Stocks up 170 points in anticipation of more Fed easy money.
Euphoria! It's baaa-aaaack!
Friday, June 7, 2013
Unemployment rate stayed the same at 7.6%.
175,000 jobs created -- modestly better than expected.
Manufacturing jobs contracted 3 consecutive months. Not good!
April jobs revised DOWN. Not good!
But stocks are higher. Wall St traders trade headlines, not fundamentals.
The bubble builds:
"...the most severe market losses on record have been accompanied by aggressive /Fed/ easing. Without question, quantitative easing has been very effective in suppressing spikes in risk premiums in recent years. More recently, it has been effective in removing any perception that stocks have risk and creating the impression that easy money is enough to override every possible economic or financial concern. But that is where perception has moved beyond reality. There is no evidence in the historical record for such optimism...It is superstition to believe that monetary easing is a panacea. Investors who recognize (actually, simply remember) this now are likely to fare better than those who are forced to relearn it later.
Needless to say, all of this will be summarily ignored by speculators who have been rewarded by the strategy of following the Fed in a mature, overvalued, overbought, overbullish, unfinished half-cycle that recently hit new highs."
"… the last two 50% market declines – both the 2001-2002 plunge and the 2008-2009 plunge – occurred in environments of aggressive, persistent Federal Reserve easing."
John Hussman, PhD
What a bizarre scenario when Wall St sees bad news as good for stocks, and a good jobs report would be perceived as BAD for stocks:
Thursday, June 6, 2013
The Fed appears to be trying to pop the bond and stock bubbles by talking us off the ledge, without doing any harm to the broader economy. I have my doubts, but will be waiting to see the impact. Dow was down another 100 points a few minutes ago.
Wednesday, June 5, 2013
Tuesday, June 4, 2013
Monday, June 3, 2013
* Rally ends 9-day losing streak, rises almost 4 pct * Synthetic prices pointing higher * Bulls points to tighter supplies NEW YORK, June 3 (Reuters) - ICE cotton staged its biggest one-day gain in over seven months and settled limit up on Monday as speculative investors piled back in to buy after prices sank to four-month lows at the end of last week. Bringing an end to a nine-day losing streak, prices jumped 2.5 cents per lb in the final 90 minutes of trading as speculators piled back in betting on tighter U.S. supplies with just two months until the end of the 2012/13 season. Traders saw no obvious trigger for the sudden surge late in the morning, but Ron Lawson, a partner at commodity investment firm LOGIC Advisors, said the market had finally woken up to the bullish factors that he expects to support prices. "You had nine days down and it ran out of selling. The U.S. is sold out. Australia is sold out. China's been buying. The only cotton left is certified stock," he said. The most-active July cotton contract on ICE Futures U.S. rose 3 cents, or 3.8 percent, to settle at 82.36 cents per lb, its daily limit price. That was its best one-day performance since October.
"More importantly, this was the worst ISM headline print since June 2009, the first sub-50 print since November 2012, while the New Orders of 48.8, was the worst since July 2012."
Not exactly what I would call "soaring", but the Dow is up 60 points, while the S&P is flat. It appears Wall St is already shrugging off not only last Friday's revelation from an internal Fed report indicating their concern that they have created stock and bond market(s) bubbles, but today's latest bad news also. That alone is classic bubble behavior!
I am currently reading Didier Sornett's erudite and esoteric book, Why Stock Markets Crash. I had to acquire it via an interlibrary loan from a university library.