Thursday, July 30, 2009

An Example of Stock Market Confusion

Today you may notice that the market indexes are up by about 1.5% so far this morning. This, despite a poor earnings report by Exxon-Mobil and a report that new unemployment claims rose by 25K rather than "only" the 16K economists expected. I quote:

"Investors also welcomed a weekly unemployment report that showed the number of Americans continuing to collect unemployment benefits unexpectedly fell last week to 6.2 million. Economists polled by Thomson Reuters had expected that figure to rise to 6.3 million from 6.23 million last week.
"The number of new unemployment claims filed increased 25,000 to 584,000, more than expected, though the increase was mostly due to seasonal distortions. Economists were expecting a rise of 16,000."

The fall in those collecting unemplyment benefits may be due to the fact that states have limits on how long the enemployed can collect benefits, or the long lines that people are waiting in to sign up, or that for many their allowed time may be running out. Nevermind. It's all good in the stock market.

This may be a new lesson for me. I had previously thought, based on years of following it and investing in it, that the stock market followed a reasonable logic and that it wasn't almost entirely psychological. I am still not prepared to say the stock market is a complete ponzi scheme or nonsensical house of cards. But if stocks go up by, for example, 11% in a two-week period solely because of "better than expected" but still bad company earnings report, I will start saying that. If that's the case, and this continues, than Obama and the nutty liberals may have me as a sympathetic friend when they go to regulate this house of cards.

I still am not there yet.

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