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MacroTOMI
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Joined: July 7th, 2020, 9:46 pm

Absense of data is creating markets in 'suspended animation'

July 8th, 2020, 7:45 pm

The Markets are in a Suspended Animation Perpetuating a Denial of Reality
Given this backdrop of instability and market fragility, how can in the midst of a pandemic the markets not only recover so almost completely, but maintain their recovery stamina? I believe we are in a data vacuum - with no Q2 GDP reporting (as yet), no Q2 corporate earnings (as yet), and very little other meaningful market data - coupled with stimulus. Both both are coming to a head - soon.



 http://macrotomi.com/article/The_Markets_are_in_a_Suspended_Animation_Perpetuating_a_Denial_of_Reality
 
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Alan
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Re: Absense of data is creating markets in 'suspended animation'

July 9th, 2020, 2:47 am

methinks you might be contradicting yourself.
Anyway, the very ugly Q2 GDP will roll in on schedule, and mostly be properly ignored.   
Or, maybe the market will rally on the release because the data will show why the economy cannot be locked down that way again.  :D

If you just need to see some data rationalizing (some of the) bounce, here's some
The aggregates hide a lot of reallocation among sectors, of course. 
 
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MacroTOMI
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Joined: July 7th, 2020, 9:46 pm

Re: Absense of data is creating markets in 'suspended animation'

July 9th, 2020, 2:12 pm

We will get to a point where the markets can no longer deny the 'very ugly' data - be it the Q2 GDP and/or other data points. Current euphoria is abetted by a lack of data, other than some employement data with a positive spin on it. The Market may very well rally - especially with hope of added stimulus - but IMO we are nearing a breaking point where reality (reinforced by data) will sober the markets and that the worst has not passed.

I also believe that with reopening not being as successful as anticipated, more layoffs and corporate failures are just down the pike. The unemployment number may go up - (contrary to Bullard's 7% prediction) - and will spook the markets greatly (a bonus to long bonds).
 
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DavidJN
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Re: Absense of data is creating markets in 'suspended animation'

July 9th, 2020, 7:08 pm

Had a really bad quarter, eh? Seriously though, the world is awash in data and I cannot see that as the problem. What we are seeing is more likely irrational exuberance conditioned by the past successes of the Republicans at stealing elections.
 
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Alan
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Re: Absense of data is creating markets in 'suspended animation'

July 30th, 2020, 1:59 pm

So, the US Q2 GDP came out and was down 32.9% on a SAAR basis (Seasonally adjusted annual rate) vs. -35% predicted. The "annual rate" business overstates the actual drop, which was -9.5% with the seasonal adjustment, but *not* the annualization business. The seasonality can be removed, too, by looking at Q2 2020 vs Q2 2019, and that drop was -9.6%.  

By the close, the market reaction was mostly a shrug ...
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