A prudent man foresees evil and hides himself, but the simple pass on and are punished.
Proverbs 22:3
The hits – negative economic news, that is – just keep coming. To underscore what I mean by bad economic news, consider the following headlines from just last week:
- “US Industrial Production Plunges Most Since March 2009.”
- “Powell: S. debt is ‘on unsustainable path,’ crimping ability to respond to recession.”
- “Household Debt Climbs to Record High, Delinquencies Rise.”
- “GDP Estimates Crash on Dismal Economic Reports.”
- “Fed Prints Even More Money, Adds 3 Additional Repo Operations With Longer Maturities.”
Yet for all that, stocks hit a record high on Friday with the Dow closing above 28,000 for the first time. CNBC’s headline on Thursday summed up the mainstream financial press’ exuberance quite well, “This is now the best bull market ever.”
How is it possible, on one hand, for there to be so much bad economic news and, on the other hand, for stocks to be hitting record highs? We dealt with this topic last week, but this topic is of such importance that it bears additional commentary. The answer to this question, to borrow a turn of phrase from one commentator I follow regularly, is that nothing’s real. We have fake financial markets designed to manipulate your perception of reality.
