Roll on Spring

The big, fat, wet squib which Jackson Hole was for market participants who had been holding their breath, just as sensible people would have expected, might in some way mark the inflection point in the belief that the central banks hold the answers to all questions and the key to all solutions. Economies are not made by central banks and even less by politicians. They are made by individuals getting up in the morning, spitting in their hands and creating wealth. Politicians, most of whom have never been part of the productive economy, only show interest in the economy in as a vehicle to re-election.

As August draws towards a close, the route markets will take between now and year end has not yet been defined. Not wishing to live in the past, the events of 30 years ago are now ancient history although many are looking for a 1987-like crash during the Spring. The choppy trading pattern during Winter is not entirely unlike 1987 but the world has changed beyond recognition. During the 1987 crash the head trader at Credit Suisse in London is said to have wandered up and down his trading floor instructing traders to buy anything panicking retail fund clients were selling. They did and a fortune was made by the bank during the rebound. Forget that happening again. Anyhow, retail fund managers can’t panic as most of it is bound in by strategic asset allocation models and they are wrapped in passive investment vehicles. Never has petty retail been further from the action and never have index strapped investment managers been less interested in market directions.

The Spring might turn out to be interesting but most probably not in the way in which most people think it will be.