Well, consider Wednesday morning’s missive from former FX trader Richard Breslow a kind of counterpoint to most of what you’ll read in these pages.
To be sure, Breslow isn’t normally an overtly optimistic type of guy, but he is cynical, which means that when he sees the punditry leaning what he thinks is too far in one direction, you can expect him to lean in the other.
Which is good, because we actually like to present both sides of the argument here as opposed to offering you a one-way interpretation of the world like so many other financial and political portals.
Below find Breslow’s latest which, if not entirely consistent with our point of view, is characteristically well written and well argued.
You Might Consider Getting Them While It’s Hot
The incessant search for proof that the world, and hence markets, are imminently coming to an end has become an exercise in self-indulgence. Too many commentators have fallen into the “everything is binary” trap and decided that if you assume each event will end badly, there’s material to turn out a good rant. I even read this morning one purportedly disinterested analyst admit he has gotten tired of not seeing bond yields collapse given all the bad news.
- The reality is, actual investors have learned that all binary outcomes won’t resolve themselves in the same way and they have to find more than one way to deconstruct events. Most issues in life, and certainly in geopolitics, are better characterized by yin and yang rather than it’s all zero sum
- Stock valuations are really high and must correct. The buyers are greater fools. Maybe. Certainly popular. But we’re also about to enter earnings season and some pretty smart people are looking for a robust set of numbers. With earnings growth handily outstripping the previous two years. Low market volatility can just as easily be a time correction after a big run higher as a petering out of momentum before the deluge
- And it’s not just a U.S. thing. Ebitda forecasts are rising for Japanese companies while credit-default swaps continue to come tighter. Credit OAS spreads for Chinese off-shore bonds are looking decidedly relaxed. And guess what, investors think the real upside surprise could come from Europe
- It’s a reality of life that new U.S. presidents, especially one’s with no foreign affairs background, are going to be tested. And have messages they must send. It doesn’t mean war is imminent. Analysis seems to run to all out war or universal peace. It doesn’t work that way
- Yes the world is a dangerous place, but while safe havens were rallying last night on well-heralded Korean fears, the Chinese and American presidents were talking and the won and Kospi rallying
- Less and less is expected on U.S. fiscal initiatives in the short-term. That’s bullish not bearish. Rather than being built into the price there’s greater scope for it to be potential icing on the market’s cake
- So many are celebrating falling iron ore prices as a sign growth and inflation are grinding to a halt. They should look at the broader commodity complex and note how bid it looks. And then admit that iron ore prices and global GDP have no meaningful correlation
- Sometimes the all-out search for canaries in the investing coal mine becomes about as useful as an ostrich sticking its head into the ground