Funky Friday

The markets are going insane today. The Dow gapped up to 11500 to open — fell to 11150 — is now rocketing up to 11500 — and it isn’t even 1pm EST. That is a huge daily range and is a serious failure of equilibrium “price discovery”. The market has ceased to function and is now, basically, just fibrillating.

Either no one – except the high-frequency computers on autotrade — knows what anything is worth anymore or the markets are no longer run on a timescale where humans can comprehend what is happening. Or maybe both. Maybe computers are our “capital allocators” now – and we humans are just along for the ride. Let’s hope the computers aren’t hostile like Skynet or HAL (popular culture joke).

On edit: The sectors going up today are: consumer staples, health, telecom, utilities. All highly defensive sectors that traditionally do very well in a recession. Could this be “rotation” — for the first time in oh – roughly a decade? Or is that merely how the computers are programmed – to ramp them up today – and dump them on Monday when the program tells them the recession has ended? At any rate — SYY may be a good play

On edit on edit: Apparently the news event of the day was the ECB’s announcement of its Italy/Spain bailout plan. Germany (and supposedly France – until France goes broke too) is now on the hook for an additional 35% of its GDP in order to bail out German/French banks that lent money to the Italy/Spain governments.


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