When we open our doors again

We often project current trends in growth, in markets, in speed and rhythm, linearly, as though what is will be and thus into the future without friction. But there is always friction, always pressures onto the trajectory, from above and from below, from every which way, and the trend line is perpetually disrupted.

With the most forceful trend, sometimes, there comes the most forceful disruption. Just as in physics – every action has its equal and opposite reaction – so also in markets and economies, the patterns can turn pendular as swings occur to balance out the force.

Underneath it all, in markets and economies, the forces are shaped by interests. Sometimes these interests converge, which adds to the momentum, and sometimes these are shaped by differences in goals, in outlook, in resources and resourcefulness, in fears and hopes, in options.

There are multitudes of interests in economies and markets, and under normal circumstance these manifest themselves as a result in twists and broken lines and fractals. Sometimes, however, the movements are extreme, as is currently the case, when interests align but are at once confused and lacking in conviction.

This period, like others in the past, is likely to resolve into a much more stable pattern. It may look like a reversal, a reaction to the turbulence, where converged interests drive momentum in a positive direction…

BI

Or it may be a milder broken line of narrower twists and fewer turns, where varied interests are generally fearful, cloudy, and defensive for a while to come (as linearly projected in the two market commentaries below)…

WSJ
WSJ

In either case, the driving forces will be psychological, dominated by emotion, as we wake up from our seclusion and train our eyes to light and open space again. The re-adaptation may happen fast, or very slowly, and the difference will determine whether this was a Black Swan event or a lasting overhang that will define an era.