And, Thursday morning’s banner headline in MarketWatch.com was a perfect example of the depths to which the financial media has fallen–“Mark Cuban: This tech bubble is ‘far worse’ than back in 2000.” I thought we might have seen the worst of this talk, maybe even put it to bed in our post, “Will miracles never cease?” Actually, turns out the bubble Mr. Cuban is referring to was not a bubble in publicly traded tech stocks; but, rather a bubble in venture funding for technology start-ups. Now, this is not the type of stuff (systemic risk) that would bring the market or economy to their knees; but, it could put a crimp in rapidly rising San Fransico Bay Area real estate values. I must say in fairness to the author, the headline did get me to look at the article.
Good news is bad news again!
Friday, non-farm employment jumped a surprising 295,000 in February, beating the estimate by 55,000. Unemployment dropped to what used to be called ‘full employment’, 5.5%, and stocks collapsed. Seems, at least to those panicky sellers in this session, that these numbers are the death knell for this bull market as the Fed will most certainly begin to move short-term interest rates higher, sooner rather than later. Again this is an issue we addressed in our last post “Plenty of noise, …”, where I surmised that this would roil the market for a while, but would not be the end of our secular bull.
To paraphrase Warren Buffett…
‘The only reason to have the stock market open is to see how stupid people (and institutions can be).’ Today’s trade was no exception. The media and punditry went to DEFCON1.
Fed, please save us from the inevitable!
Art Cashin, Director of Floor Operations for UBS Securities, became apoplectic, saying, “I hope someone down at the Fed has the TV on.” Cashin was urging the Fed to provide speakers over the weekend to calm the market. You will not believe the rhetoric and panic in the attached clip (“US stocks fall sharply on fears of pending rate hikes. Dow below 18,000”). It’s like saying, Please, G-d, say it ain’t so … they’re not going to raise short-term rates from zero any time soon! Please! … GIVE ME A BREAK! THIS BEHAVIOR AND RHETORIC IS DISGUSTING.
When Arthur went to work in Wall Street back in 1959, the Dow Jones Industrial average was about to pierce the 500 level. It never looked back. Subsequently, Cashin and the markets experienced every calamity imaginable in the United States–wars, assassinations, racial violence, hyper-inflation, September 11, 2001 and the financial bust of 2008/2009. The Dow is now 17300 points higher today than when Art hit The Street. Yet, here he is (in the clip-someone should calm the market) pleading with the Fed to say something to calm the markets after they have retreated only modestly from historic highs. Unfortunately, Art Cashin seems to never let the perspective he should have gotten in all those years, cloud his negative short-term commentary.
Yes, we could be in for a whopper of a correction
This has been a constant theme since the market moved off its lows in 2009. It will happen. Many have occurred since 1959. But, I point out again, as have in the past, it is hard to trade … easy to get out when you are fearful, hard to get back in if the market moves away from you.
Are you mentally agile enough?
P.S. Here are what a few smart guys had to say about Friday’s mini meltdown.
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