The stock markets got a real shot in the arm yesterday, and any investor who’s using spread bets or contracts for difference should be quickly working out whether its got legs.
The first thing that’s suspicious is that it is celebrating a fall in the jobs data in the US. To be fair this is not as bad as everyone was expecting and it has a nice bright spot with manufacturing, but still it’s not what you would expect. Another thing that set the market tearing was the Chinese announcing that their economy was doing just fine. Now there is no reason why an ex-communist one party state would lie about its economic figures so we are sure that all the fund managers who are taking their key from the Chinese Communist Party and their record of every so accurate statistics is just completely rational.
To be honest the market seems to be going through what could be called “animal spirits”. The fund managers are back in their office and they have taken over from the juniors, who in most cases are overly cautious – buying in a bull market (like last year) but otherwise overly cautious.
Although it is likely that the current government, and most governments outside America, are going to rely on the private sector to grow – and so are likely to get out of the way, there is still a lot of money that is going to be taken out of the economy as taxes rise and benefits fall. There is usually the silver lining that it will mean that private enterprise does not get crowded out, but at 0.5% current interest rates that’s not really as big an issue as it would have been in previous tighter economies.
Does this mean that the market is going to resume its downward trend? We don’t have a clue.








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