Stock Market: What Do We Know About The Economy

Stock Market: What Do We Know About The Economy


“Is there a hidden agenda to the economy. Why did the stock market go up drastically on bad economic news?”


What Happened Today: Friday August 27, 2010?

Earlier this morning, the Commerce Department reported that GDP growth in the second quarter was downwardly revised to 1.6 percent from the advance estimate of 2.4 percent.

The Fed Chairman Ben Bernanke indicated that the Fed would mull over the purchase of additional securities should economic conditions worsen amid the slowing recovery. Despite indicating consideration of these easing measures, the Fed chief stopped short of promising any action at the current time.

Bernanke also stated that the recovery has slowed to a slower than expected pace, calling the economic outlook "inherently uncertain" and further stressing that the fragile economy "remains vulnerable to unexpected developments."

Thomson Reuters and the University of Michigan said that their consumer sentiment index for August was downwardly revised to 68.9 from the previous estimate of 69.6, although it remains above the July reading of 67.8.The downward revision came as a surprise to economists, who had expected the index to be revised up to a reading of 70.0.

What happened to the stock market?

Key institutional Investors ran the markets up this morning to pull the carpet right after and when it was low enough, they bought it. A 10% higher volume than average cannot be initiated by private investors.

The question is why are those institutions buying into this mess?

Or is there something we do not know?

We know everything, but we might not be aware: America booked the highest profits in 5 years – corporations are healthy . Sure growth is slow, but moderate in a worldwide comparison. The key problem America faces is high unemployment and it does not change – and surely influences consumer confidence. See one of our articles: http://www.neverlosstrading.com/Press_Releases/A_New_Eearnigns_Season.html or

http://neverlosstrading.wordpress.com

Why do we face a continues high unemployment when corporate profits are hight?

America got more efficient the productivity per capita employed went up tremendously. But this also means that we might need to live with a 10% unemployment rate as it is a given for 30 years in Europe for example.

Corporate America shifted employment to the government and the government has the issue to finance the major shift of employment to unemployment.

So worldwide the US is still ahead and this makes institutions to put the money in the market.

The problem for the average market investor. This up move might be short term and next week institutions might take it out again. They do not act against private investors, they act in their interest. We highly recommend investors to learn how to deal with short term investments to the up and downside of the market. If you know how to invest, every day in the market is a beautiful day as long as it move. If it stops to move? There are beautiful strategies to make money on those days too.

NeverLossTrading is a primary institution to educate people in becoming a financial market investor. Check them out: http://NeverLossTrading.com.