Slower growth, fewer jobs? Still, Wall St. cheers

New York Post ^ | 06/27/2013 | John Crudelle

[SeekAndFind]

D’ja hear the great news? The economy continues to suck.

The stock market rallied nicely yesterday after the Commerce Department changed its mind about how the economy did in the first three months of 2013.

After thinking the US economy grew at an annualized rate of 2.4 percent in the quarter, Commerce revised the number downward — saying growth had actually been only 1.8 percent.

There are several things you need to understand before I continue.

First, even 2.4 percent growth isn’t good. An economy that’s pumped up with the amount of liquidity the Federal Reserve has created should be growing at twice that rate, or more.

Second, the new 1.8 percent growth is annualized. That means the economy would have to expand by the same amount over all four quarters of the year to achieve 1.8 percent.

So the actual growth in the first quarter was 1.8 percent divided by the four quarters of the year — which comes to a teeny-tiny 0.45 percent expansion for the January-to-March period.

The last thing you need to understand is that Wall Street loved Commerce’s announcement.

Traders who’ve been trying to keep stock prices from collapsing until after this quarter ends on Friday pushed the Dow Jones industrial average up 149.83 points, or 1 percent.

Why’d they do that? Because, as I told you in several recent columns, Wall Street is hoping the economy slows so that Federal Reserve chairman Ben (the misunderstood one) Bernanke can’t follow through with his threat to cease printing money.

[KeyLargo]

I like Larry Kudlow but he is a big time fan of Bernake’s policies.

[SeekAndFind]

Originally, Kudlow was very critical of Bernanke’s “stimulus” and QE policies, but for some reason, changed his mind about a month ago, saying he (Kudlow) was wrong and Bernanke’s policies were helping, not hurting the economy...

Some people in this forum are going to speculate that the NSA got something on him....

[Thorliveshere]

Can ANYBODY explain to me WHY Wall Street is gangbusters in this economy? I would like an answer, really, ‘cause it confuses the hell out of me.

[KeyLargo]

Jun 26, 2013, 2:31pm EDT

Job cuts looming at Dow Jones, Wall Street Journal

News Corp. will be cutting jobs at The Wall Street Journal and Dow Jones Newswires.

Staff New York Business Journal

In preparation for its split into two separate companies at the end of the month, News Corp.’s Dow Jones & Co. is cutting jobs at The Wall Street Journal and Dow Jones Newswires.

http://www.bizjournals.com/newyork/news/2013/06/26/job-cuts-looming-at-dow-jones-wall.html

[SeekAndFind]

Here’s my take...

The Stock Market went up, up, up because Wall Street expected Bernanke to continue his monetary easing policies.
Bernanke was telegraphing that QE will not stop until the job market bounces back ( i.e. unemployment falls to nearly 6% ).

With that, what kind of return can one have in putting money in interest bearing instruments like cash deposits or even bonds?

That’s why people were rushing to the stock market ( especially dividend stocks like utility companies Verizon or AT&T that give dividends of nearly 5% ).

The rush to the stock market of course, caused the Dow and the S&P 500 to go up up ( The Dow went to record territory).

At the first hint of Bernake’s plan to slow down easing of interest rates, markets went to overdrive panic and caused the stock market to fall last weak.

Now, after re-assessing what Bernanke said... Wall Street seems to be concluding that they over-reacted and that even with Bernanke’s plan to slowly increase interest rates... it has a long way to go.

So, ironically, for the markets to continue rising, the job market has to remain stuck at where it is today...

[GenXteacher]

My opinion that Wall Street is essentially in its own universe, and that nothing that happens there has much of an impact on the economy here anymore. The reason is that a lot of the corporations that are bought and sold there are holding companies that don’t really employ anyone or make anything, and a lot of publicly traded companies are in fact multi-national, and their being bought and sold might affect whether someone has a job in China or not.

[DHerion]

Ben saw a big bubble forming and he made the statements about’tapering in the future’ in the hopes of pricking the bubble and allowing a little air out. But I think all he proved was the whole phony market is a big balloon...Ben’s Frankenstein Monster has escaped and he’s no longer in control of events.