Archive for January 4, 2010

The Sound Of Cannons

January 4, 2010 2 comments

The old saw goes “buy at the sound of cannons; sell at the sound of trumpets.” But I don’t know how that adage applies in a situation such as this, when the sound of cannons is being provided by the market itself.

A spectacular start to the new year in the equity world was all the more remarkable because it did not coincide with a selloff in the bond market. March TNote futures were actually up a couple of ticks, which isn’t exactly a ringing endorsement of the sense of economic healing that (according to news outlets) was the underpinning for the New Decade Salvo.

I don’t think it was due to Bernanke’s mea-non-culpa this weekend. Speaking of which, I think there is reasonable cause to argue that low rates didn’t cause the housing bubble, but Bernanke didn’t get the cause right and, anyway, I don’t trust any economist who thinks that more regulation is the answer.

I am pretty sure it wasn’t the spectacular performance recently by the TSA in keeping our skies and airports safe (see the earlier story about Newark Liberty Airport, and of course the briefs bomber…hey, is that an explosive device in your pants or are you just glad to see me?).

Although, come to think of it, maybe the boom-boom boxers episode has something to do with this – there was a period, about six months after 9/11, and after the anthrax attacks, when every rumor of terrorism was met with a market rally because traders had become conditioned. You see, every time there was a rumor in the early days after 9/11, the market plunged, and then when said rumor turned out to be false the market rallied hard as the sellers had to buy their sales back. The ensuing rally usually more-than-erased the selloff. As time went on, the dips got shorter and the rallies harder, until finally – I remember writing about this at the time – the market would immediately spike when a rumor hit the tape. Pavlov strikes again!

So perhaps we’ve just taken this to the logical next step to where an actual security breach is met with a market rally?

Also on the list of things-that-probably-didn’t-cause-the-rally was the prediction by Shiller and Case that default rates on prime mortgages will accelerate this year. This isn’t a very hard call, because defaults have a lot of momentum and a significant lag to economic conditions, but it gets more attention when Case and Shiller talk about it. Not enough attention, perhaps.

Whatever the reason, I suppose the more important point is that one day does not a market year make; trading on Monday through Thursday may be rendered moot if Friday’s Employment data is weak.

Categories: Uncategorized

The Easiest Job In The World

January 4, 2010 1 comment

Okay, maybe this isn’t the easiest job in the world, but it surely is in the top decile. You sit in a chair all day, and your task is to make sure that people only pass you in one direction. If someone passes you going the other direction, you ask them to stop and go back the other way. In the worst case, you call a bunch of your buddies to stop that person.

Here is the story of the security breach yesterday at Newark’s Liberty Airport. Seems like someone on the TSA was taking “Liberty Airport” as a descriptive term rather than as a business name.

I just want to point out that these are the folks we are asking to handle our health care.

Categories: Uncategorized
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