The stock market has seen a heck of a rise since December 24th, and at that time I indicated that even I was little surprised that we hadn’t begun a “tradeable” rally in this bear market. In the very next trading session, that rally began, and the market has now recouped 50% of the overall loss since the start of October.
So what changed?
Fundamentally, nothing has changed! The news flow however has been bombarded by perfectly timed “rumors” on the “possibility” of a “potential” China trade deal that “might” be occurring. Those rumors surfaced on Friday, sending the Dow 330 points higher.
It is important to note that about 80% of daily trading on Wall Street is performed automatically by computers. If you want to “juice the market” on a particular day, spread a rumor such that it hits the news, and is picked up by the news scanning algorithms.
The fundamentals have NOT changed. Earnings across the board have been slowing rapidly. Auto sales are slowing rapidly. Home sales have slowed significantly since the summer. The government shutdown lingers on to now be the longest on record. And “quantitative tightening” and rising interest rates are still taking place.
All the fundamentals that make for a recession are still in place, and the debt loads that will make it the worst on record still loom over individuals, companies, and governments.
All this is precisely why America’s wealthiest are not acting like we have seen the market bottom……according to this CNBC article: https://www.cnbc.com/2019/01/20/americas-wealthy-investors-arent-acting-like-the-market-bottom-is-in.html