‘The S&P’s new highs are a tale told by an idiot, full of sound and fury, signifying nothing about the hardship of millions of people on food stamps, or the millions about to be fired from service jobs, or the homeless, or the people who are just huddled at home waiting for the vaccine, which currently feels a lot like waiting for Godot.’
That’s CNBC’s Jim Cramer summoning his inner Samuel Beckett to talk about the disconnect between equities and the harsh reality of what’s going on in the U.S. economy.
“We’ve had a magnificent V-shaped recovery in the stock market, but the stock market’s not a great reflection of the broader economy anymore,” Cramer said.
The S&P 500 SPX, 0.16% just banged out another record high, as did the Nasdaq Composite COMP, 0.69% . The Dow Jones Industrial Average DJIA, 0.01% still has a ways to go.
“You don’t need to be a rocket scientist to figure this out,” Cramer said. “Just look the stocks that have brought us to these levels — they’re not the recovery plays. In fact, they are the opposite. They are stocks that tend to do well, because of what we call secular considerations.”
He’s talking about digitization, short hand for “cut out the fat,” as Cramer sees it. It’s not “classic recovery stocks” — industrials or retail or banks — pushing indexes to new highs. Rather, it’s the likes of Apple AAPL, 1.42% , Amazon AMZ, -0.01% and Microsoft MSFT, 1.08% .
“The winners in this market are the companies that are most divorced from the underlying economy,” Cramer said on his “Mad Money” show on Tuesday. “The actual economy is in precarious shape, especially now that the government’s stimulus package has run out and Congress went home for the summer rather than trying to come up with a replacement.”
Watch the full segment:
The disconnect continued on Wednesday, with all major averages moving higher.
A woman wearing a dress made of cash, Germany, 1923.
THESE are the shocking images that reveal the full horror of hyperinflation in post Great War Germany ñ when money was literally worthless. In 1923, Germany was hit by one of the worst cases of hyperinflation in history, with 4.2 trillions marks worth just one American dollar. This out-of-control inflation began somewhat mildly during World War I, as the German government printed unbacked currency and borrowed money to finance military expenditures. The strategy was to pay off the debts by seizing resource-rich territories and imposing reparations on the vanquished Allies. But when Germany lost the war and ended up with massive debts, including huge reparations to be paid to the Allies under the Treaty of Versailles. The country found themselves in economic crisis and increasingly unable to afford the hefty reparation payments.
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