It’s Never a Good Time To Overreact
Sometimes things get even crazier than normal.
“May you live in interesting times” is an English expression that only claims to be a Chinese curse. It’s well-turned, and it feels wise.Everybody everywhere feels like their age and place is more fraught and/or more blessed with objects of anxiety and/or objects of interest than any other.
After Thursday’s wild price action and Saturday’s disturbing political violence it has a particular empty-but-apt poignance.
“This too shall pass” is how my grandmother would put it, with a deep breath and a deeper sigh. I’ve got enough time in now to know she’s basically correct.
By Friday the previous day’s six-standard-deviation event – the Russell 2000 $IWM outperformed the SPDR S&P ETF Trust $SPY by 4.5 percent – was already history.
Over the weekend it was trivialized even more.
Plenty of people are making all kinds of predictions.
At times like these I back up to the great William Goldman, author of “The Princess Bride” and the screenplays for “All the President’s Men” and “Butch Cassidy & the Sundance Kid.”
In his autobiography, “Adventures in the Screen Trade,” describing his industry and its understanding of what makes a hit but also dropping a universal truth, Goldman wrote, “Nobody knows anything.”
But investors, traders, and speculators are reacting to the tragic events outside Pittsburgh, because the big wheel keeps on turning.
Goldman Sachs $GS will report second-quarter financial and operating results at 7:30 a.m. ET, and management will host a conference call at 9:30 a.m.
At 12:30 p.m. today, Federal Reserve Chair Jerome Powell will appear at the Economic Club of Washington D.C. for a conversation with David Rubenstein.
Tomorrow at 8:30 a.m., the US Census Bureau will release retail sales data for June, the economic data highlight of the week.
And Bank of America $BAC and Morgan Stanley $MS will report earnings on Tuesday.
Prediction markets suggest Trump has galvanized a coalition that will carry him back into the White House, that Saturday only strengthens his position.
Financial markets reflect a similar sense, that Trump’s return means lower taxes, looser regulation, and a new era of global trade defined by protectionist tariffs.
Indeed, Bitcoin $BTC is back above $60,000, its weekend surge supported by expectations of favorable treatment by a new Trump administration.
Be prepared for a short-term volatility spike when markets open.
Also be prepared to stick to your long-term investment plan.