I have spent a lot of time through CMR spreading the message that the way to make money over time in the markets is not by knowing the future, because nobody can do this with any consistency over time.  We look at what is going on in politics, in economics, we try to decipher what this means based on what it has meant historically and what the classic studies of these things have been.  But ultimately these things have a tendency to hurt us.  They cause over thinking and over analyzing and a belief system that we can be smarter than the overall market.  Hot tip: we can’t.  Fortunately, we do have a place that tells us if we are wrong or right, which is the market itself.  Paying attention to how the market is acting relative to these other inputs and monitoring when these reactions show changes relative to the inputs is the most important study we can do.  Even this discipline can fool us as markets react one way and then quickly shift to reacting another way, catching us wrong footed.  But even when this happens the key is to respect it, take our small loss and move on.  Sooner or later the message the market is giving will follow through and provide for some big winners that will more than make up for the small losses.

 

There are quite a few things going on right now that could be interpreted as negative US financial markets, if one wanted to play the macroeconomics game.  But how are the underlying markets actually reacting to these inputs?