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On Wall Street, a Fever Takes Hold


Fever took hold of the stock market as the week ended, stoked by the best unemployment numbers in half a century. Two days earlier, shares had fallen sharply as investors registered their disappointment in the Fed’s latest pronouncement. Obfuscator-in-chief Powell had said the central bank would hold steady and that the economy seemed in fine shape. But the markets reacted as though they were hoping for just enough bad news to push monetary policy toward easing. No matter. By Friday, the virtues of an actual strong economy won out over hopes for a weakening economy deserving of stimulus. The buying spree we saw in celebration of this newfound contentment seemed likely to accelerate in the week ahead.

A key feature of the melt-up since January has been the steady rise of some FAANG stocks beset by troubling news. Boeing is enmeshed in a deepening scandal related to the fatal crash of two 737 Max aircraft. But however disconcerting the news on a given day, the stock has either risen or remained buoyant (click on chart inset). Apple’s iPhone sales have been weakening, but that hasn’t inhibited the stock’s wilding spree. And Facebook, taking regulatory flak every time Zuckerberg speaks, has soared on news of a broad but unimpressive change in the company’s business model. Finally there is Google, which plummeted 10% last week on news that they are losing ground in advertising to Facebook and Amazon. The selloff seemed certain to mutate into a routine shakedown, however, and before the week ended, Google shares appeared once again to be firmly in the grip of the weasels who manipulate them, always with an eye toward new-record highs.

A Millennial Peak

Scanning the business pages, the overall impression is that the U.S. economy has never been stronger and that nothing could possibly go wrong.  Bloomberg’s editors went all-in with headline hubris that just begged for trouble: If This Is a Tech Bubble in Stocks, It’s the Expansionary Phase. Mind you, the conspicuously unprofitable Uber is about to go public with a possible $100 billion (!) valuation, and Softbank is talking about spinning off an investment fund of similar size. If such overweeningly ambitious offerings are mere precursors to an actual bubble, just imagine what decadent prosperity must lie ahead for America. Will we all feast, as William F. Buckley once had it, on nightingale tongues? Such are investors’ dreams as their excesses expand heedlessly toward a millennial peak.

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