This is just something that gets my goat, and there was a particularly egregious example on the RNZ Business News this morning.
Apparently Wall St was going ‘gangbusters’, and the reason they came up with for that was ‘Wall St’ liking Donald Trump’s policies (lowering tax and building infrastructure apparently). Not long ago Wall St was collapsing because of the fear of Donald Trump. As far as specific policies, he’s not got many (having taken multiple sides to most issues during his campaign), except announcing yesterday that he’d kill the TPP by executive order on day 1 of being in office.
That’s the TPP that favours those biggest Wall St companies in the Dow Jones over all other people, and its cancelling is an unequivocal ‘bad’ to them (maybe not to the rest of us…).
The desperation to find meaning in the sharemarket is ridiculous. It’s like reading tea leaves, or deciding the weather is warmer today because the gods like The Donald.
The reason the Dow Jones went up is because investors felt that the short to medium-term prospects of the individual companies listed in the index were better value than they were priced. It goes down when they don’t think those prospects are as good.
This doesn’t actually tell us much about the world of politics or economics.
Since Brexit the FTSE100 – after an initial plummet of fear – has climbed a lot. This isn’t a measure of the UK economy though, most of the top companies that make up the index have most of their business offshore (safe from Brexit), and with the British pound plummeting they are worth more (devalued) pounds. As to the UK economy? We’re none-the-wiser. The Guardian has better measures: Jobless at 11 year low, business and retail activity up all look positive; wage growth stalled and trade gap widening look more worrying – these are useful statistics, rather than looking for data in the randomness of day-to-day rises and falls.
I’m really not sure why they read out all the individual company share-prices on the radio; they are of interest to basically nobody. For those few with the money to invest in individual companies (spread risk!), they will have far better information on specialist websites. For the rest of us – if Sky City is at $4.40 or $4.43, what does it matter to us? Even less so foreign stocks.
Crashes and long-term trends may have some use, but a more useful business report would be looking at how NZ business as a whole could improve, learn lessons; or actually looking at how workers are getting on, not just bosses…
(and don’t get me on to getting bank economists to be independent commentators on the housing market…)