Wednesday, September 5, 2012

Where is Thumbkin?

Where is retail?
Where is retail?
Here I am
Here I am
Where were you this summer?
Why are you not trading?
I'm buying bonds
Buying bonds.
- With no apologies to anyone

Well, it was either that or a bastardization of Maggie May by Rod Stewart. You know, it's late September and I really should be back at my trading desk.

Normally, the post Labor Day week releases the hounds. Pent up demand (or supply) us unleashed and things start to move again. Volume expand and away we go.

Not this year.  We are now two days into the week and nobody is still away stretching this into a two week vacation. NYSE volume is still below average and that average has been falling throughout the 2009-2012 bull market. In other words, it stinks.

Last year was the same deal. It took more than a week for things to perk up. You have to go back to 2009 to see a clear change from low volume to higher volume the day after Labor Day.

This is the age of QE. I do not blame the disruption caused by the slo-mo crash of 2008 because there is now four years of healing in place. Markets stabilize faster than that.

Note I am not talking about price. That is part of the age of QE. I am talking about the function of the market to allocate capital, reflect the mood of the public vis a vis the economy and reward those who take successful risks.

No, this is the age of QE. The public calls the market a casino. Institutions call it free money courtesy of the taxpayer. And analysts cannot call it at all. Why should they be able to do so? Forget discounted cash flows. Forget momentum and sentiment. Forget propeller head algorithms.

Nothing matters in the age of QE - except will he or won't he? Will Ben print? Will Super Mario save the Eurozone by, you guessed it, printing.

1 comment:

Blogger said...
This comment has been removed by a blog administrator.