KW: I have little respect for financial markets and their commentators right now but this article is an attempt to answer a question that is puzzling a lot of people it seems so here is one mans explanation. Personally I find any talk of a ‘market’ especially an open and free market where price is decided on an awareness and open disclosure of all factors affecting a stock price as ludicrous. There is no such thing and this has been that way for a very long time. There is however a casino where your hunches about direction can bet bet upon but that what is is, a bet. Bad news seems to hit the ‘casino’ prices higher good news drives traders into a lather of buying. Meanwhile we haven’t come even close to seeing or feeling the devastion of businesses and individual livelihoods with 33.5million Americans (and people the world over) losing their jobs but maybe the casino players are aloof or immune from that. If I was in an aggressive Kiwisaver fund I sure would consider switching to a lower risk or lower volatile fund right now while the casino has recovered so much ground, but that is not giving advice or making a reccommendation. Levitation is never a good ploy when flying is without wings. Here is an example of how they confuse themselves and you, the foolery is amazing! Another commentator writes:
“Meantime, the United States unemployment rate presently stands at a ghoulish 14.7%. Not since government bean-counters began tracking monthly data in 1948 has unemployment soared to such precarious heights. Yet the true unemployment rate may be even grimmer… The actual rate may scale an abominable 35.7% — if you accept the verdict of Mr. John Williams and his ShadowStats site. This fellow incorporates“long-term discouraged workers” into his models. These unfortunates were read out of official tracking in 1994. Mix them back in and you have 35.7% unemployment on your hands… says Williams. But cling to the official 14.7% for the moment. If it is additional good news you seek, here you have it: An even bleaker figure — 16% — was consensus.”
Another one, Michael Farr, for example, is founder and CEO of Farr, Miller & Washington investment counsel. From whom: There seems to be a willingness to look past an absence of revenues and earnings, increasing unemployment, an explosion of sovereign and corporate debt and devolving credit ratings based on two things: huge policy response and faith that a meaningful recovery will be somewhere within the next six–12 months. There is also a deep human willingness to whistle past boneyards… we might note.
“The market knows that the job losses are self-inflicted due to the widespread shutdowns,” adds Bleakley Advisory CIO Peter Boockvar. He continues: Thus, now that we are beginning the reopening process the market assumes many of these people will hopefully get hired back over the coming months and quarters. “The market assumes.”
So there you have it
The American economy, along with the global economy, has been devastated by coronvirus pandemic lockdowns, so why are stocks rising?