Hope is for dopes

Let’s remember that stocks are less of an economic indicator than bonds. As a conversation I heard on my train ride last night, “Markets were up today, so maybe things are getting better,” indicates market manipulation can work.

It’s the naive thought that stocks are the canary in the coal mine. Stocks can and are manipulated, where some key purchases in short-term futures can give the appearance of a “all-clear” signal to large investors with huge algos. As a result the market will move all the major indices higher here in the US. then Europe and Asia take their cues from US markets and off you go.

That is very different from stocks moving higher for macro reasons. Hell a wink from the Fed on easing could send stocks ripping higher, with the reason behind the move being horrible economic growth.

So hope is for dopes when you are an investor.

European equity markets are moving higher on hope.

The fundamentals underlying the markets show weakness with little to growth in US companies — as witnessed by lower earning reports.

The crude oil market is moving higher despite producers not committing to any production output cuts.

Some say the market is oversold or that its a short-squeeze rally, both are early reactions to a bear market, which is what we are entering. I see nothing to evade that outcome in the short term.

It was very curious that when markets were closed in the US on Monday, we had a $40 an ounce selloff in gold. The takeout was driven by European sellers, and I could make a case that you sell what you can if you are a large financial institution in trouble.


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