Enis’s Macro Wrap – 2012 as the Year of Micro?

by Enis September 27, 2012 7:55 am • Commentary

Sometimes the Macro doesn’t matter.  There are thousands and thousands of stocks that trade actively around the world each day.  In any economy, in war and in peace, in feast and famine, some companies are booming, and others are busting.  Whether depression or euphoria reigns, there are always winners and losers.  Despite what the headlines may have you believe, this year’s market has been much less macro-dominated than the past few years.

The number of “all or nothing days” is evidence of the dominance of micro this year.  The team at Bespoke Investment Group labels such days if the net advance/decline reading in the S&P 500 exceeds positive or negative 400, so most stocks up or most stocks down.  As of the end of August, here was the chart, courtesy of Bespoke:  



September has registered 2 readings as well, basically keeping the 2012 on track for the lowest count since 2007.  The market still exhibits more herd-behavior than it did at any point in the 90’s or early 2000’s, and there are many market-structured-based explanations for that (as well as the macro environment).  Global stock markets still move much more in unison than they did at any point in the past few decades.  But the micro has mattered more this year.

Markets overnight:

  • China finally caught a bid just past 1am eastern time, with the Shanghai Composite rallying 2.5% in the span of one hour (Hang Seng +1%).  China’s central bank (PBOC) injected record amounts of liquidity in the system
  • Europe has maintained a green session as well, up 0.5%, and SPX futures up 0.5% in sympathy
  • Very busy economic calendar today, with GDP, personal consumption, durable goods, and initial jobless claims all at 8:30am.  Now that QE has already been announced, the market might revert to a good news is good, bad news is bad, reaction-scenario for economic data
  • Dollar weaker vs. most crosses (except Euro), Treasury bonds weaker, and commodities mostly higher, with crude oil +1% leading the way