Market's up, bad news already forgotten!

[Madison320]

Have you noticed how quickly the economic commentary turns positive after a couple of up days in the market? The only reason the market is going up is because we've had so much bad news (jobs, GDP, manufacturing indexes, earnings) that there's almost no chance of a rate hike. If the DOW hits 17,000 all the bad data will be completely forgotten.

[fatjohn]

American apparel filed for bankruptcy. Rally!

[devil21]

American apparel filed for bankruptcy. Rally!

And Dupont suddenly ousts their CEO. Stock surges after hours!

Earnings period coming up....not going to be pretty.

[fatjohn]

YUM (owns KFC, pizza hut) opens earnings season with a giant miss. -17% in after trading.

[Madison320]

And Dupont suddenly ousts their CEO. Stock surges after hours!

Earnings period coming up....not going to be pretty.

I agree. Bad earnings might kill the ZIRP euphoria.

My guess is that a lot of the earnings are dependent on the stock market. I'll bet companies have been borrowing at low rates and buying stocks. So with the market going down AND consumers that are broke it may get pretty bad.

I just thought of something. If my guess is right and earnings are dependent on the market, think about how twisted that is. It should be the other way around. The market should go up or down based on earnings. And earnings should be based on making a good product and selling it at a good price. I think that's another reason why QE and ZIRP screws up the economy. No one is making anything. They're just gambling.

[fatjohn]

I must be missing something.

A good week ago the market stood at 16000

Then the news came in off

Bad job numbers, together with the revisions of juli and august the market suddenly knew that the economy had about 120000 jobs less than expected.
Everyday since there's been a company announcing another 1000+ layoffs
Monsanto, yum and some others have been reporting very bad results (most notably in china)
The US posted a disastrous trade deficit, equalling the largest on record were it not for the now rapidly busting shale gas boom.
The syrian war has escalated tremendously with the entrance of russia and iran.

But the market now tries to breach 17000?

What the fuck?

[Madison320]

I must be missing something.

A good week ago the market stood at 16000

Then the news came in off

Bad job numbers, together with the revisions of juli and august the market suddenly knew that the economy had about 120000 jobs less than expected.
Everyday since there's been a company announcing another 1000+ layoffs
Monsanto, yum and some others have been reporting very bad results (most notably in china)
The US posted a disastrous trade deficit, equalling the largest on record were it not for the now rapidly busting shale gas boom.
The syrian war has escalated tremendously with the entrance of russia and iran.

But the market now tries to breach 17000?

What the fuck?

I'm almost positive markets are up because they are not expecting imminent rate hikes, because of all that bad news.

The funny part is that if the markets go up too much, expectations of a rate hike might come back, and then the market will tank again!

[devil21]

Keep in mind that Chinese markets have been closed for the last week.

Since the big corps that seem to drive market moves lately are global, a lot of the moves in US markets are more influenced by foreign countries than the US economy itself. I do think people have to stop viewing US markets in a US-centric light. Such is the nature of globalism.


(zippy has been noticeably absent lately :eek: )

[Madison320]

Keep in mind that Chinese markets have been closed for the last week.

Since the big corps that seem to drive market moves lately are global, a lot of the moves in US markets are more influenced by foreign countries than the US economy itself. I do think people have to stop viewing US markets in a US-centric light. Such is the nature of globalism.



You think China is a bigger factor than the lowered expectation of a rate hike on bad news?

[devil21]

You think China is a bigger factor than the lowered expectation of a rate hike on bad news?

Tough question. Not sure there's a simple yes/no answer. China and others may not be a bigger factor but it is a big factor and growing bigger every day. I'm convinced that most stuff that has constituted the "financial world" of the last 15 years was for the purpose of demoting America (and the reserve dollar, really) from sole superpower, shifting industry out of the US on the backs of taxpayers and redeveloping it in other countries (BRICS). Eventually, that means that GM stock traded in the US, for example, is as heavily influenced by Russia as it is by the US, seeing as how the GM bailout essentially paid to ship US GM factories to Russia.

Just an observation based on all the comments I read (not necessarily on RPF) about how the US economy seems to have little impact on what the US stock markets do.

[Zippyjuan]

I agree. Bad earnings might kill the ZIRP euphoria.

