Warning: tonight's commentary may offer absolutely nothing of value for you. The entire thing, from start to finish, is a twisted analogy. If you can get on board with examining this week's MBS chart as a psychiatry patient's vital signs, and then proceeding to read the Dr's notes which continue to force various economic indicators into fairly bad analogies, then this could be both entertaining and informative. If that last sentence doesn't sound so fun, read this instead, and have a great weekend, and whatever you do, don't read the rest of this post!
With the disclaimer out of the way, let's open up that patient file.
The patient: MBS Market
Reason for visit: Patient reports a breakthrough this week, but is now second guessing...
Measurements and Data collected from patient over last 5 days (blue and yellow "patients," shown for reference):
Psychiatrist's Notes From Recent Sessions, broken out by phase: (in each phase, it's important that you follow along with the corresponding numbers from the chart)
Phase 1:
The patient began a new week fairly energized, fairly optimistic following a general trend of excellent improvement beginning in August. Patient reported feeling like he was finally starting to feel like "his old self" again. Phase 1 shows some continuation of that sentiment. Early in the phase, the patient was not sure how to accept this newly attained level. No meaningul improvement or deterioration in the first part of the phase. But ultimately, patient decided that it would be silly to consider this "as good as it gets" simply because he hasn't been here in a long time. The sky's the limit! By the end of the phase, patient was beginning to act according to loftier goals.
Phase 2:
Patient's confidence and optimism dealt a moderately severe blow by some discouraging life events. Patient notes "case" and "Shiller" as part of the problem. begins to doubt loftier goals. wonders if he's truly ready to attack the summit of past success again. second guessing. But a mere hour later, patient mysteriously becomes a "consumer" of "confidence" and finds a second wind. sobered by the emotional volatility, the patient merely returns to a status quo of phase 1's positive result.
Phase 3:
Another phase, another chance for patient to improve. Just as in phase 2, patient encounters some difficult life events. This time, patient's reaction is less extreme. Still letting the event get to him, but seems less crestfallen this time. Panic replaced by focus as he continues to repeat the letters: "GDP... GDP... GDP..." Patient flies immediately to Chicago with friend (only have friends initials: PMI). Patient and PMI discuss corporate profits (not sure why..), and patient shakes off GDP's ill effects. Feeling almost invincible after overcoming demons for the 2nd time that week, patient's mood skyrockets. For a moment, he considers making a push back into the glorious days. But by end of phase, patient decides for more slow and steady status quo.
Phase 4:
Patient is beginning to see that curveballs cannot be predicted and best chance for improvement will be slow and steady. Phase starts out just slightly better than last. Then patient's friend (nickname: Jobless) makes some CLAIMS that disconcerted patient at first. Not long after, patient's best friend Ben says that the patient's currency is strong with him. More friends jump to patient's defense, including one (initials: ISM) who brings two unexpected friends (Construction and Spending). For patient, this is the catharsis. Patient tells me that, in phase 5, he is expecting some big news, and until phase 4, had been doubting the outcome. In short, he stands to inherit a large sum of money and the reading of the will is in phase 5. For whatever reason, he is certain that phase 5 holds good news. He's been told he'll get about 175 grand, and starts spending accordingly.
Phase 5:
The reading of the will is one of the first events of phase 5. Deceased parties initials: NFP. When patient's inheritence is read, the shock comes. Not only is it more than expected, but it's nearly a hundred thousand dollars more. Patient bounces off the walls, runs out the door, and immediately announces to the world "I'M BACK BABY!!!" And for a moment, he felt as good as he's felt in his whole life. But not a moment later the probate attorney taps him on the shoulder and says, "you realize you don't get ALL that money, right? AND it's going to take a while to get to you?"
Patient panics. Just one phase ago, he began writing checks based on the assumption of future events. He TRADED UP on Phase 5's news before the news was actually released (cough cough cough!!! oh sorry...) and now fears he may have overcommitted. For excruciating moments, probate attorney is doing calculations.
Phase 5b
Attorney informs patient that although the official inheritence is 268k, the actual impact of the money after taxes, probate, and delay time will be more like 175k. Patient steps off the figurative ledge... This is EXACTLY what he was planning on during the previous phases exuberance!!!! It takes him a moment to calm down, but by the end of the phase, he has retained nearly all his recent improvements in mood, and merely sacrificed some of the more extreme movements that turned out not to be based on reality.
Conclusion:
What's ahead for this patient? I'm afraid even a team of the best doctors might disagree. All I know is that he's proven something to himself and to me this week. A lot of people have been pretty concerned about him recently. But with the onset of Fall months, he began to improve. After the even more pronounced improvements in recent days, more than a few of my colleagues and I began to fear some sort of relapse if he didn't have a good Friday. And although things were pretty intense for a moment, when we take a look at past data, we see Friday's end result as logical considering the untenable proposition of so quickly regaining all time highs.
Though we're not completely comfortable with the sustainibility of this level, every suggestion from this week's events and from the behavior of his Blue and Yellow friends, suggests, at the very least, that it is not an INappropriate place to be. Whether or not it's the MOST appropriate place to be will require careful assessment in the day's to come.
MBS Market Alerts
