With yesterday’s close in the SPX cash at 1075, dead smack in the middle of the trading range from early July, the daily quote on today’s Bloomberg terminal seemed very apropos in describing the market action, “If you don’t know where you are going, you might wind up someplace else,” said Yogi Berra. I’ll add another of his, “If you come to a fork in the road, take it.” Stocks are dealing with the tug of war of a clearly softening economy on one hand and the hopes that it’s just temporary in part due to the hopes for a political ‘time out’ in Nov. I do not want to get into a political/policy discussion at all but it’s clear a ‘time out’ is desired by the market. The ECB’s Weber said he prefers to wait until after year end in normalizing policy due to possible “end of year tensions” and the Euro quickly moved lower in response and European stocks followed. The European iTRAXX financial 5 yr CDS is wider by 9 bps to 137, the highest in a month. Also as a result, German bund yields went to new record lows. The Shanghai index lost 1.7% from a 3 month high and the Sensex index lost .3% from a 30 month high.

Category: MacroNotes

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2 Responses to “Yogi ism’s for a tough market”

  1. foosion says:

    it’s clear a ‘time out’ is desired by the market

    What evidence is there of this?

    The market has traded up recently either on hopes of a stronger economy or govt action to strengthen the economy. When we don’t see either, it goes back down.

  2. piyush08 says:

    Just wanted to leave this comment with regards to the sensex since you mentioned it. I am an Indian trader based out of India and follow the Sensex on a day to day basis. It has been outperforming fantastically over the past 2 months. Typically every time there would be a 2-3% selloff in S&P one would expect atleast a 1% gap and further selling as was the norm last year. But each morning the index is flat or mildly negative.

    As i have seen in other markets (i trade fx/commodities) a market which is consolidating around its highs despite negatives in other correlated markets then turns that outperformance to a major positive pop. So despite the random noise in S&P, and despite the various underweight rating on India from major research desks, I think we should see new highs fairly soon for this market.