(For Those Who Say I Just Don’t Get It…Get This)
As I am typing this the “markets” are, once again, breaking all known records to reach ever-the-higher heights. Why?
Well, the reason why I even mention it, was for a note I just received from a colleague that was incredulous to a prior conversation we had yesterday, e.g., Thursday.
The prior conversation was based around different topics regarding the state of the economy and more, when he asked for my thoughts on the upcoming “Jobs” number for Friday.
His take was, if the number was as “good” as he was hearing reported across much of the mainstream business/financial outlets, then the “markets” were sure to be going up, up, up signalling recovery and why things were properly priced.
I’m generalizing and paraphrasing, but I’m confident you, dear reader, get the gist. For I’m sure many of you have all seen the same “reporting” that he was citing. (whisper numbers were from one million+ to as high even 2+)
Then, the numbers came out, and they were just above 10% on the high side, or similarly just above 20% if you took the low with just over 200K. (e.g., 266K) A far cry from anything posited.
But a funny thing happened as the “markets” opened…
Bad news is back to being not only good for the “markets” rather, terrible is now back to “Fantastic!” as the “markets” continue their assent even as I type this just before noon time here in the U.S.
Back to my note…
My colleague was, once again, dumbfounded (also a bit apoplectic) because of the reaction to such a terrible number and what it possibly implied for the economy going forward. That was when (as you knew it was coming, right?) I said…
“What you keep forgetting is, there is nothing correlated in regards to the economy and these “markets.” I’m sorry to have to remind you again, but you asked. It’s all Fed largess. And the only question the “market” cares about is – will it continue? Or, will it taper or cease?
That. Is. It. Period.
And to prove my point: Voting member of the FOMC Fed. president, Neel Kashkari was on Bloomberg™ after the number was released and said the following, before the “markets” opened. To wit:
“For all those people who have been saying ‘oh my gosh, the Fed needs to normalize quantitative easing,’ today’s job report is just and example of – we have a long way to go”
He also added that he was “firmly in the camp” for maintaining the Fed’s policy stance, which presently entails buying $120 billion in assets every month, while keeping the Fed funds rate close to zero.
Result? Again: Never before seen in human history new highs.
And there you have it. It is what it is…Till it ain’t.
AKA: Till something breaks. Again.
© 2021 Mark St.Cyr