The economic release stream is scant this week; we will have a look at March non-manufacturing activity, courtesy of the Institute for Supply Management. This is a valuable read for vigor and employment in agriculture, mining, construction, transportation, communications, wholesale and retail trade. The release will likely exceed expectations.
But the key release by the way of market-moving horsepower is that for new unemployment Claims, for the Apr/2 week, released on Thursday. We told clients that the last figure would fall below expectations; that was the result. If that happens again the market crowd will be greatly cheered.
To understand market tension (and thus have a leg up on price discovery) one must understand crowd behavior. Key - a long time is needed for ideas to establish themselves in the crowd’s mind; once established, it takes just as long for these to be eradicated.
Observations at stream side provide a useful guide. Trout will take some food on the surface; not much however as it’s not worth the effort. They prefer to take nymphs near the bottom; that’s a lot easier and a lot smarter- there are no osprey (fish hawks) down there.
But occasionally a very large variety of stream fly will die and settle by the thousands on the surface. The salmon fly for example is a dozen times as big as the normal fly, a heck of a meal. But at first even though the salmon flies are drifting overhead in clear view of the trout the trout continue to feed as before. They see the salmon fly alright but that doesn’t register. They’re busy with the nymphs. Suddenly, and no one knows just when it will happen, the trout become “keyed in,” forsaking caution, shooting to the surface, slurping up as many salmon flies as they can.
The osprey’s shadow overhead or fly line carelessly slapped on the water - no matter, nothing will interrupt the orgy. Like members of any crowd, trout shed their individual identify and acquire that of the crowd itself. Reason, caution and judgement are exiled.
Soon the drift is over but the trout remain keyed in; they continue to mill near the surface long after, wasting energy, taking only little meals because the salmon fly have all drifted downstream.. Members of this crowd are looking in the wrong direction, once again missing the turn.
Thus, Q3, early Q4 our crowd had embraced the notion that the US economy was stuck. Ample evidence existed to the contrary, floating just overhead, but it was wasted on the crowd. Then something happened; suddenly the crowd abandoned their pattern, rejected their last notion, hanging it in effigy as if they were betrayed (there is nothing more vicious than a crowd which feels betrayed by the idol they once worshiped) Quickly, they accepted the new idol, that of economic expansion, especially that related to employment. Once again, they were all believers.
Another strong employment figure (Claims) will feed the frenzy. Yet the osprey, in the form of potentially much higher oil prices, glides just overhead.
Robert Craven
But the key release by the way of market-moving horsepower is that for new unemployment Claims, for the Apr/2 week, released on Thursday. We told clients that the last figure would fall below expectations; that was the result. If that happens again the market crowd will be greatly cheered.
To understand market tension (and thus have a leg up on price discovery) one must understand crowd behavior. Key - a long time is needed for ideas to establish themselves in the crowd’s mind; once established, it takes just as long for these to be eradicated.
Observations at stream side provide a useful guide. Trout will take some food on the surface; not much however as it’s not worth the effort. They prefer to take nymphs near the bottom; that’s a lot easier and a lot smarter- there are no osprey (fish hawks) down there.
But occasionally a very large variety of stream fly will die and settle by the thousands on the surface. The salmon fly for example is a dozen times as big as the normal fly, a heck of a meal. But at first even though the salmon flies are drifting overhead in clear view of the trout the trout continue to feed as before. They see the salmon fly alright but that doesn’t register. They’re busy with the nymphs. Suddenly, and no one knows just when it will happen, the trout become “keyed in,” forsaking caution, shooting to the surface, slurping up as many salmon flies as they can.
The osprey’s shadow overhead or fly line carelessly slapped on the water - no matter, nothing will interrupt the orgy. Like members of any crowd, trout shed their individual identify and acquire that of the crowd itself. Reason, caution and judgement are exiled.
Soon the drift is over but the trout remain keyed in; they continue to mill near the surface long after, wasting energy, taking only little meals because the salmon fly have all drifted downstream.. Members of this crowd are looking in the wrong direction, once again missing the turn.
Thus, Q3, early Q4 our crowd had embraced the notion that the US economy was stuck. Ample evidence existed to the contrary, floating just overhead, but it was wasted on the crowd. Then something happened; suddenly the crowd abandoned their pattern, rejected their last notion, hanging it in effigy as if they were betrayed (there is nothing more vicious than a crowd which feels betrayed by the idol they once worshiped) Quickly, they accepted the new idol, that of economic expansion, especially that related to employment. Once again, they were all believers.
Another strong employment figure (Claims) will feed the frenzy. Yet the osprey, in the form of potentially much higher oil prices, glides just overhead.
Robert Craven
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