How can the equity markets trade looking six months out — as is the traditional metric — when it doesn’t know what the next six minutes will bring?
The Dow Jones traded down 274 Thursday on, pick your poison:
- Terrorist attack in
- White House finance chief Gary Cohen’s departure.
- Algos in control since its August
- All of the above
It has to be near impossible to be able to formulate an earnings picture looking out the next quarter, when a 140-character tweet can throw all the analysis into the trash bin.
Here’s a analyst’s note on Friday morning, explaining very succinctly what he is up against when figuring direction of the market:
“In a week where we started by worrying about nuclear war, markets have quickly moved on from this, with yesterday’s weak session more of a response to fears that Mr Trump’s strategy for the economy and business is falling apart and later the terrible terrorist attack in Barcelona,”
Deutsche Bank analyst Jim Reid.
So off of that note we have stocks marginally down for the week. I say that’s not a bad performance even without mentioning the civil unrest in Virginia last weekend.