Posted on 10/26/2009 7:48:25 PM PDT by blam
Why Is the Market Going Up When Jobs Are Going Down?
Invest With An Edge
October 26, 2009
Brandon Clay
Last month the national unemployment average rose to 9.8%. It’s actually at 17% if you count distressed and underemployed workers. Not only is unemployment data weak, it’s getting worse. Former Fed chairman Alan Greenspan said unemployment would hit at least 10% before turning back.
Even with this well-known data, the market is going up. The S&P 500 is sporting a mostly gentle uptrend from March to October. The market thinks we’re recovering. Bernanke and company have said as much. However, given that we have the toughest job market in a generation, to me it seems a little premature to declare recovery – at least a strong one.
I’m not alone in my assessment. CNNMoney.com’s Editor At Large Paul LaMonica recently said, “Repeat after us. There is no strong recovery without job growth. There is no strong recovery without job growth. Why does Wall Street not get that?”
A good question. Why is the market going up while jobs are going down?
[snip]
Perceived value, rumor, companies actually doing well
Because big corporate has laid off hundreds of thousands and the people left at their desks are now doing the work that 3, 4 or five used to do.
Because big corporate has laid off hundreds of thousands and the people left at their desks are now doing the work that 3, 4 or five used to do.
I also wonder why..
All I can see is that the market is now run by computers and
fat cats like Soros who can pump and dump all day long.
I think the market is now in another world and not really reflective of reality.
MANIPULATION i think that about sums it up
Market manipulation through the PPT and through billions given to GS and JPM.
Also, when the dollar tanks, people buy something they think is safe, like stocks.
The fact of the matter is that the economic fundamentals are currently so horrendous — and these days are going to make the next two years look like a boom period — there is absolutely no reason for the Dow to be above 7000.
And, like I said, the next two years are going to expose Americans to economic deprivation that have never imagined.
Exactly. And I think they are also involved in the commodities market, manipulating the price of oil and especially gold.
I think the rally is over. I think a correction has started.
Blam,
You know why. The Fed has injected 1.5 trillion dollars into the monetary system. With interest rates at near zero where is that money going to find a decent rate of return? Stock dividends and appreciation of course.
Besides, the stock market doesn’t care whether you have a job.
Speculators are chumming for the next catch.
Two reasons:
Where do you see any signs of inflation?
We have deflation. That's the reason why Social Security recipients will not be getting a cost of living increase in 2010.
Most of this money is being held as excess reserves - which is not circulated within the economy - and therefore can't drive inflation.
In the current environment a company’s best move would be to fire every US worker and sell the offices. The manufacturing is done in China anyway, and product support in India. What we see today are results of layoffs that already occurred.
Of course if you look at the economy of the entire country, such move would destroy whatever remains of the industry. But that’s not what huge businesses worry about - their goal is just to make money. The job of thinking about country’s welfare belongs to the Congress and to the President. Unfortunately, they only drive business out of the USA; cost of an employee here is astronomical, taxes are high, and there is plenty of red tape. Without jobs that produce internationally wanted and highly valued products the USA will not be able to keep its quality of life.
It also means that weak companies (often the small "mom-and-pops") will dry up and fold which means more market share for the bigger companies - the ones who make up the DJIA.
The Dow has, as long as I've lived, been a poor barometer for the strength of the employment market. It is a barometer for the strength of macro-industries.
Of course, the big businesses are hurting too but they figure they'll survive and eventually have a chance to win a bigger share of the pie, even if the pie is smaller. That's why investors are returning to the market - they see the opportunity in a crisis, just like the White House does.
....and when the music stops, nobody knows. Instead of investing in the market, people would be better off going to vegas to gamble. At least there they get comped some food
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