Whew what a week
Guest post by Peter Tchir.
First, today’s move seemed bullish to me. Yes we failed to hold the highs of the days. That isn’t good. But we didn’t break to new lows as we closed and that’s not bad given all the concerns about Europe. Even more importantly we didn’t completely give up when Obama made his sheech. I can’t be bothered to correct that typo because Obama was so disappointing.
I’m not sure that I would consider the election a strong endorsement of his policies. If anything I viewed the election as reasonably split and indicative of a divisive country. He definitely won, so he shouldn’t capitulate but seriously, isn’t it time for some for cooperation? Not that the republicans were any better. I can’t tell whether they are behaving as sore losers, or arrogant winners that somehow haven’t accepted they lost.
We need to do a few things. Work together to create a reasonable plan forward. It won’t make everyone happy but we need to do what is best for the economy, and to some extent, the market. I don’t agree with everything that Ben does, but while he is out there trying to promote growth through liquidity the politicians have been messing it up. I didn’t expect hugs and kisses on day 1 but the politicians need to understand the people aren’t happy, and the only real mandate, from those in the center, is to figure out some useful compromise.
Anyways, enough ranting, and I will just close my eyes, cross my fingers, and hope the politicians can get it together. I think they will. Both here and in Europe.
Certain price action made no sense. Corporate bonds did poorly. CDS did worse. I didn’t see retail pull out of bonds, and if taxes are bad for stocks, then bonds should look relatively attractive, no? Bonds already taxed as ordinary income, so why are these bad? If there was a risk of Ben being told to tone down the toner, that’s gone. They probably already ordered more printers.
So anyways, what a week. I took off the shorts way too early. Got long too early. Got long some things that I knew were crowded trades, but didn’t think they were 40 people in a VW bug crowded. I am actually mildly bullish Europe here. Moderately bullish US. Scary and part of me cringes as I write this, but feels like the right trade to me, in spite of being dependent on politicians and central banks.
Good luck, enjoy the weekend, and let’s see what happens next week. As a future note, selling Apple at 675 is better than selling it at 550 almost regardless of tax rates.
Which leaves me with my final thought of the week. I’m left with this nagging doubt that the market has lost any ability to value anything. I can’t help but feel that this week was yet another example, if not the biggest example, of the market not being an “efficient discounting mechanism” and just being a roll the dice, take your chances, hope not to get stopped out casino, except it’s algos and not scantily clad cocktail waitresses that make you do stupid things.