Oh, the bombast! The wonderful, wonderful bombast.
Selling “gripped” US equities on Tuesday. Tech shares “plunged.” It was the “worst day since”… well, since the most recent day that was worse than this one.
Honestly, I don’t even like those jokes. I like originality. And there are (far) too many web portals and Twitter accounts who owe their entire following to making the same jokes over and over, and relying on an unimaginative public to laugh again and again.
It’s the same way looped, captioned Anchorman animations never fail to please. How many times can we sarcastically deride the media for calling a 3% Nasdaq selloff a “plunge” before people stop giggling? How many times do we have to watch Ron Burgundy mouth the words “I don’t believe you” before netizens collectively revolt and click the “unfollow” button pending fresh jokes?
To be sure, tech is on the hot seat (not to be confused with “hot streak”). I talked about it in “Tech Is ‘Epicenter For How Index Movement Could Get Weird’.” Now I’m compelled to talk about it again. “Because markets.”
The FANG+ gauge is down — steel yourselves — 4% since Friday. Trust me when I tell you that exactly nobody who isn’t inclined to staring at financial television knows this, let alone cares. I hate to come across as unduly fatalistic (the way I did Monday, in “Street Level“) but there are 330 million people in America. I doubt even 1% of them could tell you what the FANG+ index even is. Either the masses are Luddites or we’re wasting our lives on something nobody cares about. (It’s actually both.)
In any case, the tech selloff was “sweeping across stocks” on Tuesday afternoon, to quote Bloomberg’s hyperbole, which was only slightly less bombastic than CNBC’s. When I flipped the channel to the latter, I was greeted by some kind of panel discussion featuring Stephanie Link (who I found to be just as abrasive in person as she seems on television, but that’s just one man’s opinion) and Josh Brown, who seemed preoccupied and couldn’t be bothered to look up at his monitor.
Apple, Tesla and Amazon were all hit hard. That the broader market was upset as those three suffered spoke volumes about the extent to which achieving higher highs with underperformance from tech and growth shares could be an uphill battle.
Insult to injury was Janet Yellen — you don’t hear that very often when it comes to equities. Usually, she’s a boon.
“It may be that interest rates will have to rise somewhat to make sure our economy doesn’t overheat,” she said, during an interview with the Atlantic. “It could cause some very modest increases in interest rates.”
Amusingly, Yellen’s remarks weren’t even delivered on Tuesday. The interview was recorded on Monday.
But the machines didn’t care. And humans weren’t in the mood to “correct” the algos after the fact. Perhaps because they didn’t need to be corrected. Sometimes they get it “right.” For example (from Homo Deus),
In 2011 a pharmacy opened in San Francisco manned by a single robot. When a human comes to the pharmacy, within seconds the robot receives all of the customer’s prescriptions, as well as detailed information about any other medicines she takes, and her suspected allergies. The robot ensures that the new medications don’t interact adversely with any other medicine or allergy, and then dispenses the required drug to the customer. In its first year of operation the robotic pharmacist provided 2 million prescriptions, without making a single mistake.
As Bloomberg’s Edward Bolingbroke noted, some 70.5k TY traded over a three-minute period when the Yellen headlines crossed. That was “the highest volume spike of the session,” he said, adding that the 10-year note dropped five ticks following the (day old) comment.
Meanwhile, Jen Psaki told the daily White House press briefing that Joe Biden agrees with Yellen. The President, she said, takes “inflationary risk incredibly seriously.”