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Monday Morning Quarterback: Social Studies


Some operating with "Ready, Fire, Aim!" mindset.


A fresh set of sessions is upon us, and with it our weekly ritual of trying to assimilate the wicked crosscurrents in an unsure world. As we begin this process anew, I wanted to share an instant-message exchange that took place Friday as we edged toward our requisite respite:

Toddo: Jeezums, just peeked at the message boards and it looks like I'll walk home with a limp again.
Pepe: It's not you.
Toddo: Oh, I know, people are peeved. Sorta ironic actually.
Pepe: Jon Stewart either opened the floodgate or provided a much needed catharsis. I hope it's the latter but I suspect it's the former.

Now, there's a reason I share this and it's not to illicit emails of support. Social mood and risk appetites shape financial markets, not the other way around. We've been monitoring this dynamic for a long time, highlighting societal acrimony as a central theme last year and introducing the extension to social unrest and geopolitical conflict this year.

To wit, the following three headlines all rolled across the tape in the span of one hour on Friday:

"Japan: May Shoot Down North Korea Rocket"

"U.S. Jet Shoots Down Iranian Drone Over Iraq"

"U.S. Warships Head For China Sea After Standoff"

It would be easy to dismiss these as isolated incidents, or say that markets are a leading indicator and much of this risk is discounted (with mainstay indices still down 50% from their highs, some of it surely is). While I remain open to further strength in the context of a bear market rally, I would remind ye faithful that excess breeds excess.

Indeed, perhaps the single most important word ever scribed in Minyanville was "cumulative," first uttered by John Succo. Perhaps nowhere is that better illustrated than in the chart I shared last week when I posed Answers I Really Wanna Know.

The question remains whether we've passed the point of no return, a place where the cancer is bigger than the economic patient. I hope not, but understand that hope isn't a viable investment vehicle. The best utility I can offer is to share my process and experience learned over the course of my 20-year career.

I will ask for 3 things in return:

The first is patience, for this will take some time.

The second is empathy, as the point of recognition permeates society.

The third is kindness; you never know how far a positive pebble will ripple in the pond of life.

If you can do that, we can do this - and this, my friends will forge the path through the wrath and deliver us on the other side of this prickly ride.

Full Disclosure

As reference above, I offered my take on the financial media turf wars last week and Pep weighed in on Friday. We've historically avoided this discussion as we pride ourselves on taking the high road. Still, folks who never heard of Minyanville accused us of exploiting the situation for purposes of publicity.

I would counter that if they had heard of Minyanville, they probably wouldn't be so angry in the first place and what occurred was endemic of a much broader -- and potentially telling --dynamic.

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