Stimulus vs. recession

Regardless of what the state of the U.S. economy was over the past couple of months (near or in a recession), there is a truly massive amount of financial stimulation in the pipeline, on the order of a trillion dollars or even much more, that will be filtering into the various nooks and crannies of the economy over the next few months. It will take a few more weeks before the money starts showing up, but it is clearly on the way.

For whatever reasons, quite a few people on Wall Street, seem fixated on projecting the recent past into the future, even when we have good reason to believe that dramatic change is on the way. Actually, that is precisely the mode of operation of a majority of market participants, taking what they know right now and assuming that it will be true tomorrow, next week, next month, next quarter, and next year. Another word for it is being short-sighted.

Fortunately, there is a strong minority of Wall Street participants who actually do focus on the future and how the landscape is likely to change. Eventually, that latter group does prevail, but in the near-term it is usually the former group that steals all the headlines.

So, for now, the short-sighted cynics who focus on the economy in September and last week will rule the roost and project their doom and gloom out to infinity. Let them have a few more days or even weeks of glory, because their days are numbered.

The stimulus freight train is on its way and is accelerating.

-- Jack Krupansky