As I am taping Friday morning a short while into the final market session of the week, the market is nearly flat on the week (modestly down at this point). That came with a big move up Monday, a modest move down Tuesday, a huge move down Wednesday, a decent move up Thursday, and so far, early on Friday, a “flattish” day (though off a bit – again, moving as I type).
Note the theme? A “flat” week in markets, but with huge volatility day by day by day.
Why did markets go up 500 points the day the worst jobless claims data in history came out? Why did markets not tank on the news of the worst unemployment data in ten years? Because markets do not go down on news they already knew was coming. Period. I am confused by media and financial professionals who do not seem to understand this, but I take seriously my obligation to help you, readers of Dividend Cafe, understand this.
Because markets are “discounting mechanisms,” pricing in today what they believe about tomorrow, “good news” cannot make markets rally unless it was not already expected, and “bad news” cannot make markets drop unless it, too, was not expected.
And if you know someone who has not known that in the midst of this national shutdown, that jobs data was not atrociously bad, I really don’t know what to say. The key, my friends, is where we go from here, and that itself is riddled with uncertainty. So let’s unpack as much uncertainty as we can, and jump into a fruitful and useful Dividend Cafe.
Links mentioned in this episode: