“Forrest: My name is Forrest, Forrest Gump. [1] [the wo- man nods] Do you want a chocolate? [the woman shakes her head to refuse] I could eat a ton of these here. Mom always said: life is like a box of chocolates, you never know what hap- pens to you! (moment passes) Those shoes must be comfortable.

Woman: My feet hurt.

Forrest: Mom always said that many things are understood from a person’s shoes. Where you go. Where it was. How many shoes I put on myself. I bet if I try so hard I can then remember the first pair. Mom said that they took me everywhere, said they were my magic shoes.

(Flashback)

Doctor to Forrest’s mother: He has strong legs, as strong as those of strong children, but his back is more convoluted than a politician.

Jenny: Run Forrest, run!

Forrest, narrating: I know he does not believe me if I tell him, but I run like the wind blowing! And from that day, if I went somewhere, I would go running.

Taken from Forrest Gump by Robert Zemeckis.

Even the markets are a box of chocolates, you never know what might happens. In the past few weeks, the excellent US employment data has shaken the financial markets. The reading was immediate: the Fed will no longer be able to postpone the rise in interest rates. Volatility has surged like it had never done, and the stock markets have collapsed After months of records for the main world indices, the common sentiment was the ineluctable arrival of the correction. Of course, the chocolate that was caught, despite the sweet macro data, did not approve. Then, last week, again from the US macro data box, another chocolate was taken and discarded: inflation. In January, the US price index grew by 2.1%, above expectations that suggested a 1.9% adjustment. Unlike forecasts, the markets did not react by selling stocks and bonds but showed a strength that only the previous week had not found. The recent decline has served to recover energies, although the inflation rate hike link is also narrower than that between employment and monetary policies.

To understand how far the markets have done, you have to look at the shoes, from there you can understand many things: the terrain on which you marched, if you have consumed too much a part of the sole or have settled on the whole plant, if you are just walked or ran, and above all, this step: how long will your shoes still hold up?

The first thing that can be seen is that the markets have run, they have not walked and now, out of fear, they tried to stop suddenly. The sole is solid, filled with liquidity and gel put by the central banks. They were born to run but may not be optimal for all terrains. The sole is still thick and to reveal it is the analysis of the numbers. After the jolt, the markets have gone to look at the fundamentals and, even at these prices, there are many US, European and Chinese companies that have offset the sharp rise in prices, with significant expansion of profits. The result is that, for many companies, multiples are not so stratospheric. After the fall, the equity valuations have returned to more acceptable values: the 12-month earnings ratio for the S & P500 rose from 18.5 to 17 (November 2016 level at the time of Trump’s victory) while for Europe has reached 13.5 times (same level as in the first quarter of 2015 when Draghi started QE).

This, however, is only part of the story; Forrest Gump traces America, from the Ku Klux Klan, to the Vietnam war, to the economic boom, to the hippie movement to the tensions between races. Forrest emerges despite or, precisely, for his limits.

He never stopped, he never followed this or that ideology, perhaps he could not. Yet he always comes out with his head high as a hero. To his deeds, people attribute the noblest meanings, for example his long march throughout the United States.

Here, when markets start to become unstable, we attribute multiple meanings, we build theories on theories. The only solution, however, is not to pursue ideologies, but to keep running, to read budgets, to scrutinize societies, without making us too distracted by background noise. We can read what we want from the macro data, we can bet on the reactions of central banks. But one thing is certain: the world economy is running, if the profits of some companies go hand in hand, it means that we are not buying them dearly. We must, however, carefully select the titles that are riding the momentum and those that lose the pace. For US tech and for more than Chinese companies, the share price was accompanied by that of profits. The same cannot be said for many other mechanical or chemical companies or some related to raw materials.

On the bond and currency front, the depreciation of the dollar and treasuries is offering interesting returns.

The markets are like a box of chocolates; you never know what you might get but for sure we know that we must continue running.