At the time I am writing this article is 6:15 AM on the west coast of the United States.
Stock futures are up strongly in the pre-market action on yet again more bad economic news.
It is being reported that consumer demand for home loans is slowing, and durable goods orders, (that is the demand for long lasting factory goods) has now declined for two straight months yet stock futures are higher.
It is clear that this market remains upside down in that bad economic news continues to be an upward driver for stock prices.
The market obviously believes that the Federal Reserve is stuck, and will have to hold off on future planned rate hikes.
The market also believes that the Federal Reserve will not be able to begin normalizing there gargantuan balance sheet.
Today's pre-market action is typical of what we have been seeing over and over again, because the Federal Reserve is running the show. The market realizes that the US economy is in trouble and this means that the Federal Reserve will have to slow their current planned rate hike trajectory. Moreover, as I have been saying, I still cannot imagine a scenario where the Federal Reserve will be able to even begin normalizing the balance sheet.
There will be a point when bad economic news drives markets lower as it should, but in this upside down Fed. managed market the distortions may get even worse before a real market once again emerges.
Gregory Mannarino
