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The stock market is - say it with us - not the economy

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So the market when we say the market. It's not a reflection of the strength of the economy. It's a reflection of the public sentiment of the stocks that were in that index. That we're looking at. I mean come on right. The stock market is not the economy. Where a wear have I heard that before Cunningham's interview and our mic drop? Yes comes on a day when we learned another three point. Two million people filed for unemployment in the past week. More than thirty three million total since this thing began less than two months ago and yet the stock market does not care. And in fact you can make a case that the financial markets in this country have already started their recovery even as the real economy the one. We're all those people are losing. All those jobs keeps going downhill. So that is where we start today. And it's the question I put a Professor Andrea is felt at at Ucla. What does it look like when financials recovered differently than the rest of do well it looks? It looks like what we've seen before right. It looks like the jobless recovery. We had no one. We had a very slow decline in unemployment. After Oita's well I would expect the decline this time to look different because we've got temporarily displaced workers so if we have unemployment in the Over twenty percent twenty percent to thirty percent range. We could see half of that cut fairly quickly. But then we're going to be at the ten percent or so range and that last mile is probably GONNA take us. While but that kind of unemployment rate we have seen that with with recovered financial market and especially with low interest rates especially with a lot of government support if we continue to think that the government has unlimited firepower Then we can continue to think that You know the financial system will continue to function. Not that anybody's going to dinner parties these days. But you know work with me on this one. I if you were going to a dinner party this weekend and we have the facts that we have now about the real economy and the financial economy and somebody looked at you and said Andrea. This is you follow this stuff. What's going on? What would you say I would say? We have two things moving the markets the fundamentals and the way we price those are or the risk appetite the discount rates and right. Now people are optimistic. I think I think that's actually a good thing because I think this is a long road and the more optimistic we can be. You know the more we can take whatever we can. That is a growth opportunity from this crisis So this is probably a question. Better put to a sociologist than a of finance. But I'M GONNA do it anyway since you're the one I've got on the phone. What do you suppose happens in people's Moods when they see The stock market class as it were Succeeding where the the Labor class is. Not I think that this is one of the worst possible results of this health crisis is that it is going to exacerbate the structural changes. We've seen in the so one of those. Structural changes is the decline in the Labor share. The increase in the profit share we have increasing concentration very large companies making very large profits. And we have you know a big divergence and they have and have nots. And and if we can't politically and economically solved that problem I think we really will have a hard time moving farther forward in the in the long run.

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