With fighting raging in Ukraine, Palestine and Iraq, the level of global geo-political volatility is higher than usual. Drought and viruses are destroying citrus and pork crops. The price of food is rising. The Fed is talking about tapering its stimulus. Consumers are still tender in terms of spending ability. Things are chaotic. Yet, stock markets continue to hang in near record levels.
It all seems a bit odd.
This morning, even in the wake of the recent Malaysian airlines crash, Asian markets are up, North American markets are strong. Some question the sanity of it all.
Mohamed El-Erin, well-known former chief executive at money manager Pimco, gave a recent interview in which he suggested the events Ukraine and Gaza are being overlooked in terms of spillover effects in the global economy. Investors expect a strong earnings season in the weeks ahead. Investors als understand rates will remain low for a while yet. And so the geo-political concerns are being shrugged off. "The market says even if there are spillover effects, it doesn't matter. Earnings are strong and the Fed is there," El-Erin was quoted as saying. "I think there is notable complacency in the market as to how much worse it can get. It has been rewarded in the past, so investors are conditioned."
Noting the current resilience of stock markets Andrew Wilkinson, chief market analyst at Interactive Brokers, compares the current market to the pugnaciousness and fearlessness that defines the Honey Badger, a vigorous, seemingly indestructible animal that was made famous in a popular online youtube video
that went viral some months ago. According to Wilkinson, the Honey Badger's "don't care" attitude is the perfect metaphor for current markets.
Here is the video
for those have yet to see it