So there you have it. Two of the worst job data prints we have ever seen. Yesterdays 6.6 MILLION new unemployment claims and this mornings negative 700k payroll hit.
Wow.
Unprecedented,
As direct participants, what does this mean for the stock market? World economic activity has ground to a halt. As I've said before the uber bears the last 10 years could not have crafted a more dire scenario for the stock market.
And yet... here it sits... even with these two terrible data prints.... the S&P 500 is trading nearly 7% higher than it was trading for in DECEMBER 2018!
How does that make any sense?
And in the face of the growing Virus and countless record unemployed, we have a VIX that has been slowly trickling lower. What?
Perhaps the market is doing its rope a dope. Luring us into a false sense of security before pulling the rug out from underneath the market. I've seen many widely respected folks talking about how we aren't even close to a bottom yet for the market. That this bear market is just getting underway. And that the March 23 lows will break and break hard.
Perhaps they are right.
So how can the entire global economy grind to a halt, a record amount of people are unemployed, and the stock market is trading higher than it was less than two years ago with everyone working?
This Virus came quick. But you know what else came quick? The most massive central bank asset price protection scheme the world has ever seen.
I half joked a few years ago.. that when that recession finally came we may actually see stocks trade higher because of the central bank response.
The FED went back to ZIRP... announced QE Infinity.. and launched a dozen 4 letter asset price protection programs to keep the market from collapse.
In 2008 it took many months for the FED to act. Stock prices were swirling down the toilet. Panic was setting in. Cramer was on TV telling everyone to sell all their holdings and hide their cash under a mattress for five years.
Maybe thats the right move here. But the story has a familiar tone to it in 2020. The Central banks opened the pandoras box in 2008 and while many said they were out of tools to fight the next recession they are showing that they are not.
Ironically while the market was falling to lows last week everyone was saying how the Central Banks could do nothing to abate the inevitable decline of the stock market.
And as prices rise... watch these same people blame the rally on the Central Banks. Apparently you can have it both ways? Don't fight the FED?
I guess we'll find out. Whenever the price action baffles the mind... with historically bad economic data sparking a rally in stocks... just remember one thing... the stock market is smarter than all of us combined.
I think there is a good chance this market defies 'logic' up to $270 or so on the SPY
... and thats it.. Be happy for your health, see you in the chat room. Have a great weekend!