The Fed, its near-zero policy rate and its massive and continuing purchases of Treasury bonds and mortgages - $US120 billion a month - have been the key drivers of the US sharemarket since its meltdown last March as the threat of the pandemic first registered with investors.
The slower-than-anticipated manufacturing volumes and vaccination rates and the emergence of new and threatening mutations of the virus have injected uncertainty and doubt into the markets that the pandemic, and its economic impacts, will be contained within the timeframes anticipated. Something similar is happening in the troubled AMC Entertainment theatres group. Despite its near-bankruptcy - it recently raised nearly $US1 billion to stave off collapse - its share price has surged from just over $US2 to just under $US20 in two weeks, propelled by a wave of retail investor money.
For the moments the “shorts” are losing – Melvin Capital, which had shorted GameStop, among other stocks the retail investors are targeting, had to be bailed out to the tune of $US2.75 billion after $US3.75 billion of the $US12.5 billion of assets it had at the start of the year evaporated under the weight of the attacks.
Come on. Can't we have infinite growth in a market with rising unemployment, shut downs government handouts for businesses to keep them afloat, rife corruption and increasing asset prices all at once? Nah. She'll be right. Nothing could possibly go wrong.
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