Just before the opening bell this morning CNBC's Erin Burnett discussed the status of Google shares with the WSJ's Jon Hilsenrath. When Hilsenrath made the perfectly sensible point that Google hasn't lived through a true market cycle (i.e., recessionary conditions), Burnett responded with this:
Well, we know the market has priced in some pretty nasty surprises there.
Now, that's not necessarily wrong. But we invite you to conduct a little thought experiment here--thinking about the broader market, not just Google. If earnings season delivers more "nasty surprises," do you think traders and investors will shrug it off? ("Hey, that was priced in!") Or do you think they'll trim positions more aggressively rather than less?
We think the answer is entirely clear, even obvious. But there's plenty of contingency in the question, and that's what makes a market.