On the day the US reported its highest weekly unemployment claim of all time by quadruple, the Dow Jones rose 1,300 points.
Put *that* in your models.
— Downtown Josh Brown (@ReformedBroker) March 26, 2020
I used to think it had to make sense. I used to believe in linearity or some semblance of a plot that went in order. I’ve read a thousand novels. This happens, which causes Character A to do that, which causes Character B to do the other thing in response.
But it’s not a book. It’s not a story. It’s real life, which is messy and nonlinear and frequently makes no sense.
Today’s one of the all-time great non sequitur days in the history of the stock market. Appreciate it for what it can teach us.
I said the other day that we knew the news would get worse, but that its ability to shock to shock us would eventually diminish. Maybe that’s the best explanation for a 6% rally in stocks on the day our infection totals eclipsed those of China, while over 3 million people filed unemployment claims in one week.
Even if you had known this news in advance, you could not have predicted the market reaction. Which is why we’re a rules-based firm rather than a firm that relies on narratives. This is one of the primary lessons we educate clients on. And sometimes we have to relearn it ourselves.
Here’s Barry and Michael explaining why today’s terrible news was greeted with a rally for the ages:
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