[Editor’s note: This letter was penned by Tim Price, London-based wealth manager and author of Price Value International.]
“The media select, they interpret, they emotionalize and they create facts.. The media not only reduce reality by lowering information density. They focus reality by accumulating information where “actually” none exists.. A typical stock market report looks like this: Stock X increased because.. Index Y crashed due to.. Prices Z continue to rise after.. Most of these explanations are post-hoc rationalizations.. An artificial logic is created, based on a simplistic understanding of the markets, which implies that there are simple explanations for most price movements; that price movements follow rules which then lead to systematic patterns; and of course that the news disseminated by the media decisively contribute to the emergence of price movements.”
– Thomas Schuster, ‘Meta-Communication and Market Dynamics; Reflexive Interactions of Financial Markets and the Mass Media’.
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Monday 15th February 2016. Our silver-haired trader, in front of a panel of random prices, clutching his head and grimacing, probably because he’s hungover, brings you the latest from a dealing room in the same stock photo that the Telegraph have used at least three times in the last five years:
Yes, it’s [Monday/all over/a bowel-clenching orgy of blood-soaked insanity] as [negative interest rates/China devaluation fears/lower oil prices/higher oil prices/sideways oil prices] strike [like junior doctors/pant-wetting horror/sharpened blades of doom-laden Go?tterda?mmerung] into [the soft, pulpy hearts of innocent pensioners staring wide-eyed in stunned horror at the untimely end of their sheer financial existence/the markets].
- [Fed chair Yellen/BoE governor Carney/CoCo the Clown] seeks to reassure [investors/someone/anyone/turn those machines back on!]
- Gold makes biggest one-day gain since [yesterday]Global financial markets endured a day of [you think I could stand this butcher’s yard more than once/mind-shattering turmoil beyond the edge of imagination/light winds and scattered showers] as investors’ fears rose over [China/global currency wars/negative interest rates everywhere/more QE/widespread banking failures/Take That reforming].Janet Yellen, [chair of the Federal Reserve/wanted for murder/a pastry-chef from Albuquerque], played down the chances of the US central bank [finally getting a clue/disbanding/triggering a doomsday device that would bury the entire planet under half a mile of toxic lava] but acknowledged that [more rate cutting/retirement/a large pot of milky, sweet tea, and a place mat fashioned from unicorn hair] was still on the table.
She spoke to the Senate after [Sweden slashed its main policy rate with a Persian scimitar/whimpering under a table for four hours with a lampshade on her head/a five-course lunch].
Equity markets sold off [like a bandwagon full of babies careering over a cliff] while investors rushed into safe havens like [debt issued by insolvent European governments trading on a negative yield]. Gold made its biggest one-day gain since [yesterday].
Financial stocks suffered another heavy day of [Janet Yellen/Martin Wolf/Paul Krugman] but rallied slightly at the close after rumours of the resignation of [Janet Yellen/Martin Wolf/Paul Krugman].
The Stoxx 600 European banks index dropped [its trousers/everything it was doing and dialled The Samaritans/26%]. Losses for US banking institutions contributed to [staggering declines for the S&P 500 index/the Hillary Clinton presidential campaign].
Investors are worried about [central banks igniting a global monetary crisis/whether they left the gas on/everything] and whether cutting all major western interest rates to minus 96% might be [detrimental to confidence in the entire financial system/disadvantageous to banking sector profitability/dumber than a bag of hammers/a pretty good idea, provided Martin Wolf endorses it first].
“Markets have evidently lost their [breakfast/copy of last week’s Sun/belief in the power of central bank policy],” said [everybody]. “Markets have lived on the basis that central banks were there to provide [liquidity and support/bonuses/bail-outs/cookies] and are now disgruntled at the lack of [liquidity and support/credible forward guidance/incredible forward guidance/bonuses/bail-outs/cookies/taxpayers’ funds].”
After Sweden’s Riksbank cut its main overnight borrowing rate to minus 0.5 percent and then hurled itself into a live volcano, other central bankers suggested that monetary policy could be made [even more expansionary/even more expansionary/even more expansionary], though they conceded that they did not have a [precise timeline for interest rate normalisation/clue/backbone]. Both the Bank of Japan and the ECB are expected to [cut rates further into negative territory/incinerate confidence in the financial system/leave at the earliest opportunity].
The prospect of widespread deflation followed by stagflation has prompted a rush out of [people’s bottoms/a crowded theatre/Sainsbury’s] and into [Aldi/Lidl/penury/jail].
Analyst Marti Venal of brokers GoldFelon FiatMoney commented that there was nothing [in his company’s bonus pool/worth buying/to worry about/left] and he advised investors to [panic/surrender/no Mr. Bond I expect you to die].
Investment strategist Gilbert Zulu-Barnshaker of Turdman Pimhole took a more positive view however, remarking,
“Death awaits you! You have made a covenant with death, and with Hell you are in agreement. You’re all going to die! Don’t you realize? Can’t you see? You’re all going to die! Die! Death awaits you all!”
– (© all papers)