Why the Market Keeps Rising Despite Terrible Economic Data

In case you were hoping 2020 was done with the bad news, these past few days were sure to disappoint.

On top of a now six-month long global pandemic and the resulting economic downturn, we’ve had a public display of horrendous police brutality.

And following that, we’ve seen the worst civil unrest in five decades, with protests, demonstrations, and unfortunately, violence and looting in many cities across the country.

Add to that reports that China is cancelling its commitments under January’s Phase One trade deal (along with the rest of the troubling tensions with China), and surely the markets should be down.

After all, how bad do things have to get to drive the S&P 500 down a few points?

Instead, markets opened flat this morning. And then the major U.S. indexes marched dutifully upward into midday.

In other words, the markets reacted with a shrug.

That’s the Reality Gap this week, if not for this year: there are bad signs about the economy, about global trade, you name it – but the markets keep going up on the back of the stimulus from the Fed and the federal government.

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It’s becoming increasingly clear that the stock market is being turned into a public good, like having access to clean water or a functioning sewage system.

Like it or not, that’s what the News Media, Madison Ave, Big Government, and the Wall Street Heavyweights are working towards. They have made it look almost like we have a right to an ever-rising market, just like we have a right to clean water.

With ever more people exposed to the market through 401ks and investments, it’s become an easier sell for them.

But make no mistake: the Big Four want the market to rise no matter what because it benefits them more than anyone else.

We’ll talk more about this later in the week. Stay tuned.

For now, keep an eye out for some key earnings reports this week. We have three stay-at-home stocks: Zoom Video Communications, Inc. (ZM) tomorrow, and DocuSign Inc. (DOCU) and Slack Technologies Inc. (WORK) both on Thursday.

Campbell Soup Co. (CPB) will let us know how the economy is doing from a more old-school perspective on Wednesday. And cybersecurity CrowdStrike Holdings Inc. (CRWD) reports tomorrow, while tech company Broadcom Inc. (AVGO) reports on Thursday.

All in all, these varied reports will give us a good general feel for the state of the market.

Great Trading, stay safe out there, and God bless you,


D.R. Barton, Jr.

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