My guess is that a lot of the earnings are dependent on the stock market. I'll bet companies have been borrowing at low rates and buying stocks. So with the market going down AND consumers that are broke it may get pretty bad.

I just thought of something. If my guess is right and earnings are dependent on the market, think about how twisted that is. It should be the other way around. The market should go up or down based on earnings. And earnings should be based on making a good product and selling it at a good price. I think that's another reason why QE and ZIRP screws up the economy. No one is making anything. They're just gambling.

Earnings can impact stock prices but stock prices are not a part of a company's earnings. Rising or falling stocks have no impact on their earnings.

[Zippyjuan]

Keep in mind that Chinese markets have been closed for the last week.

Since the big corps that seem to drive market moves lately are global, a lot of the moves in US markets are more influenced by foreign countries than the US economy itself. I do think people have to stop viewing US markets in a US-centric light. Such is the nature of globalism.


(zippy has been noticeably absent lately :eek: )

China Market was closed for their National Holiday celebrations- reopens Thursday. I was in Jackson Hole Wyoming for a week.

[kfarnan]

If they own their own stock, it would increase company valuation.

[Madison320]

Tough question. Not sure there's a simple yes/no answer. China and others may not be a bigger factor but it is a big factor and growing bigger every day. I'm convinced that most stuff that has constituted the "financial world" of the last 15 years was for the purpose of demoting America (and the reserve dollar, really) from sole superpower, shifting industry out of the US on the backs of taxpayers and redeveloping it in other countries (BRICS). Eventually, that means that GM stock traded in the US, for example, is as heavily influenced by Russia as it is by the US, seeing as how the GM bailout essentially paid to ship US GM factories to Russia.

Just an observation based on all the comments I read (not necessarily on RPF) about how the US economy seems to have little impact on what the US stock markets do.

Maybe China has an effect but the correlation between cheap money and the stock market is a time tested fact.

[Zippyjuan]

Not always.

http://advisorperspectives.com/dshort/charts/guest/2013/LR-131217-Fig-2.png

[dannno]

Not always.

http://advisorperspectives.com/dshort/charts/guest/2013/LR-131217-Fig-2.png

lol, what a solid chart..

[Madison320]

Let me rephrase that. Low rates makes stocks go up "in the short run". The long term driver is QE. Lowering rates provides only a temporary boost that will fade over time. QE will cause the market to go "up" permanently because it devalues the dollar. The market is not actually going up, it's just that the measuring stick is smaller.

[fatjohn]

I feel as if the world has gone mad.

Deutsche bank loses billions. Rally!

I live in Germany which seems to be rapidly developing to become #1 scheissland in a few months.

Bad export data, deutsche bahn drops 5000 jobs, 1 million islamic refugees being welcomed (wtf?), VW scandal, deutsche bank worst bank in the world, the list goes on and on.

Dax is up YTD though so thats good.

[oyarde]

I must be missing something.

A good week ago the market stood at 16000

Then the news came in off

Bad job numbers, together with the revisions of juli and august the market suddenly knew that the economy had about 120000 jobs less than expected.
Everyday since there's been a company announcing another 1000+ layoffs
Monsanto, yum and some others have been reporting very bad results (most notably in china)
The US posted a disastrous trade deficit, equalling the largest on record were it not for the now rapidly busting shale gas boom.
The syrian war has escalated tremendously with the entrance of russia and iran.

But the market now tries to breach 17000?

What the fuck?

Over 17 and gold up .

[LibForestPaul]

Tough question. Not sure there's a simple yes/no answer. China and others may not be a bigger factor but it is a big factor and growing bigger every day. I'm convinced that most stuff that has constituted the "financial world" of the last 15 years was for the purpose of demoting America (and the reserve dollar, really) from sole superpower, shifting industry out of the US on the backs of taxpayers and redeveloping it in other countries (BRICS). Eventually, that means that GM stock traded in the US, for example, is as heavily influenced by Russia as it is by the US, seeing as how the GM bailout essentially paid to ship US GM factories to Russia.

Just an observation based on all the comments I read (not necessarily on RPF) about how the US economy seems to have little impact on what the US stock markets do.

Global banking families think in generational terms.

[Zippyjuan]

In general, stock prices reflect what people think the company will be worth in the future- not necessarily where they are today.