Hacker News Reader

Comment by cm2187 | Hacker News Reader

We are back in a market manipulated by central banks. I call it “junkie mode”, you can tell because when there is bad economic news the market goes up, as it expects central banks to pour more liquidity/lower rates, lifting asset prices, like a junkie waiting for its fix. A healthy market goes down on bad economic news.

I think you shouldn’t forget December last year, which was a pretty clear warning shot. The last 6 months of gains could be reversed very quickly.

View on HN

We are not "back" in a market manipulated by the Fed. The Fed has been THE most important player in the market for at least 30 years, and probably 90...

By market, I assume you mostly mean assets and particularly equities. All of the Fed's moves so far have /arguably/ been against the equities markets.

Considering that, it is quite strange that every time there is "bad" news, the market rallies. But that's probably just a symptom of the very bullish market we've been in. The market usually rallies on "good" news as well...

You couldn't be more right. QE and the Fed propping the market up are why we're at where we are right now. Conversely, last December the tough talk, rate increases, and general hands off approach led to the sharp sell off. Until policy changes or something else drastically affects the market in some way, we're probably back to the slow grind up.

Data didn't show that at all. The market seems to be doing the exact opposite of what the fed had been wanting it to do. They have been so bad at it all they've managed to do is invert the yield curve on the short end.

YOY the crb commodity index is down as well as the metal index. Gold is even only up a little since beginning of 2018.

All of this would be the opposite of the fed was pumping too much liquidity into the system or controlling interest rates at all.

Yeah, the market will act on its own when the news is both powerful enough and outside the market’s perception of the central bank’s expectations; i.e. the Fed is “stabilizing” which reduces competition and efficiency.

Moreover, it’s inequitable. The economic instability is what allow upward mobility. The Fed’s stability goal equates to a goal of preserving entrenched wealth from competitive pressures.

What the central banks do is profoundly anti-free-market.

'Reduces competition and efficiency' is a phrase that really suffers because it doesn't capture the scale of the problem. For markets to rise on bad news indicates that the entire economic signalling apparatus is being disabled.

The people who think that disabling economic signals is a good idea are actually dangerous. Real wealth cannot be created by optimism and hope. Economies are supposed to purge themselves of idiot capitalists who can't create new wealth.

You're making assertions without evidence. Which economic signals aren't working? Seems like some retailers going bankrupt lately are a sign that there is plenty of competition, in some sectors, anyway?

We are on an internet forum. What do you want him to do? Get his post peer reviewed?

Maybe link to a news article or two?

Reply on news.ycombinator.com