Outsourced to Kevin Drum:
The Washington Monthly: FINANCIAL REPORTING FOLLIES....The New York Times reports today that the stock market is up. Here's the story they invented to explain it: (a) there's a widespread belief that the global economy is tanking, thus (b) reducing the demand for oil and (c) driving down oil prices. Wall Street, (d) seeing plummeting oil prices, (e) is elated and (f) drives stock prices up.
There are two basic possibilities here: (a) this explanation has been created out of whole cloth or (b) Wall Street investors are idiots. Or both. For now, I'm going with (a).
Yep. Michael Grynbaum:
Shares Rise as Oil Continues to Fall - NYTimes.com: Stocks rose for two reasons, analysts said, a renewed sense of confidence in investment banks and an unusually sharp dip in the price of oil, which plunged more than $5 to end the day under $130 a barrel for the first time in six weeks.
Ironically, analysts believe that the bleak outlook is the primary cause for the dip in oil prices. As the economy slows and Americans spend less, analysts expect domestic demand for gasoline to fall. That could lead to a pullback in prices.