John The Baptist Was On Wall Street Yesterday Warning About The Coming Collapse Of Sovereign Credit
Inside today’s Daily Journal…
Essay: John The Baptist Was On Wall Street Yesterday
War disrupts energy supplies
Workers raid their own retirement funds
Coinbase, Trump, and congressional legislation
Chart Of The Day… Bitcoin
Today’s Mailbag
In August 2007, John the Baptist came to Wall Street.
For those of you whose fathers didn’t teach Sunday school and didn’t read the bible every day, John the Baptist was a well-documented Jewish prophet, born about six months before Jesus.
His parents were notably elderly and had been childless in their youth. His birth was widely considered a miracle. Interestingly, his mother, Elizabeth, was a cousin of Jesus’ mother, Mary. Miracles seemed to run in the family.
John began preaching in the lower Jordan River valley, in the 15th year of Emperor Tiberius. His core message will sound familiar to Christians:
Repent, for the kingdom of heaven is at hand.
He urged moral reform – righteousness, justice, charity – and administered a “baptism of repentance for the forgiveness of sins” via full immersion in the Jordan River. He baptised Jesus in A.D. 29 and was among the first to recognize his divinity.
Later, John condemned the local governor (Herod) for divorcing his wife and marrying his brother’s wife. Herod, egged on by his new step-daughter, cut off John’s head and served it to his new wife on a platter.
In Christianity, John the Baptist is seen as a forerunner to Jesus. His preaching was a warning: the time to repent is now. He was warning that everything was about to change.
On Wall Street, the first time I saw John the Baptist was on August 6, 2007.
On that day, everything in the financial markets changed. A singularity emerged: assets that were normally uncorrelated began to move in lockstep. And, even worse, the markets began to work in reverse.
Rather than appreciating businesses that were well-run and safe to own and discounting the businesses that were failing, the opposite began to happen, with horrific volatility. If a stock was a “long” in a standard-value factor model, it was sold. If it was a “short,” it was bought and moved higher, with incredible speed.
It was a “mean reversion” storm, where the best stocks tanked and the worst stocks soared.
None of these moves were supposed to be mathematically possible.
