The banner headline of today's WSJ read: Nervous Investors Flee to Treasuries. What it should have said was: Stocks Went Down and Bonds Went Up..Yesterday
As we have suggested before, the continuing common mistake of the financial media is to imbue meaning into the noisy ripples of the post-credit super cycle, post-QE markets. If only a single "nervous investor" could have been dragged out in front of the cameras to verify the hyperbolic headline claim. Alas, none were to be found. Treasury prices rose, equity prices fell..we want to believe the action must be connected and an omen of something. Until today, when another false narrative went to the bone-yard. Its as if we are collectively Leonard in Chis Nolan's brilliant Memento, a society with anterograde amnesia, unable to store short term memories.
Are we to believe that a good night's sleep not only calmed the shaking masses but fortified them with a glowing vision of the future? Hardly. The market moved, Taylor Swift fell down. 17 Trillion dollar economies don't vibrate so easily, only their capital markets do. The sticky misunderstanding of the debt markets is the concept of catching capital flight. Look around the world, bond market exodus is a precursor to nearly every significant economic calamity. Yet, here at home, bond buyers and TLT cheerleaders allegedly strap themselves to the "Duration Masthead" at the slightest indication of stormy seas. I can't put it any more simply: It just isn't so.
The Employment Report will print tomorrow. Jobs will be added. Markets will move. Stories will be spun. The Fed, in the greatest feat of all, will remain both- in front of and behind- "the curve." Now, where am I? Who's Sammy Jankus?