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July 6, 2019


My followers are aware that I am constantly harping that the Dow does not represent the reality of the marketplace inasmuch as it is not a real measure these days of the efforts of a corporation to build a better mousetrap, out-compete its competitors via more efficient production of its core goods and/or services etc.; that rather Wall Street investors have become dependent upon congressional largesse in the form of tax breaks, loopholes etc. in exchange for “campaign contributions,” aka bribes. The recent Trump-Ryan tax giveaway to the rich and corporate class is a crowning example of this modus operandi.

Today we hear that we have added 224,000 new hires to the workforce, which suggests that demand will pick up with the additional monies that will be spent as a result since consumer demand represents seventy percent of aggregate demand, the final arbiter of economic growth. The Dow’s response to such good news? It fell. Why? The Dow fell because investors felt that this signal of a continued expansion in the stock market would cause the Fed to not reduce its overnight rate by a quarter of a percent, that in other words good is bad, never mind that the market is expanded for their goods and services – capital costs and not market share are the prime considerations.

Based on such investor response, it is clear that today’s coddled investors would have preferred a negative jobs report from the Labor Department so that the Fed would have been more likely to cut interest rates to keep the expansion going, or, in other words, that they preferred a smaller market for their goods and services in favor of cheaper money, or that bad is good, proof that they are more dependent upon government giveaways than competing in the “free market” they claim to worship – but don’t.

Cheaper money may run up values in the stock market but an economy that is not expanding does nothing for working Americans who are suffering wage inequality what with a minimum wage that hasn’t been increased for over ten years, the longest since it was instituted during the New Deal days of FDR, and especially in an era when their jobs have gone and are going overseas and who are subject to replacement by robots at  home.  It rather expands the chasm between rich and   poor.

So what does the Dow really represent? Guesswork and giveaways.    GERALD        E

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