Output falls by 6.1% in the US in the first quarter, more than forecasters expected. The US market rose.
Rumours swirl that maybe half of the 19 US banks being stress tested by the authorities will fail their test. The US market rose.
News filters out that the Chinese decline in output was bigger than feared, and the numbers losing their jobs higher. The Chinese market rose.
The world’s motor industry remains in deep distress. The markets rise.
The reason is simple. Interest rates have a very powerful effect. The authorities smashed the banks and the markets by their high rates and tight money, then they switched in blind panic to the lowest rates we have ever seen and started to print and pump money in to the system.
Savers and companies robbed of interest on deposits and short term government bonds have decided to take some more risk. Sometime the extreme monetary actions of the authorities will start to turn round the battered world economies. Markets look ahead.
Whether they continue on up or not depands on what the authorities do next. If the authorities want asset prices higher they have to carry on with easy money.