Markets: Still Inexplicable

You may or may not be aware that stocks are down quite a bit this morning,

and, as ever, no one really has the foggiest notion why. David Gaffen, in a

market round-up headlined "What

Is Going On Around Here?", quotes one broker, Bill Frejlich, as saying

that "nobody has any idea what’s happening", which rings true

to me. But Gaffen still feels compelled to come up with a list of five possible

reasons for whatever it is that we’re seeing.

At the risk of getting a bit too philosophical here, there is a very good chance

that there simply is no reason why the markets are doing whatever it is that

they’re doing. And in any case causes and effects can be hard to differentiate

sometimes: if Crocs stock is down 30% today, is that a reason for the rest of

the stock market to fall, or is it simply a symptom of the broader sell-off?

As for the notorious report

on Citigroup from CIBC’s Meredith Whitney, I think one probably can reasonably

say that it caused some if not all of the sell-off in Citi stock. Whitney has

focused the spotlight on Citi’s damaged equity base, and that’s not something

which is going to cause the stock to rise. It is however refreshing to note

that the markets seem to care much more about Whitney’s serious-minded analysis

of Citi’s financial’s than they do about Kate

Kelly’s muckraking on the subject of what the CEO of Bear Stearns does in

his spare time.

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