Global shares near 5-year high as central bank rally rolls … World shares hit their strongest in almost five years and Germany's Dax reached an all-time high on Tuesday …Global shares near 5-year high as central bank rally rolls on … ECB President Mario) Draghi that he'll do whatever it takes to push the euro zone economy forwards. Draghi's comments that the ECB could cut rates, including pushing its deposit rate into negative territory, kept downward pressure on the euro although the stronger German data pushed it back above $1.31 against am easing dollar. – Reuters
Dominant Social Theme: Ain't the stock market grand!
Free-Market Analysis: The reason the stock market is going up is because central banks have launched an unprecedented money-printing binge. But you wouldn't know that reading this Reuters headline.
The headline is weirdly disassociated from the text of the article itself. The headline is a celebration of the stock market. The rest of the article reveals a more sordid reality.
Why not write Central Bank Money Pumping Primes Market Rally? Or Dow Is Up Despite Depression-Like Circumstances? Or Stock Markets Stuffed With Super Money Soar?
That would be more truthful.
But those who write these headlines get their marching orders ultimately from those special interests that own or control the mainstream media and evidently and obviously want people to think that markets are responding to economic good news.
They are not, of course, and ironically, the rest of the article reveals the truth of what is occurring in a way that the headline does not.
"This year is a year where all market behavior is basically nonsense … In an environment where you have the central banks pushing down all yield levels on whatever is supposed to be a fixed-income investment, this is really changing the game," said Didier Duret, Chief Investment Officer at ABN Amro.
"I think there is a plot to inflate from the central banks and this is still unfolding, so we are in the paradigm where the central banks' actions are still the fuel for markets. For now I don't see any reason to worry (about equity markets falling)."
… Investors will scrutinize a batch of April data from China, the world's second-largest economy, for more clues on global growth. Chinese trade data is due on Wednesday, inflation on Thursday, and money supply and loan growth from Friday. Prospects the giant U.S. economy will lead global growth lifted any industrial commodities although persistent worries about demand from top consumers such as China tempered gains.
"There is some profit-taking coming in after the sharp rise in prices we saw in the recent days," said Tetsu Emori, a commodities sales manager at Astmax Investments in Tokyo.
"The current fundamentals are very weak, with China slowing down and with U.S. demand not so strong," Emori added.
We can see that this excerpt is making two main points. The first one is that the rally is "nonsense" and is, in fact, a central banking plot.
The second point is that the one economy that has been doing "well" – China – is basically foundering now with "weak fundamentals."
You wouldn't know that from the headline of the article, though. And elsewhere, the article mentions the ECB and celebrates the idea that the ECB is hinting at a further rate easing.
The ECB is obviously being used as a mechanism of monetary debasement these days but the idea that ECB officials are using the ECB for purposes that were meant to be illegal does not find an airing.
Obviously, this report is meant mainly to point out the "news" that stock market averages are sky high. But the real news is how these averages got there despite what is basically a worldwide depression.
An important caveat: The above analysis should not stop us from profiting in stocks, however. If we are convinced that central banks will keep printing and forcing averages higher, then perhaps stocks are a place for at least some cash to reside.
It is always a curious struggle for those who – like us – analyze elite dominant social themes. Money Power has its own logic and once we understand it, it is up to us to determine whether its memes will continue to be persuasive and therefore popular and profitable.
As we often write, in the 21st century that is a good deal more difficult than in the 20th.