The market is no doubt disappointed with yet another lackluster jobs report today. This could leave us wondering what all this recent rallying in almost all financial assets has been about. Well, you can almost pick your favorite explanation at this point. I will simply maintain that these past few weeks have all the markings of a set-up…a set-up for what exactly (up or down) remains unclear.
Speaking of uncertainty, are you as tired as I am of hearing the cliche: “The market hates uncertainty”? It implies that the market only moves when it is sure it knows something significant. If the market hated uncertainty, then the market should just collapse from paralysis because the future is not knowable with certainty. Most of us know that by the time you get “certainty”, the move you wanted has just about run its course. Most of us also know the better cliches like “the market has predicted 10 out of the last 7 recessions” (or something like that). And let us not even throw timeframes into the mix – in the long-run everyone can be right at any given point (just think of your favorite perma-bulls and perma-bears)!
The market is one big prediction machine and people place their bets all the time. But the persistent belief that the market knows things noone else knows and then acts efficiently according to that knowledge, keeps financial sportscasters and makers of crystal balls in business (who me?!). It is almost as if we think of the market as everyone and noone at the same time. Play on…!
