It's perfectly fitting that in an economy which - as of tomorrow morning - will have 30 million newly unemployed workers (and perhaps as many as 50 million), and where the recession officially began after the biggest GDP plunge since the financial crisis (soon to be followed by an even worse collapse in Q2 growth) that stocks would soar almost 3% and tech names are now flat for the year.
Some would call it a depression; others a new bull market.
But maybe we are somehow misreading today's GDP print? Maybe, hidden somewhere deep between the lines there was just the right amount of good news the algos were looking for and the economic crash was really a catalyst to send stocks surging? Maybe we are deluding ourselves, and it wasn't that bad? Well, according to JPM the answer is...
Nope, it looks like that the data was indeed bad. So bad, in fact, that stocks exploded because thanks to central planning, the worse the news for the ordinary man on the street, the richer Wall Street gets, courtesy of Powell. Here are the details from JPM:
US GDP growth for 1Q fell 4.8% q/q saar. If there is any good news in this report, don’t believe it. These data are ugly, and are set to get much worse.
While the outturn was not as bad as we had feared (-11.2%ar), it was modestly worse than consensus (-4.0%ar) and the largest decline since 2008. Moreover, given the likely hit to hard-to-measure service sector activity late in the quarter, there is a high likelihood of downward revisions. Notably, we have not changed our call for a 40%ar plunge in current-quarter GDP—but we lowered our 3Q20 projection so as to leave the level of GDP by 4Q20 unchanged at a huge 7% below its 4Q19 level.
So now that we are in a quarter when the US economy is expected to shrink by 40%, or about $2 trillion, stocks are now just 10% below their all time highs, and at the current pace of levitation, will surpass the previous records in a few days.
Incidentally, when Jerome Powell was asked what he thinks of this absolute idiocy, and if he is guilty of encouraging moral hazard and pushing stocks higher, he said that "we want markets to work, we are not focused on asset prices", to which he added that "it's been good to see markets working." Which by implication means that when markets are down, they no longer "work."