Across the board, global markets like something, but what that is, I don’t know. US, European, and Asian markets are all up. Even Spain’s IBEX is up today, and that is weird because Spain is about to collapse, or at least its banking system is about to collapse. That is the story line anyway. Yet, the markets leaped forward today. What’s up with that?
Germany and European Union officials are urgently exploring ways to rescue Spain’s debt-stricken banks.
The above hardly seems enough to move the market so strongly, especially after the ECB turned down an opportunity to lower interest rates for its struggling economy. No, something else is going on.
U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third day, on speculation policy makers will act to spur economic growth.
Are we back to this, the market hoping the Fed will jump in with more stimulus? Can this really be the reason the market jumped today? I sure hope not because that would be foolish, especially since the Fed has repeatedly said the economy would have to make a sharp downturn before injecting any more stimulus, and as I have been pointing out, the economy is far from a sharp downturn.
Maybe we are seeing a market that decided to buy into a sell off and that caught short sellers off guard, forcing them to cover. That could explain the huge jump. Then again …
US worker productivity dropped at 0.9 percent annual rate in Q1, fastest pace in a year.
Now that is news the market should like. It seems counterintuitive, but a drop in worker productivity is another positive leading indicator for economic momentum. You see, when worker productivity drops, it means employers have wrung the last bit of work out workers. It means that to increase productivity, employers will have to hire more workers. Given the data I recently pointed out about auto sales, the service sector output rising for 29 straight months, retail shelves being bare, the level of new factory orders rising to its highest level in over a year, and gasoline prices dropping, one might think the market is suspecting the economy is not as bad as the media is portraying. Maybe, but I might be giving the market too much credit. I suspect it will take some big headline news to convince the market the economy is not falling apart.
So, here we are, global markets running strongly in the green, and the truth is I really don’t know why. I am not alone, though, as the financial chatter is all over the board. I am hearing it is time to get back into the market and I am hearing this is fake rally, so it is better to sell.
I’m not sure what the market will do, but what I do know is today lots of money is flowing from US Treasuries into the market. Look at 5.5% rise in the 10-year yield today. I also know that when trading volume kicks up on a green day, it means investors are buying back into the market, and trading volume kicked up today. Maybe I was right yesterday when I wrote …
The market is gonna eventually like this stuff, especially if it needs something else to relieve its boredom with Europe.
Trade in the day – Invest in your life …
