Bipolar pigs high on the hog
GEORGE Bernard Shaw wants a word with all you latent bears out there: “I learned long ago, never to wrestle with a pig. You get dirty, and besides, the pig likes it.” Never mind the dodgy reasons for the long-running bull market: we must roll with it. Don’t make a mistake, as Naas Botha would say, it is going to run for a good while yet. A market does not crash from the top; it wilts under the weight of failing buyer interest until sheer seller momentum drops the floor from under it.
Look at the charts on this page: the JSE could have fallen through its own underpants in June, when we got a big fright that the US Federal Reserve would stop giving money to banks to buy stocks. But it, along with the Dow Jones, the FTSE 100 and every other leading index, had a Bette Midler moment as soon as that fear was put to righteous bed. So, more wind beneath our wings. Then on Thursday the Dow cracked the 16 000 barrier, and technical analysts will tell you how much money gets bet when a ticker breaks a resistance level; not just by traders with an eye on surfing an obvious trend, but by the high-frequency wagers generated by big-banking computers.
The world has blundered into a silly state in which stock prices have only a vague relation to company earnings, and interest rates are so low they practically force major investors to borrow for next to nothing and invest in blue skies.
Fund managers armed with cheap cash reckon theirs not to make reply or reason why but just to do and bloody well die.
Yes, it is manic and foolhardy but you would come a cropper trying to bet against
The war may be dirty but bigger forces are running the show — not just the banks and their policy stooges
a bipolar market that is doing its damnedest not to slump into despond.
The surreal fact is, despite the anaemic recovery in the “real” global economy, central bankers have succeeded in creating wealth — paper wealth, to be sure, in the form of unrealised capital gains on share prices — for anyone lucky enough to have a few cents invested.
This fact gives bearish economists such as Nouriel Roubini and Marc Faber grey hairs. What happens when the phantom financial market meets real life?
But again, let us not fight a battle we can only lose. Too many bears have lost their (hair)shirts trying. The war may be dirty but bigger forces are running the show — not just the banks and their monetary policy stooges, but the trading algorithms that are programmed to feed on the “good” news pumped out by the financial tsars.
High-frequency trade deals in what data monitor Nanex calls “fantaseconds”. At this velocity of buy and sell oscillations, no regulator on earth can tell if any monkey business is going on.
Super-sceptic website zerohedge.com has suggested that infinitesimal lags induced in orders can create “latency arbitrage opportunities” that even the US Securities and Exchange Commission’s Market Information Data Analytics system will fail to pick up.
So cheer up, everyone. Never pre-empt depression: dance like a fool, enjoy the gig: the pigs are on top, for now …