The stock market has been on an amazing tear since December 26. The government shutdown (GSD) began December 22. Coincidence? No. I told you about the belated epiphany I had about this back on January 11:
That short term factor is the government shutdown. That’s right. It’s bullish. Forgive me for telling you this only now, but unfortunately, it just dawned on me. I’ve been speculating about it for a week or so, but now the data confirms my suspicions.
This rally isn’t business as usual. It’s not about what the media is telling you: that the economy is fine, inflation is low, and the Fed will not raise interest rates as much as originally feared.
One thing is the same about this market, though. And that’s the underlying principle that drives all markets. The market has moved, as always, because of money. It’s pretty simple. When there’s not enough money around, the market declines. When there’s a surplus, the market rises.
Until December 22, there wasn’t enough money around. But then, something changed.
Since December 26, a tidal wave of money has sent the market surfing higher. That money isn’t coming from the usual source, the Fed and its fellow central banks. They’re going the other way.
Nope. This time it’s coming from the US Treasury. And this time is also different because the people controlling the money dynamics aren’t motivated by long term economic factors. They are motivated by politics. That makes this a whole different kind of ballgame than the one we usually play.