If there's a fallacy that is often very prevalent within economics, it's that the economy is predictable. A simple quick observation of the current economic state would hopefully lead you to the conclusion that of course that assumption is false. With 55+ million people filling for Unemployment and millions of Small Businesses going under, you'd expect that the S&P 500 would also be seeing downturns as well right?
Welp...
According to Reuters, (full link to article will be down below) the S&P 500 saw record highs this Wednesday along with the Nasdaq.
According to Peter Cardillo, a chief market economist, he stated that ''these earnings are reflecting the reopening of the economy and the stimulus cheques.''
The technology sector is said to be what's helping to the great boost to the benchmark index with the sector being boosted thanks to trillions of dollars in monetary support from Washington.
The S&P index reported overall 17 new week highs along with 0 new lows while Nasdaq reported 41 new highs and three new lows.
The Take
If there's any question as to why I stated that it's a fallacy to think the economy is predictable, it's simple, at it's fundamentals the economy is the sum of Individuals interacting with goods and services based on their own self interest. Unless you know preemptively how every individual within a economy is gonna react to certain circumstances, there's no way you can then predict the economy for certain.
Everybody has different incentives, needs, and interests, something that in my view statisticians outta recognize.
It's for that reason I believe why you can see on the one hand millions of small businesses go under while at the same time see the S&P 500 and Nasdaq see record highs. Everybody is gonna react to incentives in different ways and not everyone's needs and situations are the same and this news shows that.
Feel free to let me know if you agree or disagree with my take on this news and if there is any points that you may have thought I missed. 👌
New Entrepreneur out later today!
Article Cited: https://www.reuters.com/article/us-usa-stocks-idUSKCN25F1C2