The markets today were mixed as the Dow was “bow-wow” while the NASDAQ moved higher. At the close the Dow fell 157 points 25,178 on trading volume that was lower than a snakes belly in the Grand Canyon.
In the “never a dull moment” category, David Stockman, ex Reagan director of OMB, former Goldman partner and now author and market prognosticator was hosted on CNBC today and once again called the market a bubble that is ready to burst! It is important to note that David made the same prediction in 2011, 2012, 2013, 2014…….you get the picture. The great thing about Mr. Stockman is his consistency but since he has been constantly wrong for so many years it might be more beneficial to do the opposite of what he says instead of actually following his advice.
Countering Mr. Stockman’s gloom and doom is the zoom and boom of Brian Wesbury, chief economist at First Trust and honorary member of the Westport Mafia. Brian says that with strong earnings growth the markets are at fair valuation levels and then cites statistics to show that the economy is starting to accelerate. Things like wage growth, job creation (above estimates) and new orders plus the new $39 million 3 year contract Richard Sherman signed with San Francisco are reasons to consider having some exposure to equities.
The recent market selloff saw the S&P 500 Index fall by 3.8% just in February alone. Bloomberg reported that JP Morgan studied the selloff and noted that hedge funds in February lost an average of 2.4% but more interestingly, within the hedge fund universe, AI or “Artificial Intelligence” hedge funds returned a negative 7.3% thanks to automated sell programs that are triggered when certain trends are detected and then become heedless of market dynamics. It is kind of like a forest fire that creates its own weather. The implications here are that humans did better than AI driven traders. Maybe we should realize that “Artificial Intelligence” can also be defined as “Artificial Incompetence”.