This weekend saw the annual running of the Bulls in Pamplona and former U.S. Vice-President Al Gore carry off a ‘global’ rock concert designed to raise awareness about the environment. There is little that links these 2 events beyond the timing. But, they do tell a story about these markets (at a stretch).
Pamplona is all about risk and odds – this year 2 were gored as they barreled down the narrow cobbled Spanish streets. Many others were treated for minor cuts and bruises sustained in the general melee. While personally painful for the individuals involved, given the numbers who take part in the run the casualty figures are low. Since 1924 when record keeping began there have been 13 deaths – a small number it seems given the danger from the 6 -1400 pound bulls. So the appetite for risk remains strong – and the market like the runners appears to hold the view that if there are problems or dangers they won’t affect me. Look at how quickly sub-prime, Bear Stearns and Amaranth came and were discounted. There may be danger out there, but no one thinks they are going to get hurt.
And what of Live Earth? Did anybody alter their behavior this weekend to consume less power or act in a more environmentally sensitive way because of this event? Uh-ha ... thought not. I don’t want to knock the event because the cause is a genuine one that we all have a stake in finding answers to – but it is part of a continuum. Progress towards the desired end goal is going to take longer and be less theatrical. Live Earth is part of a process of raising awareness – but it is a slow burn. Just like this current run of liquidity ... the market still looks good for making money, but as interest rates tick up conditions will change.
So, the message appears to be there is still time to enjoy this run of liquidity - just beware of being taken out by one-off events - and understand that nothing lasts forever...
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