Why the Stock Market is Defying Gravity
Degenerate Business School
English - April 11, 2020 21:00 - 29 minutes - 20.1 MB - ★★★★★ - 16 ratingsInvesting Business News Business News Homepage Download Apple Podcasts Google Podcasts Overcast Castro Pocket Casts RSS feed
The S&P surges higher this week, gaining 12% while all the world is dying.
So why is the investor community happy to ignore the deaths of thousands and the recession sure to follow?
The answer is simple...and yet not so simple.
1) Stock valuations are pricing in a RAPID recovery from today's contraction, the scientifically named "V-shape"
2) That recovery is informed by faith in a massive Federal Government intervention in the form of ongoing stimulus AND
3) Jear Bear's equally massive backstop from the Federal Reserve in the form of easy money and corporate debt buy-ups
4) The formation of a Saudi-Russian oil cartel propping up oil prices
5) A structural exit from short positions on travel stocks
All of this is to say, friends, that the markets are highly optimistic now that the curve is flattening. Now...is that optimism well founded or not?