We are now seeing the most euphoric stock stock market in history — a market as precariously perched as the one I laid out last January. “Market Euphoria Surpasses Dot Com Levels” says one headline.
There is another way of putting it: extreme euphoria.
The sudden hope of multiple vaccines appears to have inoculated the market against an epidemic of bad news that would normally drive markets down.
First, the most stridently contested (and possibly corrupt) election any of us has ever witnessed is the kind of uncertainty markets usually run from. The presumptive victory of the candidate who most promises to raise taxes is also something markets usually don’t like. The rapid resurgence of COVID back to its spring crisis levels is something the market certainly hated when COVID first hit this year and ripped the economy to shreds. The return to full COVID lockdowns in many areas is something the market should fear, having experienced the economic damage wrought by spring’s brief lockdowns and knowing now how longterm that damage can be. These lockdowns could last even longer since we are in the coronavirus’s typical favorite time of year in a season when weeks of indoor holiday festivities could turn out to be “super spreader” events. We shall see.
Meanwhile the approaching end-of-year termination of the numerous economic protective programs that have been put in place and the impending December budget war following with the greatest October deficit in history all seem to be offset by the glinting hope of a $900 billion stimulus program, far smaller than the stimulus programs that failed to pass congress earlier this year. Never mind, however, that all such promises in the past several months have failed.