundamentally sound but technically inexcusable shorts, but spout baseless trash talk like that where gormless average-joe investors can hear you and I’ma call you out: You’re not fit to drink the pinot noir juice I’ll be wringing out of my hangover socks tomorrow morning. And tonight, I’ma toast that shit all night long.
I’ve been talking up media/market momentum since this blog began way back in April of ’09, but pundit/market momentum–or even crackpot dimestore analysis from an empire builder–is a whole other animal. Oh I beg your pardon “Sumner”, I shouldn’t paraphrase. Let’s hear it from straight from your horse’s ass’s mouth, shall we?
I think we’re in the beginning of a bull market. When a bull market begins, nine months later the economy turns around.
Oh, is that how it works? Mind if I paraphrase now? Thank you, sir. You are truly gracious.
A bull market is just around the corner, because I have visited January 2010 in my Viacom Timecopter, and January 2010 wanted me to tell you guys that it has an “economy”, and it’s all “fixed up”. So, go ahead and buy some stock today, so you don’t end up paying too much for it later! Might I suggest a generous helping of $CBS, due to report earnings May 7? Oh yeah, in case you were wondering, on my way back from January 2010 I stopped by May 7, and it turns out we had exactly the kind of quarter you have 9 months before the beginning of a bull market, which is very bullish for 9 months from now. January 2010 congratulated me on that quarter, in fact, before I even went there. The future is totally awesome, I think.
Oh, now I get it. Seriously though, his logic looks exactly like this rally’s logic: as long as people keep buying every dip, and prices keep going up, the economy is going to recover when we say it will. Never mind the reams of cogent analysis from crack econowatchers like Zero Hedge and Calculated Risk with a bunch of pesky “data” and “facts” and “charts”–the wind is at the back of the bulls, and that’s the right time to say that the wind will be at the back of the bulls.
If you recall, back in late February and early March when there was day after day of selling, lots of “how low can we go?” articles began popping up. Breaching 700 on the S&P was a huge deal, and the selling was so relentless it looked like it would never end. It ended. Now, after eight solid weeks up or nearly up, the punditedia has started putting out “maybe it’s the real-deal rally” pronouncements. They ride a trend right off the right side of the chart into spec-u-land.
Market trend is useful stuff–no one makes that case better than Howard Lindzon–but these are not rational markets, and their trends cannot be trusted. The brokenness can be very profitable or very destructive for trading, but don’t confuse one-way movement (January to early March short, March to now long) for proof of anything, unless it’s desperation: panic selling, panic buying, panic short-covering. What the bulls feel is a breeze–the longer-term wind is still at the back of chaos.
Remember that projections in the media–especially but not exclusively those of the soothsaying species punditrionus whiffleballia, and and those strewn like so many crumbs of wisdom from the top of the org chart–are sold before they can be proven, and will not be disproven before having been bought and forgotten. What does it cost Goodfellow Redstone to make such a pronouncement? Nothing but a couple blog rants from Schlumpy Smurf the Rally Skeptic. (Yeah, there’s likely to be a follow-up post down the line. Start counting the seconds.)
I shouldn’t pick on the guy; he has clearly jumped the marble. The problem is larger than what the batso kingpins have to say, at any rate. In light of the facts on the ground I linked to above, I find articles like this one from Jon Markman disturbing in a different way. He’s clearly a brighter guy with more knowledge of these things than I, and makes a very reasonable argument for what might keep pulling buyers in even after a sharp 30% run up, but I get worried when I read summary analysis like this:
Considering that at least half the economic cycle is about confidence, just shoring up the psyche is enough to get the ball rolling. Whether you call it green shoots or little green men, good stuff is happening out there in the real economy: Layoff announcements are receding, new unemployment claims are declining, U.S. business and consumer confidence is rising, Germany’s business activity is quickening, South Korea’s gross domestic product is picking up, U.S. existing- and new-house prices and sales are ticking up, Japanese exports are swinging higher, Taiwan’s leading index is higher, and container exports at the Long Beach, Calif., harbor are rising.
Notice the confident tone along with the confidence he’s seeing in the indicators. None of which are really specific, and several of which are actually clearly contradicted in the links above, but I digress. A lot of those assessments only stand if you compare them to a month or six ago. Of course, things have to stop getting worse before they get better, but there’s no guarantee they’re going to do that in snap-back fashion. He might just be saying there is some confidence that the bottom is in, but the writing sounds like the writer believes things are looking up. These two things are not synonymous. It is infinitely possible to crawl or bump along or oscillate around a bottom for a very long time. It is equally possible to start getting better and then get worse all over again.
The second-derivative misperception is very strong right now, and even a mastermind like Mr. Kass would now seem to agree with little ol’ Mr. U that less-bad news can’t prop this rally up forever, and will soon be as ignored as the regular-bad has been of late. Some of the data is still pretty terrifying; consider this adjusted GDP perspective courtesy of Barry Ritholtz. The pain has not ended, and if media makers great and small walk around pumping their ideas into the minds of people who don’t spend their days sitting around figuring out what to trade but do want to invest wisely for their retirement or their kids’ education or their Hobie Cat, and then the markets fail to confirm and those people have to sell the retirement, the kids, and the boat at a loss, the pain is actually prolonged. Much of which could be avoided if certain people would just suck on a Ricola, recount their zillions, and shut the hell up.
But enough thinking! Let’s see what else “Sumner” has to say.
The reason we have not gone to newspapers is because its a slow growth industry and I think they are dying. I’m not sure there will be newspapers in 10 years. I read newspapers every day. I even read Murdoch’s Wall Street Journal.
Uh-huh, uh-huh. The ol’ dying, slow-growing, disappearing, indispensable industry conundrum. Now that is a take on this rally I can get behind.
UPDATE: This Zero Hedge post should have been in here somewhere. Now it is.