Saturday, March 1, 2014

Banality of Ukraine

The media force feeds news to the public and it's eaten up like corn at a cow pen.  For some reason, we are supposed to sell stocks when we see headlines about military conflicts in far reaching parts of the world.  Somehow, instability in an economically insignificant region is going to start World War III.  Due to the unusually peaceful times that we live in, the bar for panicky headlines has been lowered to the point that only a midget could limbo under it.  Now movement of Russian troops into an area already with Russian military in a pro-Russian area is the precursor to war.  The imagination of these reporters runs wild.  If it didn't, we would be bored to death.

Egypt, Libya, Syria, and now Ukraine.  If we hadn't had a similar scare so recently, it wouldn't be so banal.  But we just had one last August in Syria.  And a couple in 2011 in the Middle East.  All of a sudden, daytraders become experts in geopolitics, and worry about something that has no bearing on the stocks that they hold.  The stock market goes down for a day or two, and suddenly the bears get really loud on CNBC.  This view that war is bad for the economy forget that the recession ended at the same time the US invaded Iraq in 2003.  That was the start of a huge bull market.  Same thing happened in 1991.  So even if what the traders fear happens, which is war, it's not bearish!  And if it doesn't happen, that's also not bearish!  In other words, it doesn't matter.  

Stocks and bonds are financial assets.  What Janet Yellen says and does is a million times more important than whatever Vladimir Putin does.  But it is boring to talk about the Fed all the time so we have to bring out something new, even if its irrelevant to the global economy.

By the way, we closed at a new all time high.  You would never guess it watching CNBC Fast Money opine about Ukraine.


Anonymous said...

Fast Money has 100,000 viewers. Hardly the show to base any sentiment reaction from.

Anonymous said...

We get a good pullback that starts this month or one that starts at the end of the month but from 100 spx points higher. I work in a business that installs satellite dishes. I had a group of installers talking about their 401ks just this week, commenting on how well they are doing mostly based on the company stock. I asked a dozen of them how much are they contributing to their 401ks. Not one of them had any idea what I was talking about, but they wanted to know how to buy some company stock which has gone from 8 to 60 dollars a share from 2009. They all were willing to buy at 60, but not willing to contribute more then the minimum 2% contribution to their 401ks even after I explained the company match and tax benefits. There is some sentiment.

Anonymous said...

Hi MO, do you think it is time to re-short natural gas? Chances are this winter storm is the last one for this winter. Thx.

Market Owl said...

Yes, I think natural gas is a short here. The move last week tells me the power companies have already hedged and the only buying power will be coming from commercial shorts or speculators adding longs, but speculators have gotten very long over the past several weeks.

BTW, I am bullish for the first half of the day, but we could have a weak close. I have done a little bit of dip buying, looking to sell the bounce at the open.

Anonymous said...

Cnbc says everything is fine.