OLD1953 wrote:The recovery has slowed, shock shock, of course that drove the market up. Odd how later readjustments downwards don't move the market at all.
Given the performance of the market on negative news, apparently if the US economy crashes to a GDP of five trillion and the banks all fail and 50% are out of work, the market will call that "good news for the future" and then, rise.
I was thinking about discussing this before tuning in.
This stuff gets funny. Yesterday we got the unemployment claims number. They said it was down. Why was it down? Because last week's was revised up. Based on pre-revised numbers, claims were up. But the press reported the claims as down.
Now it gets even funnier. March pending home sales were reported up. March, mind you. But unemployment claims for April have been high for 3 weeks running. So what did the market do? It went up, of course.
Wednesday, I think durable goods orders were reported down 4.2%. There as a time in the 1970s when a report like that would take the market way down. Not now. What did they do? Bought the market 10 or 15 minutes after it went down on that release and drove the market up all day.
Today there were a lot of people looking at the 1.54% GDP deflator. For those who don't know, that's the assumed inflation rate for the first quarter by which GDP was adjusted from nominal to real. And estimates varied, but throughout the blogosphere it is recognized that inflation is running something like 2.9%, so therefore GDP grew less than 1% and some are even saying zero.
In the GDP report, the issues we have been discussing for months are coming to light. The economy is growing almost entirely with consumer spending, per capita incomes are down, savings rates are down, and now it is being said this is unsustainable. Really?! How long does it take people to figure this stuff out? This was already happening 3 months ago and it was obvious.
Here's another funny one. Apple stock went gangbusters right until the beginning of this quarter, then started to tank. So this week Apple's earnings from last quarter were released and zoom, up goes the stock. But those were the earnings from last quarter. And if the stock has been tanking this quarter, it's my guess that those in the know realize that this quarter is not going as well for Apple. We'll see.
The summary is the market is so crazy it wants to buy based on old data and ignore new data. Or buy bad data on the hopes Bernanke will use bad data as a basis to print more money.