Market Analysis

Fisher Investments on What Casey Anthony, News of the World and Apple’s iPhone 5 Mean for Markets

Three stories dominated headlines Thursday—all of them outside financial news. What does that say for markets?

(Editor's Note: Fisher Investments MarketMinder does NOT recommend individual securities; the below are simply examples of a broader theme we wish to highlight.)

Story Highlights:

  • Three non-financial news stories dominated headlines this week, while financial news was mostly more of the same.
  • Surprises tend to move markets most—and about the only really surprising financial news story this week was an incremental positive.
  • That our national discourse has shifted from the dire economic news of two years ago to matters more economically trivial illustrates shifting sentiment.

Recently, headlines have been principally dominated by three stories: The debate over the Casey Anthony trial verdict, the hacking scandal involving News Corp’s (now defunct) subsidiary News of the World and the pending launch of Apple’s iPhone 5.

By no means are we arguing any of the above are truly drivers for equities. And we’re quite sure readers don’t come to our site for Fisher Investments’ view on the justice system or hackers. But they do speak to a different fact: The sheer lack of truly new, surprising bearish news for markets.

While Bill O’Reilly has been busy covering the Casey Anthony debate—and, judging by Internet story popularity, rightly so—the US has seemingly found resolution to the Mexican trucking issue (essentially, a long-standing trade debate), economic statistics showing continued growth have rolled in, mixed employment data showing slow growth in jobs has been released and the stock market’s 2011 tug-of-war between bulls and bears has continued.

For the past two years, the economy has been a hot issue for both politicians and the punditry. From opining on jobs to bailouts, US woes to eurozone problems, most attention has been on the negative—with most of the headlines seemingly replaying themselves over...and over...and over again. But as of now, markets are near cycle highs and the economy is bigger than ever before.

Ultimately, surprises tend to spook markets most. And about the only thing approaching the definition of a surprise was the Mexican trucking deal—a positive factor (albeit incremental) at that. That unemployment remains high isn’t one. The same could be said for downgrades to the credit ratings of peripheral eurozone nations. Ditto for US debt. Somany folks who feared these factors would likely have sold already—and long ago at that.

From an economic standpoint, what many folks fear actually provides quite an opportunity for profit-seeking capitalists. For example, in the wake of Japan’s earthquake and related nuclear disaster, folks as far away as California jumped on their iPhones to buy radiation pills. And there were plenty of companies happy to sell them for a profit. Which should be your sign a fear isn’t all that real—if a nuclear Armageddon impacting America were likely, wouldn’t they just hoard the pills? Consider that same point the next time you hear a radio ad pitching gold as a hedge against a currency calamity. Why are they accepting dollars in exchange for gold if that’s so real? Ultimately, it’s the risks few see coming—and therefore can’t market to in a timely fashion—that carry the most weight for economies.

But right now, new news carrying the surprise factor is noticeably absent. What we have instead are a gaggle of rehashed economic stories and the Casey Anthony/News of the World/iPhone 5 troika. Or maybe the new Paris Hilton reality show. We like using iPhones. We aren’t so big on hacking computers or Casey Anthony. Paris Hilton having a new reality show is just plain confusing. But from an investment standpoint, those are really rather trivial stories (perhaps not as trivial as Justin Bieber tweeting his latest hairstyle, but we digress). That so many folks are apparently interested in reading a News of the World story about the Casey Anthony trial on their new black (or white) iPhone 5—and many apparently are, seeing as those three stories are among the most popular subjects in the New York Times and Wall Street Journal—really illustrates more of what isn’t grabbing as much attention.

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*The content contained in this article represents only the opinions and viewpoints of the Fisher Investments editorial staff.