Another Surreal Day on Wall Street

Goldman shares took a manic leapThe stock market long ago decoupled from economic reality, as we all know, but it would be hard to find better evidence of this than yesterday’s surreal performance on Wall Street.  For instance, while one might have expected plummeting bank profits to take a heavy toll on the sector, the Bank Stock Index, which has been on a tear for the last two weeks, opened with a sharp lurch higher and ended the day at the top of its range. Could it have been the 60% drop in profits reported by Goldman Sachs that triggered the buying panic?  Only the Smart Money knows.

Retail’s Death Spiral

Meanwhile, the Dow Industrials reversed early losses to close 50 points higher despite expectations of a 4.3% revenue drop in Dow 30 companies compared to Q1 2015.  Intel was about to lay off 12,000 employees, and there were signs that brick-and-mortar retail’s death spiral has been much steeper than executives at Macy’s, Kohl’s, Target and Nordstrom’s had feared even six months ago.

Despite all of this and more, the major stock averages sit within a one-day rally of new all-time highs. Perhaps the grim outlook for U.S. corporate earnings has raised investors’ hopes that interest rates will be pushed below zero, just like that other monetization success-story, Europe.  The most obvious explanation for such perversity as we witnessed yesterday is that funny-money is infinitely available to Wall Street’s Big Players, and they will always be able to find a handful of stocks into which cash can be ostentatiously rotated. Of course, they have plenty of help from many large companies that have nothing better to do with their surplus (and borrowed) cash than to buy back their own stock to create fake ‘growth’ in earnings per share.

  • John Jay April 19, 2016, 9:24 pm

    Retail’s Death Spiral……………..

    I am proud to say I have had a small part in that Death Spiral!

    On a whim I have been expanding my CD music collection, partly because Amazon has been restricting MP-3 downloads to “Prime” members for recordings I desire.

    So I have begun to buy used CDs on e bay for $3 or $4, with free shipping! The first few I bought with suspicion, expecting damaged goods. But, they have all been just fine.
    So between that and the occasional Stevie Ray Vaughan gem in the $5 bin at Walmart, I am a happy camper!

    Thanks e bay!