Even as activity inside the Beltway bogged down, the markets have been on an almost nonstop rally since the election....but sometimes you've got to suspect it.
Even as activity inside the Beltway bogged down, the markets have been on an almost nonstop rally since the election....but sometimes you've got to suspect it.
4 comments:
The markets are tied to the underlying economy by a very stout rope. However, that rope has a potful of slack in it; there is very little time-based connection between the markets and the underlying economy. Added to this is the potful of resignation under the Obama regime and resulting frustration.
The resignation and frustration was sharply released with Trump's election, and the markets have been reflecting the antithesis--lots of enthusiasm (though not irrational exuberance) and confidence. There is a good connection, possibly causal, of the election leading to the markets' current performance.
But that does wear off if the economy itself doesn't follow along and justify that confidence. We're still seeing under 2% growth. To a large extent, that's because it takes time for an economy to turn around. But Government has actually to get out of the way, and that means Congress (read: Republicans) have to get off their dead patooties and do some positive things. They have done a lot with repealing many of the more egregiously destructive Obama regulations, but they've got a lot more yet to do.
Or else the markets will come back to where the economy is.
Eric Hines
PDT has hitched himself to DOW average, which is insane. DOW goes up, DOW goes down, and we've seen 8 or so years without recession. (Yes, Eric, crap growth, but positive.)
When DOW dumps, PDT will look like an idiot. Won't be the first time, either.
The DOW has little enough to do with the real economy anyway; it's all about trading fairy gold.
Oh, the markets going up (and they're much more than the Dow) is a net positive. But that's not nearly so important as an increase in the labor force participation rate would be.
Eric Hines
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