On Monday August 3, CBS news Katie Couric remarked that the DJIA went up 115 points as if that means positive news or a recovery. A little over a one percent move means nothing. Its called market noise. Her fellow CBS colleague then comments that the Nasdaq index is over 2000 and the S&P 500 index was as low as 666 in March. He refrains from calling it a recovery and then reports that some analysts are predicting Wait! Some analysts are always predicting something – it means nothing! Then the news reports on the Cash for Clunkers rebates. Ive got news for you: People arent turning in Japanese cars.The next news report is the $7 billion post office losses (Now, theyre up there with Worldcom with large losses) and the possible closing of hundreds of post office locations. Hey, fire the guys running the operation. I still cant figure out why the postal service wastes money advertising on TV. One low flat rate? If, by low, you mean high, and then multiple flat rates making consumers fuss around with different size boxes then yeah, there might be one flat rate that is relatively low for a box thats probably too small to ship most things in. Email isnt diminishing the postal business as the newscast reported its mismanagement, running useless ads, and government efficiency. In the 1980s the post office briefly offered an email service, there wasnt sufficient demand for them and they canceled it. If they would have gave the email addresses away for free and charged the advertisers instead of the consumer they could have had a business on the digital side.
So, wheres the broad economic recovery? A contact of mine commented last week about his surprise regarding some of the large and or record profits for some of the large Wall Street investment firms. He remarked that maybe they would be hiring and that could spark a slow recovery. What if those profits were boosted by special arrangements and it has no bearing on translating to jobs? What happens on Wall Street does not significantly translate to the average family on Main Street. He hadnt considered a jobless recovery. For all the speculation about protracted contractions or recoveries it does nothing to address the most overlooked issue, there is some natural stability built into the system rich people still want to be rich – so I dont fear any sort of collapse.
Heres an interesting comment from an unrelated post, partly relevant to our topic:
7-30-2009 @ 5:04PM Iridium said There is nothing that could have happened in the past 24 hours that could cause this type of volatility. The global economy doesnt work on a 24 hour basis. People dont have 24 hour jobs and corporations dont have 24 hour profits. The way the market works you would think that 100 million people are hired and fired everyday.
The market can rise or drop 100 points for no apparent reason. This disconnect from reality needs to be remedied. You cant have a sell off in oil caused by a real fundamental reversed 24 hours later because of some rampant speculation of future economic activity.
I have no doubt in my mind that the traders at Goldman Sachs already have the GDP data. The rest of us are left wondering, are they buying up shorts or buying up longs? No matter what they have the advantage that will make them billions tomorrow.