{"id":14152,"date":"2013-05-21T10:52:57","date_gmt":"2013-05-21T17:52:57","guid":{"rendered":"http:\/\/www.itmtrading.com\/?p=14152"},"modified":"2013-05-21T10:52:57","modified_gmt":"2013-05-21T17:52:57","slug":"the-market-and-the-economy-are-not-synonymous","status":"publish","type":"post","link":"https:\/\/www.itmtrading.com\/blog\/the-market-and-the-economy-are-not-synonymous\/","title":{"rendered":"The Market and the Economy are not Synonymous"},"content":{"rendered":"

While, in a normal Economy<\/strong>, the market and the economy might be used as a gauge for each other, in our present situation, what seems good for one does not necessarily translate into something equally good for the other.<\/p>\n

Case in point: The U.S. economy is driven by consumption (70% of GDP) and not stock market equity prices<\/a>. <\/p>\n

\u00e2\u20ac\u0153We\u00e2\u20ac\u2122ve made rich people richer,\u00e2\u20ac\u009d Dallas Fed President Richard Fisher remarked to CNBC.<\/p>\n

\u00e2\u20ac\u0153This is great for the (Warren) Buffetts and for others who can take advantage of this multiple of great money<\/a> and cheap money that\u00e2\u20ac\u2122s been available,\u00e2\u20ac\u009d he observed. \u00e2\u20ac\u0153The question is, what have we done for the working men and women of America?\u00e2\u20ac\u009d<\/p>\n

Mr. Fisher is something less than a fan of the Fed policy<\/a> to date. \u00e2\u20ac\u0153Government is not the future, the private sector is the future,\u00e2\u20ac\u009d he stated. \u00e2\u20ac\u0153Right now, (companies are) using cheap money to buy back their stock, pay extra dividends, etc. etc. We all know what is going on.\u00e2\u20ac\u009d<\/p>\n

Analysis from Goldman Sachs reveals that maintaining rates at extremely low levels has \u00e2\u20ac\u0153large and significant effects on equity prices.\u00e2\u20ac\u009d<\/p>\n

Goldman\u00e2\u20ac\u2122s analysis observed that market behavior in answer to a quarter-point cut in rates generally lead to a 1 percent rise in stock prices. The biggest advantage was found in financials and rate-sensitive consumer stocks, while energy, staples and health care showed the least response over time.<\/p>\n

\u00e2\u20ac\u0153Taken together with our dovish view of the Fed … this reinforces our generally upbeat view of the equity market, particularly our top-trade recommendation to be long in large-cap U.S. banks,\u00e2\u20ac\u009d noted economists Sven Jari Stehn and Noah Weisberger.<\/p>\n

The expectations for a rosy economy, on the other hand, are less than rosy. Fisher affirmed those prospects are not expected to change in the positive until sensible fiscal policy replaces the current wild monetary policy.<\/p>\n

\u00e2\u20ac\u0153What I\u00e2\u20ac\u2122m focused on is the movement toward putting people back to work and the efficacy in monetary policy in getting that done,\u00e2\u20ac\u009d commented Fisher, maintaining that today\u00e2\u20ac\u2122s situation will remain until \u00e2\u20ac\u0153uncertainty\u00e2\u20ac\u009d regarding fiscal policy is dealt with. \u00e2\u20ac\u0153Until then we\u00e2\u20ac\u2122re just underwriting these guys for not getting their job done.\u00e2\u20ac\u009d <\/p>\n

So while the market steams ahead, the elephant in the middle of the room remains the economy.<\/p>\n","protected":false},"excerpt":{"rendered":"

While, in a normal Economy, the market and the economy might be used as a gauge for each other, in our […]<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1207],"tags":[],"class_list":["post-14152","post","type-post","status-publish","format-standard","hentry","category-blog"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/14152","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/comments?post=14152"}],"version-history":[{"count":1,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/14152\/revisions"}],"predecessor-version":[{"id":14163,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/posts\/14152\/revisions\/14163"}],"wp:attachment":[{"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/media?parent=14152"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/categories?post=14152"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.itmtrading.com\/blog\/wp-json\/wp\/v2\/tags?post=14152"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}