Investors work for a lifetime to develop the skill and the industry knowledge to pick stocks without going broke in an afternoon. Today, all that time and effort is proving useless as markets have become what Zerohedge calls “messy and unusual.” The reason for all this uncertainty is, well, unprecedented uncertainty. Speculators control the prices of stocks more or less by prognosticating on their futures.
Right now, with arbitrary COVID lockdowns on an arbitrary decline after two years of arbitrary restrictions, speculators don’t know what to expect. Further, with a host of arbitrary sanctions against Russia which seems to have legitimate security concerns in Ukraine, once again, the speculators are turning to tea leaves for answers.
Why you ask, is all of this happening? It is happening because your government is playing Duck-Duck-Goose with the levers of power. When it comes to the prognostication of Wall Street investing, speculators usually look at the predictable effects of government regulation on business productivity and commerce. At the moment, with Former Vice President Joe Biden and Cackling Kamala at the helm, the speculators don’t know what to make of current policies.
That is partly because current policies don’t track with political realities, not in the eyes of someone who would play the game honestly, anyway. It is also partly because the policies seem to change on a whim based on political expedience. This has left day traders biting their thumbs in frustration as they sell themselves down the drain cutting trades that would normally work for them.
Peter Tchir of Academy Securities has defined the crisis of uncertainty in seven different ways.
1. Sevens and Tens are inverted as are 20 and 30s. This breaks from all cyclical norms, leaving the terrain so convoluted that experts are reluctant to even talk about them.
2. The direction of oil prices seems to matter more than the size of price shifts. For example, if prices change by $5, that is less significant than if they go up by 1 cent and then down by 1 cent the next day.
3. Rates usually move higher with inflation. Now, that connection seems loose. Tchir says, “We seem to be in a ‘risk-on, risk-off’ mode.” It’s entirely arbitrary.
4. Housing inflation needs to be curtailed as the market seems on the verge of a major flip. But sales have slowed and mortgages are surging at a historic rate.
5. The Fed’s Financial Condition index hasn’t looked this poor since 2016, discounting pandemic metrics. This means we are back in Obama’s economy, and that should tell you something.
6. Credit had a boost and outflows have resumed. But conditions appear strange as liquidity and credit look quite low.
7. Chinese companies are “un-investible,” Tchir says. Just two weeks before this writing, those same Chinese companies were sure things.
Taking an eagle’s eye view of the landscape, it looks like a game of Chess where every square on the board is rotating at a random speed and direction, any of which could change at any moment. It is a soup, a miasma of instability.
Commerce, the value of a currency, and the ability to make a living depend on two things, predictability and trust. Under these conditions, those are two things that cannot exist. So we have gone from two years of lockdowns shuttering businesses, to a season of career-killing vaccine mandates, and just when those things come to a halt for clearly political reasons, all the normality drains out of trading and finance as if someone pulled the stopper out.
There is only one way to explain this, and it is a war by other means against the working man and woman.