It’s November and I’m in jeans and flip-flops as I was in Denver in July. It’s 75 degrees. But in Aspen last week for a break around my birthday, it was decidedly wintry. So winter is coming.

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Tim and Karen Quast, Aspen CO, Nov 2023. Photo by Tim Quast.

But winter ended suddenly in the stock market while I was out.  The S&P 500 rose 6%, the Dow Jones Industrials surged about 2,000 points from about 32,300 Oct 27, to roughly 34,200 yesterday.

Is that normal?

Define “normal.” It wasn’t accidental. The market has a cadence, a context, and tiny prices.  Index futures used for “risk transfer” by the largest institutional investors expired Oct 31, this time decidedly not ghoulish.

On Oct 30, Broad Market Sentiment, or simply DEMAND, fell to 4.0 on our 10-point Sentiment scale. Statistically, the market has always risen from that level. Sometimes it’s fast, sometimes slow.

At the same time, Supply, or Short Volume, the market’s wholesale supply chain, declined for the first time since Oct 16 during options expirations (after which it rose, and the market fell).

I don’t know if anyone could have predicted that these things would goose the market like an electric cattle prod jammed into the behind of a yearling (something I’ve seen firsthand as a cattle ranch kid).

But it sure the heck wasn’t business fundamentals.

Tim, it was the Treasury’s reduction in 10-year issuance, which jolted demand for bonds and equities simultaneously. 

Did you read the Treasury release?  The Fed is slowing issuance of 10-year debt by $3 billion the next month – but increasing issuance of denominations from 2 to 7 years by $18 billion.

That’s not enough to offset government borrowing needs, which have increased by 20% just since August.  We track weekly auctions in your Market Structure Reports, public companies. In the past four weeks, the US government has sold $1.6 TRILLION of debt. 

A lot of that is refinancing. But that means interest costs are going up. The Federal Reserve is losing money hand over fist, which has never happened since it was created in 1913 (interest expense exceeds interest income).

The point?  If that’s the reason for the bond rally, somebodies got it wrong. I would submit machines did. They’re 90% of the Treasury market.  They misread the data.

Just like they misread your press releases. 

Machines read things and react. If you say you had record quarterly results and your first bullet point includes the word “loss,” your stock will get hammered by machines (we saw it happen).

Or maybe your stock will rise 48% like ROKU did.  ROKU lost a billion dollars the last four quarters. But ROKU wisely excludes data from the one-page earnings release.

Quantum mechanics is the study of the movement of molecules in the smallest increments. It’s the way everything works. It’s the ripples on ponds.

Most public companies still deliver information to the market the way they used to when stock-pickers were still the top 20 holders, accentuating accomplishments. 

The market is the quantum mechanics of half-penny prices. Doing that now is often harmful rather than helpful. You have to understand how stuff works to make sense of it.

I’ll give you one more case.  Affirm is a “buy now, pay later” company. Ask my wife Karen about this business model and she borrows a line from the Popeye character J Wellington Wimpy: “I’ll gladly pay you Tuesday for a hamburger today.”

AFRM lost about a billion dollars last quarter and warned then of deteriorating macroeconomic conditions. Delinquencies are reaching crisis levels. Yet it’s up 27% the last five days on a new deal with Amazon.

Could be warranted. I don’t know.  AFRM is down 78% from 2021 highs.

Whatever the case, the move is a product of the same quantum mechanics, the same wave theory, that drive everything in the stock market now. It’s, literally, quantum – defined in the smallest units.

Whether this stock or that, a benchmark, a sector, rises or falls depends on whether prices are rising a half-cent at a time, or falling a half-cent at a time. Thousands of times per second marketwide.  Imbalances mean things whoosh up and down. 

For the machines navigating these changes, it’s all asteroids, stuff flying at the windshield like snow in a blizzard.  It’s not about what value is correct for something.  It’s which way are the half-pennies going?

And there’s your disconnect, public companies. If you think a certain value should be assigned to your results, the probability that it happens is defined in the half-pennies shredded by machines.

So try not to tip the machines the wrong way with your earnings release (we can help).

We have the same problem in the economy. The Federal Reserve is allocating labor and capital (that’s what the pursuit of “maximum employment and stable prices” causes) 25 basis points at a time.

They will get it wrong. Just like the machines in the stock market.

I don’t know what we do about the Fed. But we can help you with the half-pennies, public companies. Request a demo at (it’s a brand new site!).

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