July 5, 2012

Macro IR

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.

Share this article:

More posts

dreamstime m 206876446
February 14, 2024

I’ve got my Valentine, for which I’m grateful every day.  Whether the market finds love after yesterday’s blood remains to be seen. Back when the...

dreamstime m 212403964
February 7, 2024

On Nov 15, 2021, NVDA closed at $345.30 on a hundred million shares of volume. Without context, that information is interesting but unhelpful.  I’d note...

dreamstime l 24803177
January 31, 2024

Consumers are confident. I’m not sure they have all the data. It’s a lesson for public companies. In case you missed it, The Conference Board’s...

dreamstime l 56087804
January 24, 2024

If I said the name “Sherlock Holmes” to you, what’s your snap response? Probably, “Elementary, my dear Watson.” I have long favored a line by...

dreamstime l 50373701
January 17, 2024

What do bitcoin Exchange Traded Funds mean for public companies?   More competition for those dollars you chase with your story. A number of you...

dreamstime m 4397737
January 10, 2024

Total nonfarm payroll employment increased by 216,000 in December. So said the headline from the Bureau of Labor Statistics in its monthly report on jobs...