When the market was gapping up yet again on Monday, I jotted down some notes to myself about how the skeptics (including a certain columnist I know) could get it so wrong.
With the Dow hitting new highs, the last thing I thought was that the rally would feed on itself. Surely, I thought, cooler heads would prevail as people realized this market mania appeared to be largely tied to one thing: Falling oil prices. “If this rally is hanging by the thread of one thing – oil,” I said on Kudlow & Co. a week or two ago, “then we are all in trouble.”
All in trouble, that is, if everything doesn’t go just right. As it turns out, that the “if everything doesn’t go just right” du jour was the PPI. Today it could turn the other way – or not! -- based on the CPI.
I know, I know: According to the pundits, this has nothing to do with just oil and everything to do with a strong economy. Stronger-than-expected inflation would appear to reflect some of that, no? There is no shortage of business people who say all is well in their world. Then, of course, there are plenty who say it’s not or that it’s just okay. (Mark Haines was musing Tuesday morning on CNBC’s Squawk on the Street that one trucker recently was telling him it was good; another was saying it was bad.)
That’s why the market is so volatile and vulnerable – and why I say there’s really very little in the way of conviction about a long-term trend.
The most telling moment, perhaps, was a week ago on CNBC when veteran floor trader Art Cashin – who has seen it all – was saying the impression he got was that the market was being propped up by “hot” money that was using the market as a place to “park” money that was coming out of real estate and other assets. (Since when is the stock market a parking place?)
Then there’s the Greenberg Indicator: Anytime I call a short-seller and say something like, “So, how goes it,” the response is: “How do you think it is?" (Oops, wasn’t thinking!) That’s always a sign of excess to the upside.
Sticking with that theme, writing on Street Insight Tuesday, Doug Kass told his readers that today he will be lecturing on short-selling at Yale University. When he did the lecture last spring, 90 students signed up; this time it has attracted only 28. The ultimate sign-o-the-times.
Wild times. Onward.