I met up with a lawyer friend of mine on Wednesday evening this week and we got to talking about Murphy and his annoying law …further questioning who Murphy actually was and what was behind the every-day adage we know and use today.

 

As we know it, Murphy ’s Law is an adage or epigram that typically means “anything/everything that can go wrong, will go wrong”.

 

According to the book ‘A History of Murphy's Law’ by author Nick T. Spark, differing recollections make it nearly impossible to pinpoint who first coined the saying Murphy's law. The law's name supposedly stems from an attempt to use new measurement devices developed by the eponymous Edward Murphy and coined because of an adverse reaction to something Murphy said when his devices failed to perform.

 

I’d rather define Murphy’s Law as this past week and all of the crazy things that did go wrong.

 

It all started on Monday with a tumble in crude prices following the referendum “no” vote out of Greece over the weekend in addition to the Bank of Canada’s Business Outlook survey being released on Monday morning offering a “positive but weak” sentiment.

 

Then on Tuesday, concerns out of both Greece and China had copper, coal, natural gas and iron ore commodity prices nearing 2015 lows, with Chinese stocks continuing to slide. Nearly 800 companies suspended trading on Chinese markets (both the Shanghai and Shenzhen) bringing an end to an 8 month bull run.

 

On Wednesday, you-know-what hit the proverbial fan pulling the S&P 500 down over 1.5% and the TSX down ~1.4%.thanks to the perfect storm of the continuing Greece saga, half of the Chinese market on a trading halt during a meltdown, the Canadian dollar and crude oil prices sliding further and Armageddon like technical glitches - at just about the same time Wednesday morning, the NYSE halted trading because of a technical issue, United flights were grounded because of automation problems, and the WSJ was inaccessible online.

 

By Thursday, North American markets were positive at mid-day as the NYSE sorted out Wednesday’s technical glitch and Chinese markets lifted ~5.8% overnight (that’s what happens when you aren’t allowed to trade).

 

And today – my screen was fully green again as a hopefuls investors smiled while Greek officials put together a new reforms package proposal (which analysts have noted is quite similar to the terms Greece previously rejected in June).

 

In the U.S., all three major indices were up over 1% at mid-day and while headlines whipped the index back and forth, the S&P 500 moved in both directions yet ended the week unchanged. On the fixed income side, Fed Chair Janet Yellen once again mentioned the first rate hike could come “at some point later this year,” she left the door open for adjusting the timing if overseas events warrant. Regardless of the timing, investors should prepare for the rate hike cycle. Read a great report put together my by fixed income strategies team here.

 

In Canada, all 10 sectors of the TSX were positive, led by the healthcare sector (the space is up 1.5% at mid-day, with no major headlines contributing to the performance, go figure). Today’s jobs report demonstrated that Canada’s unemployment rate was unchanged at 6.8% for the month of June and showed a net loss for the month of 6,400 jobs, was received positively by the market.
Government bond yields saw significant volatility throughout the week but ended up roughly where they started. Looking forward to the Bank of Canada’s rate decision on Wednesday, July 15, the market is currently pricing in a 34% chance of a 25-bps rate cut.

 

So, what gives, Murphy?

 

I’ll tell you what – this week was the perfect example as to why it’s so important that you stick to your long term plan – had you freaked out on Wednesday, you would have realized a loss you didn’t want to lose – and on the contrary, I hope you bought more, I sure did.