{"id":53867,"date":"2020-06-25T12:32:34","date_gmt":"2020-06-25T17:32:34","guid":{"rendered":"https:\/\/olduvai.ca\/?p=53867"},"modified":"2020-06-25T12:32:41","modified_gmt":"2020-06-25T17:32:41","slug":"market-begins-to-internalize-reality","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=53867","title":{"rendered":"Market Begins To Internalize Reality"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/global-macro-monitor.com\/2020\/06\/25\/market-begins-to-internalize-reality\/\">Market Begins To Internalize&nbsp;Reality<\/a><\/h3>\n\n\n\n<p><strong>Summary<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>The financial media is beginning assign blame to the recent stock market weakness to the spike in COVID cases and the potential for a November Democratic sweep of the White House and both chambers of Congress<\/strong><\/li><li><strong>Nothing new to GMM as we have been on this early and stood alone<\/strong><\/li><li><strong>The stock market\u2019s valuation is at a historical extreme<\/strong><\/li><li><strong>The stars are aligned for a nasty and protracted bear market. Timing is anyone\u2019s guess<\/strong><\/li><li><strong>The Fed has created an asset scarcity induced stock market bubble, similar to the Beanie Baby bubble of the late 1990s<\/strong><\/li><\/ul>\n\n\n\n<p>In graduate school,&nbsp;&nbsp;<a href=\"https:\/\/en.wikipedia.org\/wiki\/Rudi_Dornbusch\" target=\"_blank\" rel=\"noreferrer noopener\">Rudy Dornbush<\/a>,&nbsp;<a href=\"https:\/\/en.wikipedia.org\/wiki\/Jacob_A._Frenkel\" target=\"_blank\" rel=\"noreferrer noopener\">Jacob Frankel<\/a>, and&nbsp;<a href=\"https:\/\/en.wikipedia.org\/wiki\/Michael_Mussa\" target=\"_blank\" rel=\"noreferrer noopener\">Michael Mussa<\/a>, all giants in the field of macro and international economics,&nbsp; gave a seminar to our economics department.&nbsp; I was invited to dinner with them along with the department\u2019s international economics professors.&nbsp; The one take-away from that dinner was a comment seared into my mind by Jacob Frankel, who went on to become the Governor of the&nbsp;<a href=\"https:\/\/en.wikipedia.org\/wiki\/Bank_of_Israel\">Bank of Israel<\/a>&nbsp; and now serves as Chairman of&nbsp;<a href=\"https:\/\/en.wikipedia.org\/wiki\/JPMorgan_Chase\">JPMorgan Chase<\/a>&nbsp;International.<\/p>\n\n\n\n<p><strong>Why Markets Do What They Do<\/strong><\/p>\n\n\n\n<p>Over dinner, he laughingly mocked the financial media for their propensity to assign specific reasons for why the market did what it did on a daily basis.\u00a0 He quoted two diametrically opposed and contradictory headlines, one from the NY Times and the other from the LA Times, which explained why the market was down that day.\u00a0 \u00a0That comment has stuck with me throughout my career \u2014 nobody knows what really causes the stock market to do what it does on a daily basis.\u00a0 The best, and the safest explanation I have heard on a down day, for example, is \u00a0\u201cthere were more sellers and buyers,\u201d which doesn\u2019t even suffice.\u00a0 The comment should be qualified, \u201cthere were more sellers than buyers at yesterday\u2019s closing prices.\u201d<\/p>\n\n\n\n<p>\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Market Begins To Internalize&nbsp;Reality Summary The financial media is beginning assign blame to the recent stock market weakness to the spike in COVID cases and the potential for a November Democratic sweep of the White House and both chambers of Congress Nothing new to GMM as we have been on this early and stood alone [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[36,1849,15450,855],"class_list":["post-53867","post","type-post","status-publish","format-standard","hentry","category-economics","tag-asset-bubble","tag-financial-markets","tag-global-macro-monitor","tag-viral-pandemic"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53867","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=53867"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53867\/revisions"}],"predecessor-version":[{"id":53869,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53867\/revisions\/53869"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=53867"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=53867"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=53867"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}