Bears continued to concede ground in choppy action on Friday trying to defending the absurd bearishness which had enveloped the markets. While short covering is the primary feature, it is a natural market reaction to a liquidation phase not seen for decades. Signs of an exhaustion bottom are evident by the richly deserved criticism heaped on CNBC where their content was as bearish on the bottom as it was bullish on the top. This of coarse confirming that financial news reporting is clearly the lowest in form and talent.
Populist cries against trading activity however are often misguided and mistakenly compared with valuable elements of volume created from the transactions of price discovery, with the transactional fraud created in the debt leverage business perpetrated by banks and insurance companies. Traders are not the problem. Price discovery includes at times severe devaluations. Though we all would love to have 'our' price, the reality is that prices have to move to discover value. For years, farmers have complained about the speculators in Chicago manipulating grain prices. Farmers would have simply preferred to accept a high price every year for their product. So it is with stocks and real estate. Everyone wants the top tick. Sorry, you lose.
What is amazing is just how little people know about markets and risk, economics and business, politics and government. This ignorance has led to unsustainable gains in the values of assets driven by a pseudo conservatism and by a cloudy notion of free enterprice.
