The market opened lower and never had a chance. The 332-point drubbing of the Dow was orderly and, save for a couple of half-hearted rebound attempts, it was selling triggering even more selling. However, the session was more about a buyers' strike than a mad dash for the exits. Still, the notion that the train is leaving the station has been replaced with a relaxed sense that buyers can pick their spots.
The Real Deal
The confusing world of economic interpretations and assumptions is what makes the markets. To make matters worse, good news is bad news, and bad news is good news. Thus, the narrative: ‘the United States economy is so strong, it needs to be slowed down by an interest rate hike’ which is just absurd.
The Fed wants 2% inflation, even though in the past year, wages are only up 1.6%.
The Job Openings and Labor Turnover Survey (JOLTS) report saw a minor increase in people quitting their jobs, but not the mass exodus that signals confidence that makes the Fed confident they have finally gotten the virtuous cycle underway. Moreover, the number of hires actually took a sharp decline.
In addition to the wage-less recovery, there are wide swathes of the population who are not working, including 31% of the unemployed who have been in that predicament for more than 27 weeks- twice the pre-recession level.
Speaking of lost enthusiasm, it is hard to find it these days on Main Street or Wall Street. Enthusiasm is fading quickly on Main Street seen here from the Gallup daily tracking poll.
Again, enthusiasm is fading quickly on Wall Street. It can also be seen here from a StockTwits poll.
In the end, Tuesday was an ugly session, but not one that dashed enthusiasm...because there was not a lot of enthusiasm to begin with.