Stock market record highs despite bad economy actually makes sense - Business Insider

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Opinion | The 'rising stocks are ignoring the terrible economy' crowd is missing the clear reasons for the market's surge. By Neil Dutta of RenMacLLC.

recently proclaimed that "the economic/market disconnect grows ever more" on a day of better than expected US economic data no less!

. By contrast, the US economy has a lot of service sector activity that is not captured in the equity market. A trip to the barber or dry cleaner is not something that registers in equities, but these people to people services make up a large chunk of US gross domestic product. For starters, stocks tend to care less about whether the economy is "good" or "bad" in level terms, but do tend to care about where conditions are "better" or "worse." This is one reason why stocks, a growth momentum variable, tend to slump in recessions and rise early on in recoveries even when unemployment is still elevated.

Worried about people not making their rent? Well, residential REITS have seen share prices sink since March. Travel and tourism? It's not as if airlines, hotels and cruise lines are leading this stock market recovery.

 

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RenMacLLC 'More recently, since the pandemic ended, ' You meant 'since the pandemic began,' I assume?

RenMacLLC Really.

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