Does the market know something we don't? Or is the bias so bullish that we don't care?
Last night, there was general panic over the Italian vote, as if somehow it was totally unexpected. You could argue that this vote and the subsequent resignation of the globalist Prime Minister Matteo Renzi could portend a breakaway of Italy and a return of the lira to stimulate growth.
You could argue that all of the ailing banks will have no fresh capital because of that danger. You could argue that the dominos are falling. I saw all of these last night and the market is rejecting them as a factor for the rest of Europe even as the Italian market, at one moment rallying, has turned down.
But the "surprise" factor turned out not to be a surprise. We have given up on the polling after Brexit and Trump, and the idea of a major European or Italian collapse was factored in. Notice, I said the idea.
Now, Europe was down ahead of this vote, so you could say it was factored in. But the notes last night were all pretty worrisome. They were also totally dismissed.
But another way to look at this is that the market isolates and doesn't assume collateral damage any more, at least for the moment.
This phenomenon is happening in individual stocks, too. I am in awe of the market's ability to bounce back after the forecast cut by Workday (WDAY) . In February this would have been catastrophic as it was with LinkedIn (LNKD) and Tableau Software (DATA) when they had shortfalls.
The spillover was brutal for stocks like Salesforce.com (CRM) and Splunk (SPLK) and Qlik (QLIK) and Demandware (DWRE) , although the latter two were subsequently snapped up, as was LinkedIn itself. Only Tableau Software really struggled, as its model was called into question and it's become a more inconsistent and slower growth company than it was last year.
Perhaps the takeaway is that there is more bullishness now than then? It sure didn't pay off to panic then: three huge takeovers were missed.
Perhaps the takeaway is that Brexit and Trump were buying opportunities.
Or just perhaps people simply aren't going to sell everything on any news and then reconsider because they are concerned about missing the next move?
To not acknowledge this switch is to suggest that nothing's changed. That would be completely inconsistent with what is happening now.
Note it; either the bullishness is totally palpable, or the across-the-board bearishness has been discredited as a poor strategy for running money.
