NO, dont worry, I do NOT think we see a move as we have seen in 2020… so no panic please…. BUT what I would like to say is the following…. the circle and the arrow you see early 2020 is the early China Covid led selloff.. we had a brief 4-5 % sell off when China started to quarantine entire Cities…. BUT the Equity market felt, it is a China problem and moved to new highs…. I think it was this move to new highs, that made matters a lot worse once the market finally realise that the world has a problem.
To this day I struggle to understand how very smart Money Managers didn’t really see this.. or at least reduce some risk for a potential problem…. It should have been very clear that when the Chinese quarantine 200 Mio people, a country that doesn’t really care that much about its people… and at the same time closing down the Industrial heartland…… an Economy that is now responsible for 25% of world GDP?….. Hello? shouldn’t that really have rang a bell? Ok, water under the bridge…. BUT it does bring me to today.
The news in recent weeks has turned more negative…. we talk about a China slow down in H2, we see the issues that Covid is creating across Asia with some countries now in a far worse state than in the first wave in 2020. We just heard today that China does a partial close of the worlds 3rd largest Port due to Covid (Bottlenecks anyone??) and I could list a few more things out there.
Markets used to be efficient to the point that when the NEWS changes, it adopts and finds the correct price for what the story currently suggests… NOT so now…. day after day we create new highs in the Dow and the S+P, the same ignorance or complacency as you see in that circle of 2020.
I felt when we traded around 34500 that we might be due a very slow and uneventful 10% correction… no big drama…. BUT the market is yet again ignoring all of it…. not to even maybe mention that Taper is also coming rather quicker than probably first thought…. that makes me think that the quiet , uneventful 10% correction might now turn into a nasty, fast and panicky 15%+ correction….or B) I just talk rubbish….
I have always been not too bad in sensing stories and changes in stories and sentiment… and most of the time, that worked just fine…. what happens in the US equity market now is beyond any understanding i have… BUT we shall see….
Rant over.. just felt I need to get it off the chest and thank you for reading my Rant and feedback always welcome
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