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The Dow was up nearly 300 points at its
highs yesterday, savaging bears who may have gloated over last week’s
equally impressive decline. These short-squeeze rallies are usually catalyzed
by economic headlines, and it doesn’t seem to matter whether the news
is good or bad, since the markets have a mind of their own and can sometimes
surge on the gloomiest data. U.S. markets actually seem to thrive on bad news
as long as it does not emanate from Europe. But it is probably just force of
habit that causes shares to rise at such times, since, for nearly a decade, ostensibly bearish stories came to be associated
with a likelihood of further easing by the Fed. Easing is of course no longer
possible with administered rates already at zero, but any news that might
help us cling to the notion that things can’t get much worse is
arguably a plus for stocks.
So what were the day’s headlines?
The top stories could not have been much gloomier. For starters, we learned
that the inflation-adjusted income of male workers has not increased since
1978. Nor have households fared so well in more recent years despite
Keynesian and monetary stimulus amounting to many trillions of dollars. Even
with all of those digital bucks flooding the financial system, however, the
income of the typical American family appears to have dropped for a third
straight year and is currently at 1996 levels after adjusting for inflation.
A report on this in the Wall Street
Journal noted delicately that the statistics showed “how
devastating the recession was [our
emphasis], and how disappointing the recovery has been.”
Rodney Dangerfield
That’s putting it mildly –
not to mention, in a way that denies what we all know – i.e., that The
Great Recession never left us…has been with us since the Great
Financial Collapse of 2008-09. Statistically speaking, our 1930s-style wallow
has been the Rodney Dangerfield of hard times, failing not only to get
respect from the press, the Federal government and its statisticians, but
mere acknowledgment. To the credit of the mainstream media, however, they
have ceased to seize upon such rallies as yesterday’s
as evidence of anything more than a random walk run temporarily amok.
That’s progress of a sort, we suppose, although we’re not going
to hold our breath waiting for the New York Times and their ilk to give us a
market wrap-up that explains just how Fibonacci levels work.
Rick Ackerman
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