Welcome back. Wow. That was some ugly, wasn’t it?
If it’s any consolation, last week’s market action was only the fourth-ugliest thing that happened. If you watched Brian Hoyer’s interception late in the first half or Vontaze Burfict’s penalty late in the game, or Blair Walsh’s missed chip-shot field goal, you were probably wishing for last week’s tape instead. (They say it’s better to be lucky than good—the Seahawks are both). Maybe that is part of why we love football so much in this country. We can watch a sort of raw, brutal screw-ups that make our own feel minor by comparison. What’s that you say? That’s why we secretly enjoy watching golfers three- and four-putt? Ok, guilty as charged.
But, let’s get back to the markets. It’s always especially distressing when conventional knee-jerk views, like staying out of the market when the Fed starts raising rates, turn out right—even if they need some help from good old Chinese dysfunction.
Last year wasn’t horrible, but it wasn’t good either, whether you’re talking issuance, performance, whatever. There was plenty of reason to hope for a better 2016: maybe slightly rising rates would finally kick issuance into another gear, maybe stocks could benefit from a reasonably healthy economy in a still-low rate environment, and so forth.
It’s of course far too early to give up on the year, but if the first week is any kind of tell, you can’t blame people for being somewhere between cautious and skeptical. We’ve seen markets bounce back from Chinese malaise before, and we won’t be surprised to see it again.
Here’s to things getting better in 2016. Let’s try to follow the lead of the late, great David Bowie, about whom Grant Feller wrote this morning, “David Bowie understood—like the greatest business leaders—that standing still and repeating the same mantra because it once worked, following instead of leading, being wary of innovation because of the uncertainty of what might happen, was anathema to success.”
Roman Terekhin is currently on a client assignment. Euro Gang of 10 will return next week.
(This is the cover letter for the subscription-based weekly Hillside's Hybrid Vigor newsletter. For a complete copy, please contact John Anderson at + 1 (646) 712-9289 x 107).