According to an economic barometer called the Money Market Index, the recent rally in the Dow...

According to an economic barometer called the Money Market Index, the recent rally in the Dow over the past three trading sessions has been "totally irrational," says the index's chief researcher Dan Geller. The rally, mostly due to the release of Friday's monthly jobs report, shows that the enthusiasm has been mispaced due to the simple fact that a large portion of the 163K new jobs reported are only temporary, and likely to vanish soon. The move "has no economic merit," Geller insists.

Comments (20)
  • Van Hyder
    , contributor
    Comments (172) | Send Message
    wow, when I see comments like "no economic merit" I really want to get long. Everybody is on one side of the boat (look at the volumes on up days and the prices of treasuries), the market has an uncanny way of punishing the majority.
    6 Aug 2012, 08:02 PM Reply Like
  • wyostocks
    , contributor
    Comments (9113) | Send Message
    The market has been "totally irrational," for a long time.
    6 Aug 2012, 08:05 PM Reply Like
  • Machiavelli999
    , contributor
    Comments (831) | Send Message
    For the past 4 years now, people have continuously said the market HAS to go down. Obama is President!! It just HAS TO CRASH!!! If you listened to their advice, you would have lost a lot of money. Many of the same also said there will be hyper-inflation and government will default. Again, if you bet on any of that, you would have lost a lot of money. Of course, the absolute catastrophic past record of those predictions has not led anyone to abandon these views.
    If you want to know what's been driving this market for the past 4 years, it's monetary policy. In March 2009, economic data was much worse than it is now and yet it was on the eve of the biggest market rally in history. Why? QE was announced in March 2009.
    The main reason market is holding up now is hope for either the ECB or the Fed to act more forcefully. If those two dissapoint, market will crash. It has NOTHING to do with economic data.
    6 Aug 2012, 08:14 PM Reply Like
  • Ted Bear
    , contributor
    Comments (700) | Send Message
    You all need to remember two things:


    These (economic) numbers are prepared by the same imbeciles who sell you a drivers license. That are not exactly the product of PHD's studying the various nuances in the labor market.


    Second, as long as the Fed and the Treasury are pumping trillions into the economy you need not worry about the market selling off. The market backs off a little now and then in order to put pressure on the Gubment to keep the spigot open (the constant babble about QEx) but it will not sell off until the supply of fiat currency is exhausted and everyone is fully invested.


    I know you all can time that event, so have at it.
    6 Aug 2012, 08:37 PM Reply Like
  • anonymous#12
    , contributor
    Comments (545) | Send Message
    The more the naysayers scream, whine, rant....the higher the market goes....


    Hussman is already on suicide watch....
    6 Aug 2012, 08:40 PM Reply Like
  • heywally
    , contributor
    Comments (249) | Send Message
    As if there was ever a 1:1 correspondence between something as complex as market movements -- especially short term -- and the 'perceived' macro picture ....
    6 Aug 2012, 08:44 PM Reply Like
  • The Patriot
    , contributor
    Comments (358) | Send Message
    This is not your fathers market. Instant news,communication,tra... has the market sending signals we dont know how to interpret. World events have become daily so many" trends" dont behave rationally.
    6 Aug 2012, 08:59 PM Reply Like
  • Three Cheese Fondue
    , contributor
    Comments (932) | Send Message
    The market will get to where it "ought" to get to eventually.
    A lot of these big up-moves are certainly intended to shake out the many shorts that exist; Friday was no exception.
    "They" could hold it up here for just a few more days, or they could hold it up here for months (especially since Op Twist has been extended); you simply have no way of knowing, except that you can look at sentiment indicators to get an idea of when they might feel it convenient to pull the plug.
    6 Aug 2012, 09:00 PM Reply Like
  • Ted Bear
    , contributor
    Comments (700) | Send Message
    There is a guy called Denninger who has been predicting the end of the world for several years. His 'call' was that we break the 666 low several years ago (since then the market has doubled and he has apparently been wiped out--not to mention that the subscription web site he started is down to a handful of only the most hardy (and broke) 'stock up on tents and canned goods' type of souls. Just another example of guys not appreciating the full picture, regardless of how irrational it might seem to the traditionalists (count me as one, BTW).
    6 Aug 2012, 09:11 PM Reply Like
  • coolshaps
    , contributor
    Comments (48) | Send Message
    How can the "market", whatever that is, "rally", whatever THAT is, when we are literally experiencing global financial turmoil.


    The previous sentence is analogous to a dysfunctional family meeting for a holiday, with all types of intra-family drama, and pretending that everything is ok.


    Let's all go about our business as if everything is ok, but if there is "news" or a "rumor" of an event, then somehow the "market" moves in grand fashion in a single direction.
    6 Aug 2012, 09:15 PM Reply Like
  • bosco115
    , contributor
    Comments (250) | Send Message
    We've had nearly five years of "global financial turmoil". People are bored of the fear when they see KO increasing dividends and free cash flow.


