Hampton Think - August 31, 2020
A reader sent us a brief, important request this week: “would like to see more on why markets are up when the world is on fire.”
This is, in many ways, the theme of almost every edition of Contention, and we’ve pulled it apart a number of times:
- Dire economic straits can be good for big business as workers are less likely to press for higher wages, and competition goes bankrupt.
- Investment prices are all about expectations, and the big losses businesses keep reporting aren’t as bad as predicted.
- Those forecasts aren’t rational, and investors are arbitrarily assuming the worst can’t happen.
- Central bank action is swelling asset prices — not like a bubble, but like a tumor.
But let’s elaborate the reasons for this disconnect yet again, because new explanations emerge all the time. Multiple phenomena are causing this contradiction, all part of the same basic force: state manipulation of markets to protect concentrated wealth. ...
Read full report at Hampton Think