Fundamental is the main theme of stock markets

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Fundamental - "the main themes of the market"  I think you have watched more than once the market, it would seem paradoxical to react to these or other news. Yesterday, on the increase in inflation in the  UK, the pound market went up by 50 points, although a year ago it almost did not react to this news; Yesterday the Consumer Confidence market did not react at all, and in a couple of months it will arrange the flights of a wounded woodcock at the slightest deviation of the released data from the consensus forecasts of riders or bloombergs. What's the matter? The fact is that at different stages of the business cycle, the market reacts differently to the same news. But this is all "blah, blah, blah", as they said in one famous film. In fact (IMHO) on the market there is a main theme, currently being promoted by market analysts-fundamentalists. Such topics somehow go unnoticed in popularity and also quietly come out of favor. What is the main theme of the market? This is the topic by which the talking head constantly carries something in the bloomberg, according to which different "main analysts from the Tokyo branch of Mushito Bank" write "fundamental" articles in magazines, etc. Themes are periodically pop-up, for example, geopolitical tensions and terrorism; long-playing, as the recent theme of the twins: the negative trade balance in the US and the budget deficit, lasting a year and a half. There are topics that can be described as "who is first" when the market is waiting for leading indicators, such as consumer confidence, ISM, etc. What is the main theme of the market?Most importantly, it makes a trend. Makes not even a topic, but an evaluation of the topic (here Soros's reflectivity is manifested in full measure).In the near past, Evra went on an apprentice for about a year on one of such main topics. When such a topic is in the market, everything else (indicators, statements) are evaluated in the common market pot only through its prism. What is the main theme of the market now? You know yourself. Rates for the USA. Will raise - will not, faster - slower, etc. All indicators are currently evaluated in terms of "what the Fed thinks about this indicator." Since the FRS comrades have already said something like "there would be more jobs, then you can pull the stitch", then the market looks at the "number of applications for unemployment benefits" and "the number of new jobs, although half a year ago he would not have moved from his place if the "jobles" had reached the level of 500. If the Fed were told that they need a lift, say, in the industry of durable goods, we would already look at "durable goods", but on everything related to the workforce would not pay attention. What else influences the decision on rates? Inflation. The more it is the stronger the expectations of the people for raising the rates and the more they are zapped by the dollar (not paying attention to the fact that inflation is the depreciation of national currencies). Remember that another year or two ago the rise in inflation was estimated from the opposite point of view in a different way. One would think of something like "an increase in inflation reduces the field of leverage for the Fed in raising the economy" and would begin selling bucks. The more it is the stronger the expectations of the people for raising the rates and the more they are zapped by the dollar (not paying attention to the fact that inflation is the depreciation of national currencies). Remember that another year or two ago the rise in inflation was estimated from the opposite point of view in a different way. One would think of something like "an increase in inflation reduces the leverage for the Fed in raising the economy" and would begin selling bucks. The more it is the stronger the expectations of the people for raising the rates and the more they are zapped by the dollar (not paying attention to the fact that inflation is the depreciation of national currencies). Remember that another year or two ago the rise in inflation was estimated from the opposite point of view in a different way. One would think of something like "an increase in inflation reduces the field of leverage for the Fed in raising the economy" and would begin selling bucks. How does the main theme work? First of all, she completely ignores all other news. Again, let us recall, as an example, the recent past and the upward trend in the euro. Look, what was when the bad news on the US came out? Euro shot up by 100 points. And the good news about the US? The euro still shot up, but by 10 points. Poor fundamental analysts who tried to explain this! Their head hurt, too. :) I remember one such news bulletin. It was Consumer Confidence in the US, which came out, it seems almost 20! points above the previous value. I do not remember exactly, but it seems that this was the second largest increase in the history of calculation. The euro reacted with a short move down, pips at 20, and then again rushed up, more than a figure. And all because the main theme was different and the market by and large was just like America's there with confidence. He drove the euro up on the topic of the deficit. Another liked the statement of one analyst about the reaction of the euro to good data on the US on consumption. He said something like "the growth of consumption in the US further contributes to an increase in the trade deficit" in general, if we rephrase it "little bourgeois eat - bad, eat a lot - too bad." The main themes of the recent past, remember what was in their time.Deficits of trade balance and the budget of the USA.The ECB will intervene at 1.3.For Europe, the Euro is not so terrible.The real estate market in Britain is overheated.Greenspan follows unemployment.Europe and Japan are more dependent on higher oil prices than the US. Now thesis:

  1. The main trend is not the foundation, but the main theme of the foundation.
  2. During the existence of the main theme, all the fundamental indicators and statements are either viewed through its prism, or completely ignored.
  3. You can work on the news only on the "trend of the main topic". The market will still in most cases go to her side, ignoring everything else.
  4. The long-term main theme usually ends with the market switching to a new one.
 

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