In case you didn’t notice, the stock market surged yesterday after the lousy jobs report. Why does bad news on the jobs front cause the stock market to rise? Because investors assume (1) the Fed will now continue to keep interest rates low (despite its announced intention of reducing the amount of long-term bonds it buys monthly); (2) which will continue to push savings into shares of stock rather than bonds; (3) and make it easy for big investors (including corporations) to borrow money to buy back their shares, thereby pushing up their values; and that (4) employees, desperate to keep their jobs, won’t demand raises, thereby keeping profits high. But thats bad for Main Street and good for Wall Street in the short term is bad for both in the long term. The American economy is at a crawl. When, if ever, will Wall Street learn?
Posted on: Sat, 08 Feb 2014 16:12:39 +0000
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