We’re a day late this week in deference to an important birthday yesterday. After 236 years, there are lines and age spots but the countenance still juts, resolute.
Do people send you group emails sometimes with those images where if you stare at them, suddenly you see something else? Here are two verbal versions, headlines I saw Tuesday:
“European stocks rallied for a third day as hope mounted that central banks in Europe and the U.S. will act to bolster economic growth.”
“U.S. stocks extended a rally for a third day on Tuesday as sharp gains in oil prices lifted energy shares and traders factored in increased expectations for central bank stimulus.”
Do you see what’s freakishly wrong with these? Stocks rose despite conditions that should depress stocks. Because central banks might offer free money.
Markets have always been barometers of economic health. Now they’re moving on money alone, disaffected from the factors that once could be relied upon like the piers and stanchions of a venerable republic.
IR folks, think about this. It cuts to the quick of the job. We’re heading into earnings season. We’re planning call scripts and press releases. We’re thinking about discussion and analysis for quarterly filings.
Yet the markets we use as a mirror for the value of these efforts are doing the exact opposite of what they have always done. They are valuing supplies of currency rather than its commercial use.
With fires having recently ravaged us in CO with ferocity we’ve rarely seen, and never so near important urban centers, I’ll use an analogy. If your neighborhood was on fire, the smoke and ash thick, the sirens sounding, people frantically scurrying, would you water the shrubs and mow the lawn as though nothing were happening?
No. You’d be affected by the immediacy of the threat.
IR profession, we are affected by the immediacy of the threat. Macro factors – fluctuating currencies, monetary policy, global economic ecology – are animating the equity market. Case in point: Last week global markets surged on the weakest dollar in many months, because the German government may socialize Eurozone debt. Something that might kill the workhorse of Europe, a sort of “we will all go down together” chorus line, juices markets. Strange.
So, IR folks. I hope you won’t report results as though you’re watering shrubs while the neighborhood burns. You must develop methods for contextualizing Macro Factors. Call it Macro IR. I’ll give you just one: Watch the DXY, the dollar spot market. If it’s up and stocks are down, or vice versa, mark it, friends: it’s Macro IR.