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"People can foresee the future only when it coincides with their own wishes, and the most grossly obvious facts can be ignored when they are unwelcome. Advertising [perception management] is the rattling of a stick inside a swill bucket."
George Orwell
Watching the commentary on the stock market and Egypt on US financial television today was an exercise in cognitive dissonance.
See, there are no problems in the world, because the Dow has hit 12,000. All is well, and now is the time to buy these shares from us, so that we can unload this misvalued paper just like we sold slop buckets full of collateralized debt obligations to the institutions and foreign banks, in celebration of the deregulation which we bought from the politicians, causing this financial crisis in the first place.
The hubris and arrogance of Wall Street is almost shocking if one does not realize that these fellows are very afraid, and probably trying to bluff their way out of this latest crisis. They are whistling past the graveyard, treading lightly over the bodies of their victims, keeping one eye on the exit and one hand on your wallet.
There may be a bull market in Swiss chalets and South American villas coming, depending on how steadily the winds of change sweep across the globe.
"It is not necessary for the politician to be the slave of the public's group prejudices, if he can learn how to mold the mind of the voters in conformity with his own ideas of public welfare and public service. The important thing for the statesman of our age is not so much to know how to please the public, but to know how to sway the public. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country."
Edward Bernays
"Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one."
Charles Mackay
This index is particularly odd, if you take a look at the weighting of it as shown by the graphic on the chart.
It is difficult to imagine the euro continuing to strengthen against the dollar without howls from the German exporting companies. And the same can be said of the Yen.
FX trends often notoriously overshoot targets, since trading in forex, like so many other financial asset markets, a matter of the biggest boys sloshing the water around in the tub.
However, a break of this support could trigger another leg down. It will be interesting to watch the existing negative correlation between the dollar and US equities.
