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| Economy |
| Why Markets Are Rallying as Millions Become Unemployed |
| 2020-04-26 |
| [Mises] The US economy is imprisoned, most of the population is under house arrest, and the inmates in Washington are running the asylum. And yet while the nation appears to be walking the green mile, investors residing in the Wall Street cell block have been extended pardons from the market gods. Prisoners in the Main Street general population wing of the jail are stuck consuming gruel, manufacturing license plates, and marrying old maids with a dozen cats. The bats not only triggered a severe respiratory illness pandemic, but also sparked a serious case of insanity. AMERICA IN ONE IMAGE? Justin Horwitz, a Democratic strategist, tweeted a screenshot [in link] that was meant to showcase "everything that is wrong with America." It featured CNBC’s Jim Cramer celebrating the Dow Jones Industrial Average’s best week since 1938 and a network chyron that read "More than 16M Americans have lost jobs in 3 weeks." The consensus on Twitter was unanimous: what the heck is happening? On the surface, it does not make much sense. Today, millions of Americans are out of work, businesses are closed, and the gross domestic product is forecast to contract double digits in the first and second quarters. At the same time, the leading stock indexes have rebounded about 20 percent from their March 23 lows. Champagne is flowing on Wall Street, while blood is being shed on Main Street. Trying to grasp this market is like attempting to comprehend former vice-president Joe Biden speaking to the press. Once you scratch that surface, you realize what is going on. It may not seem like a satisfying explanation, but at least you can understand the office water cooler talk between the bulls and the bears. PAY IT FORWARD Do you remember the annihilation that took place last month? The consecutive Black Mondays, the thousand-point swings, the margin calls, and the liquidation of trillions of dollars in assets? It was devastating to watch in real time for the faint of heart, especially if you are nearing retirement and desiring to spend the rest of your days sleeping in and eating cheesecake. The March madness was pricing in the next quarter or two. Stock exchanges anticipated the rising confirmed cases and death tolls, the soaring jobless claims, the skyrocketing unemployment rate, the depressing earnings season, and every other piece of bad news relating to the coronavirus. This is why it seems befuddling when 6 million Americans file for unemployment benefits and the United States confirms 723 new deaths, but the S&P 500 jumps 2 percent. Financial markets are always forward looking. Right now, the New York Stock Exchange is focusing on life after COVID-19, when society, it is hoped, returns to normal. There may be some detours along the way, but traders are assessing the future of the postcoronavirus world and searching for new opportunities to make a lot of money. THE POWELL PUTSCH And then there is the Federal Reserve System.... |
| Posted by:Clem |
| #11 "Printing presses" are overheating Printing presses are so 20th Century. Now the Fed magically creates money and distributes it by computer. Major banks and money houses exchange those magic dollars among themselves. If you use a credit card, you are also play a part of the magic money system. Now if for some reason the electricity goes out for an extended period of time, those printed bills and minted coins will have to be resurrected and a lot of houses of magic money will collapse. |
| Posted by: Procopius2k 2020-04-26 13:32 |
| #10 "Printing presses" are overheating. To simply dump a few trillion dollars into the economy is no small thing. Then, throw in the Repo crisis and bank woes in Europe, then you have gold potentially going through the roof. I've read where 70% of USD cash (most 100's) are overseas with much of that in Europe. Europeans have a propensity of cancelling their currencies; the US never has. Wonder why there's a movement to go to digital currencies? Pelosi wants it, too. Hmmmm. Funny how it ties in to this COVID-19 spiel. |
| Posted by: Clem 2020-04-26 10:33 |
| #9 Gold is bouncing around $1800-2000/ounce. The buying power of the dollar is not much if it takes ~$2000 to buy an ounce of gold. The govmint printing presses are running overtime. |
| Posted by: JohnQC 2020-04-26 10:24 |
| #7 And when US T-bills pay around around 0%, money has gotta go somewhere, and that somewhere will be the stock market. I should think Europeans are not too keen on negative interest rates, either. |
| Posted by: Clem 2020-04-26 08:16 |
| #6 It's another game of speculation. It's a herd that gets spooked in an environment in which the signal is designed to spook. Chicken Little was the very first reporter. |
| Posted by: Procopius2k 2020-04-26 07:50 |
| #5 Because markets are not really connected to actual economy? |
| Posted by: g(r)omgoru 2020-04-26 03:17 |
| #4 May is it for me. I'm going to find someplace to get a damned haircut. Did everyone/anyone see that cartoon/joke where a supposed hooker leans into a car window and says 'I'll do anything for $50', and the car's occupant says "can you cut my hair?" I may (I do) have a low sense of humor but I thought that was hilarious. I comes in second only to the same picture entitled "how I met your mother". |
| Posted by: Whiskey Mike 2020-04-26 01:31 |
| #3 Where can I bet on quarantine cultists tears? |
| Posted by: M. Murcek 2020-04-26 01:29 |
| #2 Buy on the next dip. Either the lockdown ends within a month or we will have mass violence in this country. Prediction: no violemce. Instead, our idiot governors will see a few brave souls moving forward and will capitulate in rapid succession. |
| Posted by: Lex 2020-04-26 01:13 |
| #1 Wall Street loves pain on Main Street. This has been known forever. |
| Posted by: M. Murcek 2020-04-26 00:49 |