The stock market blasted higher, with the Dow crossing the 14,000 mark because the jobs report came in well under expectations. In today's world, one follows the other.
In yesterday's world, the one where logic and reason ruled the day, that first sentence would not have been written. Economic weakness would not have been rewarded with a big surge in stocks.
But this all makes perfect sense in today's world, once you tilt your view to the "new normal" and get with the program.
I titled this piece 'running on fumes' because, in one very real sense, that's exactly what this current market is doing. The fumes in this case happen to be thin-air money that the Fed is injecting into the financial markets to the tune of $85 billion per month, or roughly $4 billion per working day.
When an engine finally runs out of gas and turns to fumes, the last act of that engine is to run really hot – to race for a while – before finally quitting.
Let's Put January's Employment Report in Context
The stock market had a banner day on the news that the U.S. job market added 157,000 jobs when the consensus estimate was for 165,000. To understand why the market should be buoyed by lackluster results, we must wonder just how much longer the Fed will be providing additional fumes to the market in the form of zero-percent benchmark rates and $85 billion per month in thin-air money printing.
The Fed has said that it will continue with its current accommodative policies until the unemployment rate drops to 6.5% or inflation ticks above 2.5%. That's how it stands now, with the caveat that the Fed could change its mind at any time and pick new numbers.
by cmartenson 
