I don’t own any stocks at this point, but I do watch the markets to monitor one aspect of our nation’s financial health and national mood. Bloomberg Business is one of the sites I frequent in additon to The Economic Collapse blog and Zero Hedge.
Bloomberg is interesting for two reasons:
1. They regularly report on the futures market late at night to predict the likely direction of the markets the following day of trading, and
2. When the markets are stable, the future’s market usually provides an accurate picture of the next days’ trading. When the markets are in hyper-sensitive mode as they are now, the futures market most often is ignored the next day.
And right now and over the last several months, the markets are in hyper-sensitive mode. Every little news story about the Chinese economy, oil prices, corporate earnings reports, or Janet Yellin’s dreams about interest rates sends the markets into a bi-polar episode – either up or down.
Last night Bloomberg reported positive futures gains. This afternoon, the Dow Jones closed down over 300 points. See the picuture?
At 10pm the news might be good, so the futures market increases by 2%. Then at 9:30 the next morning, the market opens down 100 points. Why? Because China’s factory orders were down, oil prices were down, or Janet Yellen had a bad dream about interest rates.
Twitchy markets are a sign of uncertainty and fear. Businesses and most investors don’t thrive on uncertainty. I read an article yesterday giving investor advice which was: Dump on the spikes. Period. Normally the advice is balenced with “buy on the lows” but that is not presently sound advice. “Get out when you can without losing your shirt” is today’s message.
One other interesting feature of Bloomberg Business is the frequent establishment optimist’s article sprinkled in amidst the hard financial news. The financial industry, like most others, is a cheerleader for itself. They are big on positive PR to stimulate business. Despite our financial picuture being less than rosy, the bias of the industry is to publish unrealistically upbeat articles about how great the myriad of investment opportunities are. Some of these articles are similar to a home builder urging you to build your house in a floodplain in the midst of a record rain event.
There is a good chance that just as the bad economy of 2008 got the “hope and change” Obama elected in 2008, another bad economy may bode well for a business sense candidate like Trump in 2016.