    Turn off the news and get back to fundamentals.
    6 Aug 2012, 09:36 PM Reply Like
  • cplange1
    , contributor
    Comments (164) | Send Message
    I wouldn't buy into the rally...but I'm not shorting either.


    The simple fact is that everything if so confusing, it seems like a bad idea to buy or short.


    At any rate, I think the Fed is essentially tapped out--their policies can stabilize, but they can't create growth (okay, let me clarify: they can keep the 1.5% growth, but to get to that 3% we'd like, that's up to fiscal policy and the markets) and I think the ECB ought to remember that.
    6 Aug 2012, 09:36 PM Reply Like
  • Chris Lau
    , contributor
    Comments (3979) | Send Message
    Read macro and be a macro "caller" at your own peril. Only Soros could do macro calls, and these days he makes the market do what he wants.


    As for the job figure, you need to factor in other things than to look at the headline figure (as discussed in Paragraph 1):
    6 Aug 2012, 09:54 PM Reply Like
  • noob
    , contributor
    Comments (393) | Send Message
    I think people are bored with the daily cries of EU crisis and rescue. It's been priced in already.
    Markets are also tired of shoving money into declining rate bonds.


    Essentially -- there's nothing left but the stock market to put money into. You sure can't leave it in the bank and most of the bond market is running below inflation. What isn't below inflation is forming a pretty horrific bubble.


    So where else can you go?
    6 Aug 2012, 10:05 PM Reply Like
  • Tack
    , contributor
    Comments (16274) | Send Message
    Those still moving into Treasuries now remind me of the news stories, following the great Asian tidal wave a few years back, where it was reported that some locals, seeing the tides recede so far out to sea that ocean bottoms were left fully exposed, rushed out to scoop up flopping fish. Of course, when those unprecedented low tides reversed, many of those unwary fish gatherers were wiped out in the ensuing inundation.
    6 Aug 2012, 10:12 PM Reply Like
  • nightfly
    , contributor
    Comments (1015) | Send Message


    Between the Fed and the europeans there's no shortage of buyers of all bonds. Since there's likely no solution to the EU thing anytime soon and the Fed will go on and on with QE or QE lite or whatever it wants to call its constant bond buying, treasuries will continue to be bid.
    6 Aug 2012, 10:37 PM Reply Like
  • Tack
    , contributor
    Comments (16274) | Send Message


    Contrary to persistent mystical beliefs, there has been no QE since June 2011. "Twist" is money-supply neutral, and that's been confirmed by the slight decrease in M2 ever since QE expired last summer.


    Sure, there's unlikely to be an immediate panic out of Treasuries, right this minute. What we're starting to see now, as evidenced by the recent trading patterns on both down and up days, is that some Treasury holders, probably those with the longest holding periods and greatest unrealized gains, are starting to roll out of positions and into equities. The tide still remains out, and not many yet see that ominous grey ridge out on the horizon, so the mad scramble for higher ground hasn't commenced in earnest. But, the final outcome is virtually inevitable.


    The huge cashflow imbalances we now see in equity and bond allocations will reverse. Getting paid a paltry 1.5% to stand offshore on the bare ocean bottom and wonder when the water might suddenly reappear should certainly raise the question as to why anybody would think this represents prudent behavior.
    6 Aug 2012, 10:51 PM Reply Like
  • SA Editor Stephen Alpher
    , contributor
    Comments (562) | Send Message
    Dow rally over last 3 sessions? DJIA was down Tues, Wed, Thurs. last week before move higher on Friday and all of a 20 point move today. So basically one day up (Friday) erasing the losses of the previous 3 days. Crazy.


    Because of Friday's jobs report? Stock futures were up more than 1% on the back of a huge rally in Europe before NFP was even released. Did the jobs report add some strength to the move? Sure. But the rally hats were on before 8:30 hit.


    Haven't heard of Geller before today, but he's not making a whole lot of sense here.
    6 Aug 2012, 10:40 PM Reply Like
  • Robert Duval
    , contributor
    Comments (7852) | Send Message
    So when are markets rational? Markets will likely keep going up because of the skeptical. Mountains of cash on the sidelines, record retail short positions, and massively underinvested long funds will be forced to chase the market higher into year end....but as there are no sellers, the chasing to get positions will get funds cannot watch the market go higher without them. Once retail covers their shorts and goes long....then perhaps we are closer to a top.
    6 Aug 2012, 11:04 PM Reply Like
  • Remyngton
    , contributor
    Comments (343) | Send Message
    you mean Hope and Change is not the reason for the market's rise ?!?!?!?!?
    7 Aug 2012, 07:40 AM Reply Like
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