This morning I posted an item on Scott Brown and how it was interesting that the markets are down.
Shame on me. Not only am I making the #1 mistake that financial journalists make -- a spurious correlation -- but I didn't even analyze the more obvious reasons. You see, China tightened credit again. And in other data, housing starts were down. There are a whole host of reasons why the market could be down.
When China tightened credit again overnight, that may have helped spur a rally in the U.S. Dollar, which started in the wee hours of the morning U.S. time. Because China, credit, and currencies have been ruling the market (not politics), it's my guess that this has been a bigger factor in today's market selloff. Take a look, for example, at what the BBC has to say about it. The selloff started in Europe, centered around the China news.
Financial "journalists" worldwide will continue to scurry to explain how the markets can be down when Massachusetts elected a Republican Senator. For example, the Business Insider is busy scratching its head and bashing Cramer about it. This is a U.S.-centric view of things.
The bottom line is that scientifically, it's nearly impossible to determine "why" the market is down. It could be random noise. Or it could be some overleveragd hedge fund liquidating. Because nobody knows for sure, let me now annex possible theories I introduced to include more options:
1) China cut credit again. In a liquidity-driven market, this is bad.
2) Republicans gained a senate seat. That means less healthcare and less stimulus. The market rally has been coincident with government stimulus, therefore the market is selling off on the idea there will be less liquidity in 2010.
3) It's raining in California.
4) Scott Brown has a nice haircut, and and once posed nude. The idea of a former male model as U.S. Senator has investors scared.
5) The latest numbers show the drop in the bee popuation reaching a crisis. (Telegraph)
6) Conan is toast. (Popeater.com)
Go ahead journos. Pick a random data point and write a story about your theory. The market is down because (choose one).
Brownie Boy has won! Scott Brown, Republican, is now a U.S. Senator, having won the special Massachusetts election. Democrats seem mystified about how a dark-horse Republican can take the senate seat of the late Ted Kennedy, one of the greatest liberal icons of all time -- in one of the most liberal states of all time.
I'll tell you why: It's the cheesecake (see below, if you don't know what I'm talking about).
What does it mean for the markets? The conventional wisdom is that the market will rally whenever Republicans take over because they're for business and lower taxes. I have some news today: the market is not rallying. It's getting whacked. This is disturbing on several levels. What does it mean? I think it means the market knows that it needs the government printing presses to keep it afloat, and without further government largesse, it may just all fall apart.
The fact that Brown has won and reduces the Democrat's grip on the Senate by one vote means less chance for healthcare, less chance for more stimulus, and less chance for more debt. The market senses this, and wonders what it would be like to "fly naked" without the support of a U.S. government that looks almost certain to descend into gridlock.
Scott Brown. But not the Scott Brown that won the Massachusetts election.
The Republicans appear to be elated, wagging their fingers at Democrats, saying, "I told you so," dancing on the tables with lampshades on their heads. But why, exactly, I'm not sure. Sure, they might kill healthcare, but then what? The state of the U.S. Congress is a mess. The only thing that either party knows how to do is toss angry rhetoric at the opposition and then sign a huge pork bill for their state.
Let's not get carried away. It's just one senate seat. Yes, that's enough to stop a filibuster, but not exactly a majority. And the market selling off on a Brown victory warns us to be careful. Why's that? It's because the market knows that we're in a raging recession, unemployment is at 10%, we have huge multi-trillion-dollar deficits, and Scott Brown is not going to change any of that -- even if he does look good with no clothes on.
Scott Brown the new U.S. Senator.
Scott Brown. But not the Scott Brown that won the Massachusetts election.
The Republicans appear to be elated, wagging their fingers at Democrats, saying, "I told you so," dancing on the tables with lampshades on their heads. But why, exactly, I'm not sure. Sure, they might kill healthcare, but then what? The state of the U.S. Congress is a mess. The only thing that either party knows how to do is toss angry rhetoric at the opposition and then sign a huge pork bill for their state.
Let's not get carried away. It's just one senate seat. Yes, that's enough to stop a filibuster, but not exactly a majority. And the market selling off on a Brown victory warns us to be careful. Why's that? It's because the market knows that we're in a raging recession, unemployment is at 10%, we have huge multi-trillion-dollar deficits, and Scott Brown is not going to change any of that -- even if he does look good with no clothes on.
Scott Brown the new U.S. Senator.
Greetings for Tuesday, January 19th. That new year goes fast eh? It's almost February. In today's news, we have Massachusetts Politics, Matt Taibbi's slam, a Krafty deal, and a rising stock market. What more can you ask for?
Here's a rundown of what's going on, through the eyes of the Rayno Report:
- Massachusetts politics -- what fun! Republican Scott Brown is grabbing the headlines, with his possible come-from-behind victory over Democratic favorite Martha Coakley in a special election for a Massachusetts senate seat today (Politco). Not only would a Republican candidate taking the late senator Ted Kennedy's senate seat be a shock to the Democratic party, but it jeopardizes the Obama Adminstration's entire agenda (New York Times) Kind of a big deal!
- The market rallied today. Folks who don't study statistics say it's because of the Massachusetts senate election. Even though we don't know who won. Okay. (Bloomberg)
- The disaster that is Haiti continues (CNN.com). Remember to help out, if you can.
- I'm still laughing at Matt Taibbi's rant on Thomas Friedman's greenish hype (NY Press). He even tells you what it has to do with what midgets think of Austrailia. It was so inspiring, I had to flatter him with my own derivative rant below.
- Interesting, Taibbi is onto something. Conflicts around "greeness" may be rising (New York Times).
- Did anybody notice that China is putting together a national strategic oil reserve? (Kuwait News Agency)
- Speaking of Kuwait, the Kuwait foreign minister has called Israeli Prime Minister Benjamin Netanyahu "stupid and insane." (Al-Manar TV)
- I guess it's time for another Middle East conflict (Xinhua).
- Avatar is now the most popular movie shown in China ever. That's enough for censors to start yanking it, apparently (Sphere).
- Speaking of battles in China, Google is yanking its Nexus One from China until it can sort out that pesky negotiation with a totalitarian regime.
- Microsoft wants to launch a Zune phone (All Things D). Go ahead, try to stifle your laughter.
- HarperCollins Publishers is negotiating with Apple for books to appear on a new Apple tablet device (Wall Street Journal).
- More men are marrying wealthier women. And women are rejecting rich men for poor men. (New York Times). No word on whether poor men can marry poor women.
- Speaking of wealth, a man masquerading as a fashion model has been bilking wealthy men (L.A. Times).
- The man was posing as fashion model Bree Condon. Here's what Bree Condon looks like, in case you were wondering:
- The Cadbury board has accepted Kraft's improved $18.0B takeover bid (Associated Press)
