August 25, 2015

Interesting Times

Okay, a bit of an understatement, but the truth nonetheless. The day started with a precipitous fall in the Dow Jones Industrial Average of over 6.5%, followed by a bounce in part instigated by a comment from an unnamed media personality that received an insiders email from Tim Cook, the post Jobs leader of Apple Inc., and finished a day that looked to recover only to close at a loss of over 3.5%. He’s how I saw it.

Apple (AAPL)
Apple Inc. has come down nearly 30% from its recent high, and because if its massive presence in all three of the broad indexes (Dow, S&P500 and NASDAQ) the influence of its drop cannot be underestimated. More curious however was the letter containing a few comments regarding the new iPhone sales in China. Most notable measured the thirst of iPhone interest by the Chinese consumer as measured in rates of activation as well as the purchase. The news relieved investors enough to take Apple stock briefly into the green.

Not to repeat myself, but the news about Apple underscores an important fact of recessions, that being most people might pullback on going out to dinner, or seeing that new movie in the theater, but very few will stop buying toothpaste, baby shampoo and other personal and household products that in my opinion these days includes ones cellphone in general and iPhone specifically. This is true for any consumer driven economy.

Before the advent of digital investing, the short name for algorithmic speculation, of the broad markets, it was the open cry futures markets that served wide felt disruption to Wall Street. Needless to say the split second influence of these many systems all contributed today to a collision of orders and trade executions made more urgent on a Monday morning. The ability of the market to recover with equal speed lends some evidence to that idea. This could be a factor of the new economy, or the system needs to spend less time on JP Morgan and focus more attention on a new breed of ad hoc financial speculator.

No one can know if the market direction is near the end. It’s been four years since the last, therefore there is an especially strong demand for patience. Many have heard me comment that markets go crazy simultaneously but come to their senses one at a time. It is my opinion that we are experiencing correction, not a systemic event, and that the aforementioned comment will play out…again.