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Must be joking?

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Unemployment numbers are eagerly awaited. They normally tell us the state of the economy and should indicate the price of equities. In a normal world that is. This is hardly normal, or new normal is on steroids, myopic and heady with fast cash. It is baffling. Even with good numbers from the US department of Labour, it is still likely to read ongoing claims of approximately 20 million. A virus as virulent as ever, with only suggestions of a vaccine (available Dec2020 earliest). A president concerned primarily with continuing his power and not much interested in the "foreign" virus, which now is boring him. Naturally, the markets have taken this as another massive positive and are buying like it's 2019 all over again. Are the majority just suckers? Obviously P/E ratios are for has-been nay-sayers, as is the notion of value. Even as Facebook is boycotted, hurting ad revenues, its price is still on an upward trend. Google is also taking a hit to its ad revenue, yet the same can be said (the only way is up). I have been astounded repeatedly by the Dow's irrational resilience.

Unlike Oil, which has reacted pretty much as it should and is priced fairly (ok, plus or minus) and that is despite Saudi and Russia being total numb skulls in March. Opec+ has members that dislike each other intensely and would not wee on each other even if they were on fire, but have managed to come together for their common good. The result is supply and oil price is moving with demand. (One has to question Saudi insistence on heavy premiums to Asia, and conclude Saudi royals  oil ministers are not business people and treat Oil as political, as they sure don't understand the nature of good business and are doubtless surprised when they are the last person anyone wanting oil calls, but I digress). Oil seems to be fairly priced according to market value. Equities are not. Equities are still in lalalalala land. There was a time when there was a symmetry to the price of oil and the value of equity  (25% of all equity is oil ) . That correlation has ceased to have relevance in the present paradigm. In a normal world, equity would be around 25% down from its highs, roughly equivalent to the oil price being 25% down, which is roughly equivalent to the total level of economic activity being down. But not today. Today those correlations do not work. Because the Time factor has been ignored where equity is concerned. Because the Fed has flooded the markets with liquidity and related stimulus. Where Einstein maintained time being relative, it would appear equity is also relative and travelling at considerably different speeds to the rest of the actual economy. Or is that just those trading equity? Dow does not like down. But sometimes you have to come down, don't you? It's not called a correction for nothing.

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