Anatomy Of A Global Rescue

by Chris

What does a rescue look like in a hyper-interconnected world of global “markets?”

Well it looks like this…just for fun I’ve lined up the “markets” for Japan, the US, Europe generally and Germany specifically so that their times line up.

Notice anything?

Now the headlines this morning are all going to be about how US equities rebounded on strong earnings or some such nonsense, when the truth is EVERYTHING rebounded at exactly the same time, and well before any earnings came out.

Why should Japanese equities rebound on news of Morgan Stanley’s earnigns?  Why should Nasdaq stocks rebound on the basis of bank earnings?

My point here is that the movements of these “markets” does not have anything to do with news, but something else.  Something that binds them so tightly that they move in virutal lockstep.

Practically down the 5 minute wiggle, in many cases precisely that far.

So what does this tell us?  What does it mean?

For starters, we might surmize that traders are up against the world, not individual markets nor indiviual equities.  Further, there must be quite a lot of attention being paid to the global markets by the big players – governments and central banks.  After all, maybe the worry is that if one falls, perhaps they all fall?

Given the they rise in lockstep it’s reasonable to presume the opposite could happen too, right?

Alternatively, it means that the global markets are entirely out of the control of the central banks, et al., and that thye now move in accordance to the Rule of Big Money; which states that massive sloshing piles of global capital flows are responsible for everything that we see.  If so, are we comforted by that idea more than the idea that central banks are fiddling like crazy to keep all the plates spinning?

We might also note that regardless of caaue, such markets are not providing us useful information about anything except their instantaneous price levels.  All other information has been stripped away.  Country risk, currency risk, and market risk are no longer independent, but linked.  So no information there that’s useful.

These are the sorts of “”markets”” that I could imagine climbing to new gaudy heights even after the last human has died.  As long as the lights stay on and the central bank servers are shoving money out and there are corresponding algorithm programs to respond, that could happen.

In other words, these “”markets”” are now utterly contrived and not very helpful as guides.  Yet they are the prime signaling mechanism of the state.

I guess we might as well argue vehemently over what percentage of DNA qualifies one for “heritage” standing.  It’s about as useful to facing our many predicaments.

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