Yesterday Never Happened

In case you’re wondering, yesterday never happened. That anxious feeling you felt early in the morning as the market stumbled wearily? ‘Twas a figment of your imagination. And if you thought Ericsson numbers were disappointing, this too has been erased from the annals as GS upgrades the name and we’re back at Wednesday’s levels. This is nothing new, for as we all know, 2008 did not happen either. So the trick is to just buy the dips, or failing that, just buy the peaks…risk is where it’s at. Fact…and if you need some proof of that, look no futher than here. Sure, you may be playing the game of the greater fool, but if it does all head south, we’ll be out by then, right??

Anyway, caution on playing the short side yesterday proved prescient as the market threw another dummy, which this time, not many bought. Selling the news is SO two days ago. I think the Ericsson example gives a great idea of how this market is trading. The focus is on finding the good and overlooking the bad, often with Panglossian abandon. As I write, the market is in the process of clearing Peugeot’s poor figures on Wednesday from its hard drive as the company ups auto market forecasts. It is now…you guessed it, back at Tuesday’s levels!

















To be fair, there was probably more substance behind yesterday’s up move than the previous days’ down moves as we saw some strong corporate numbers being reported. Lifting the stats from DB’s Jim Reid, of the 56 companies in the S&P 500 which reported yday, 46 beat at EPS and of the 54 which had a consensus revenue estimate, 36 beat. But bellweather UPS noted a poor outlook and the jobless numbers were worse. The focus,in any case, was on the beats.

The FX market, at least today anyway, is less forgiving to the negative news and the big miss on UK GDP is seeing GBP on the receiving end of one big, fat tattoo. Within the figures, mining and quarrying was the main culprit for the fall, -3.5% vs -0.6% previously. We could well discover a few days down the line however, that this never actually happened either.