Let me start by noting that a stock market that rallies because the news is bad – as happened a little over a week ago when we got a terrible new jobs number (only 75,000, less than half of the weak number economists expected and lower than what it takes just to keep up with population growth) – is a market that is locked in dependence on recovery-mode life support where everyone is happy just because the ambulance will soon be on its way … again.
That market as well as the “recovery economy” built around it is destined to fail because you cannot sustain growth or build enduring wealth on the need for an endless flow of bad news to keep forcing central banks to create new money in order to keep goosing the marketplace along. It’s a stock market running on absurdity. The need for endless salvation is not the hallmark of health. However, the market’s codependency on the Fed is not the set-up I’m talking about. It is merely evidence that this soaring market is not a healthy market (A tree blooms most, you know, just before it dies).