A Market with No Memory

What has been a tradition in this market, where so many hair triggers are set to instantaneous computer exploitation of every incremental data point, is a complete lack of memory from day to day. A bad labor report nearly 4 weeks ago on a Friday was completely forgotten by the following Monday. A "good" GDP report last Thursday was completely forgotten by Friday. Whereas in the past, you built a mosaic of the market over time, today's era of market has almost no sense of memory outside of the current 6.5 hour session.

ISM Manufacturing (only 12%ish of the economy mind you) came in better than expected, and so did pending home sales and construction spending. ISM Services (Wednesday) is the far more important report but people still seem to think the US economy is like it was in the 1960s/1970s with their focus on manufacturing. Different importance in a few rust belt states....

As for why we are building out new construction when we have 18M empty homes, and countless extra commercial real estate is a question you have to ask your federal government. Consider it the Japanese plan - build things to keep people working, even if there is no need. [Feb 8, 2009: NYT - Japan's Big Works Stimulus is a Lesson]

It is very difficult to apply techniques in such a news-driven environment; at this point we are hovering right around the 50 day moving average again. It just shows you have to take profits quickly in this environment because the entire landscape can change on one news report. We'll expect to herky jerk again Wednesday and Friday in similar fashion - guessing if its up or down is akin to placing your chips on red or black.

Comments

[Tony Petroski:]

Mr. Mark is puzzled as the old and the tried and true aren't working so well.

"As for why we are building out new construction when we have 18M empty homes, and countless extra commercial real estate is a question you have to ask your federal government. Consider it the Japanese plan - build things to keep people working, even if there is no need."

He's raised a reasonable question. (Source for the 18 million empty homes?)

I know that Jimmy Carter is pounding a nail somewhere to build the 18,000,001 home. That's the stuff of peace prizes.

Nov 03 08:55 AM

[TraderMark:]

Technically it was closer to 19 million but I'm trying to be generous

www.bloomberg.com/apps...

Nov 03 09:38 AM

[Tony Petroski:]

OK. Let's call it 19 million. But a million here or there and the moral of the story is still the same: the market is whacky and we're all doomed? Hope and Change out the window?

Open the Southern border as there are many more than 19 million who will buy those homes. Unfortunately, for a generation, they all vote Democratic. Still, we can handle that and then we have a Republican wave in 2044!

Nov 03 10:16 AM

[mdmrjsds:]

On Nov 03 10:16 AM Tony Petroski wrote:
<snip>
> Open the Southern border as there are many more than 19 million who
> will buy those homes. Unfortunately, for a generation, they all
> vote Democratic. Still, we can handle that and then we have a Republican
> wave in 2044!

A lot of unskilled, uneducated serfs from latin america aren't going
to rescue america by buying all the houses and paying for social
security and medicare. And they bring with them the culture that
created and sustains the disastrous societies they came from, and
supplies lots of gangbangers and teenage unwed mothers and prison
inhabitants to the US. Oh, and I forgot 2 hr gang rapes.

Now, if you talk about opening the border to educated, skilled, asian
immigrants that's a different story! Unlike the latinos, in one
generation *their* children are excelling, exceeding the native born
by large margins. i.e. raising the average

I'm not saying that latinos have less *potential* than asians, I'm
saying that latino culture is a piece of ****. And if you program a
computer (human brain) with bad software, you get bad results, no
matter how good the computer is.

We've done a massive social experiment in this country using
California. About 1 in 4 residents of California are third world
serfs from Latin America at this point. And the state definitely has
that third world flavor to it now. So no, they don't automatically
reach their potential just by crossing the border. In fact they seem
to be very slow learners, taking multiple generations to realize that
their old culture is crap, and they need to get with the new program
(again, unlike Asians).

Your view is common among the PC crowd, that America can take all and
sundry and its innate power of transformation and goodness will
automatically work. (violin and organ music in background) That is,
after all, one of the myths of our country. But like any other
system, this one has limitations too. That view is just another
variation of the kool-aid that main stream economists drink, that
perpetual growth is possible in a finite system, and that the only
possible system is one of growth. Our whole system is predicated on
growth, whatever the cost.

Don't believe me? Imagine that tomorrow we opened the borders to
anyone who wanted to come to America from anywhere in the world. We
would probably have a billion people here within 3 to 5 years. Would
the system survive such a shock. No.

Am I saying that in a hundred or hundred and fifty years, when all
these latinos finally get with the program (if they do), they won't be
American? No. But that doesn't change things now, living in a
society with a large minority of third world serfs with all the
discordance that brings.

Nov 03 10:47 AM

[Tony Petroski:]

Mr. mdmjsds: I fear you are right, but I hope you are wrong.

Nov 03 11:51 AM

[PainfullyAware:]

Short Term Memory Allows Disaster To Reoccur.

Since "Value As You See Fit" Rules The Day In Accounting Now, Why should anyone worry "How Things Add Up"??

Ride The Wave Folks, Lunacy Has Longevity When The "Referee Is In On The Scam".

The Scam Will End When No One Can Be Found To Participate. (Remember The "Credit Crunch" where "Miraculously" no one wanted to lend to each other because of UNKNOWN EXPOSURE TO DERIVATIVE CONTRACTS. => Much Can Be FIXED By Fraud)

Nov 04 01:56 PM