The overall concensus for today's job numbers were a mere loss 5,000 jobs in the prior month of September. This number, though still a decline, would have made the market rally, as it shows strength in the economy and that companies are laying off less people. You would figure that if the number was 10 times as bad, however, that the market would plummet, as the jobs report would indicate that 50,000 jobs were lost and the economy is losing steam.
Well, the jobs report came out - Actually, it was 19x as worse - at 95,000 jobs lost... What has happened? The market is in the process of rallying. It is because investors expect the fed to pump more money into the system and to hold up every asset - thus supporting my prior predicitons. Where is this money coming from? Is there that much money on the sidelines? Are foreign investors really throwing money into a stock market in which they are losing more on the value of the dollar than they are making in the actual equity markets? I think not...
The money is coming from the federal government. They are buying stocks as if they were a hedge fund manager. The only difference between a hedge fund manager and our government is that a hedge fund manager is playing with money that is given to them by individuals and entities that seek a return - The government is playing with OUR money as if it is an unlimited source... They are hoping to recoup the losses by the banks (which the reports are out that they made money on TARP... But, you need to follow the money trail). If the market does sell off, which it won't because of the unlimited supply of money flowing into it - The U.S. will inevitably collapse upon itself. That is why the dollar is falling and getting weaker (among other reasons, i.e. a currency war that has the first country with the weakest currency sparking up their exports, thus increasing domestic manufacturing, and increasing jobs - in which Japan was aggresively trying to do, but has failed miserably because the mighty USA is able to manipulate the market even better - as we are now seeing). Mortgage rates continue to fall, as do treasuries - slowly approaching my low of a 3% rate on mortgages (though, I believe it will bottom around December - let's see how low it will go).
Moral of This Story:
The SNEAKYnomics is turning out to be very sneaky indeed... Prop up the stock market, come out with inaccurate reports only to come out with revised reports later, increase the GDP by killing the dollar and increasing demand for US goods (what do we make anymore?), buy up treasuries to reduce the cost of borrowing further than the fed funds rate can produce - which yields supposedly higher demand for loans (though it's not), and allow the banks to get bigger and bigger... I love this economy!!! Free market forces are harder to predict, because it's based on human emotions... But, when this manipulated market is run by a few people that react to the situations at hand - It is very easy to predict what is happening... Because they are driving by looking at the rearview mirror... Unfortunately, there are always bumps you don't anticipate.
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