Of course, everyone knows that one of these is a speculative asset that people will buy (and not sell) no matter how high the price on the basis that The Fed will continue to print money and subsidize ‘valuations’ and the other is a long-term asset to preserve wealth. But which of these assets would one expect to react to a considerably hotter-than-expected inflation print and dramatically worse-than-expected retail sales print? The answer (for all those efficient market, hyperbolic discounting types) may surprise…
Another no-reaction news event from the eMini (S&P 500 futures) to a double news event, Producer Price Index and Retail Sales. Gold, however, never seems to disappoint (chart 3). See also Gold futures from earlier the same day.
1. September 2013 eMini (ES) Futures Depth of Book (how to read).
Note how liquidity just vanishes before the annoucement.
2. December 2013 eMini (ES) Futures Depth of Book (how to read).
Now the front month, same vanishing liquidity. Note the unusual temporary increase in orders at 8:32. That’s probably from one firm.
3. December 2013 Gold (GC) Futures Depth of Book (how to read).
It seems that if ever there was an example that showed a total and utter lack of fundamental impact on stocks, this was it – especially given retail sales and the 70%-consumption-based economy in which the US lives.
And so it seems clear that US equity markets remain so over-stimulated and ignorant of fact (or fiction) that no matter what you throw at them they are the cleanest dirty shirt – “where else are you going to invest?” – well maybe Marc Faber was on to something…