"I dont understand why the Market is acting the way it is"? We hear this question all the time. It's a perfectly natural question and if someone gives you an answer, just know that there is at least a 50/50 probability that they are either correct or incorrect. No one, not even the so called experts know with certainty why the market acts the way it does. Yes, we can arrive at rational conclusions some of the time. For example, once the markets figured out that there would not be an easy short-term fix to the coronavirus and that this would have a negative impact on the economy, stocks fell dramatically. After the Federal Reserve and government promised to provide an almost unlimited backstop of financial support to calm the bond and credit markets, the markets shook off the downside and rallied back to what is now, not far off from the old all-time highs.
On the other hand, we are faced with the highest unemployment numbers since the great depression, the additional unemployment benefits are set to run out at the end of July, we are seeing record missed rent and mortgage payments and a coronavirus that is creating havoc to people health and the economy in hot spots all over the USA with no concensus on how to safely re-open the economy. The market has high hopes for a coronavirus vaccine, but what if those hopes are significantly delayed or dashed altogether? How long can the government and the Federal Resever keep funding everything as record defecits shoot even higher? How long can cities, states, schools survive without their staple revenue sources. And what about inflation? How will this impact the dollar, the economy and our every day lives?
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