Markets are turning a deaf ear to any bad news

Market mood: I don't want to hear it.

Markets are not people, but they do have moods, and right now the market mood is, "I don't want to hear it!"

The Dow dropped 373 points on May 17 on reports that former FBI Director James Comey had written a memo alleging that President Trump asked him to drop an investigation into Michael Flynn. Concerns about obstruction of justice were raised.

But the next day, the markets acted like nothing happened, or that it wasn't an issue. In the following six days, the S&P 500 rose 2.5 percent to historic highs, the NASDAQ rose 3.2 percent — also hitting an historic high. It wasn't just a few momentum stocks like Facebook, Amazon, Apple, Netflix and Google parent Alphabet (the FANG stocks) that moved. Yesterday, roughly 220 stocks hit new highs on the NYSE.

So, we have the first problem for stocks: the Trump Agenda is limping along because the Comey/Russia issues are not going away, and it's not clear if health care reform can ever get passed. And the Comey/Russia issues have not gone away just because the President is out of the country.

Another problem: Oil is not cooperating, again below $50 despite OPEC extending its production cuts, with some oil stocks at 52-week lows.

And finally, we've had very choppy economic data in the second quarter after a rocky first quarter, with many taking down Q2 GDP estimates, though today we did have better Durable Goods numbers for April.

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Under normal circumstances, you would think these would be issues for the market. The Trump trade, the reflation trade (led by oil) and the U.S. economy improving story are three cornerstones of the global rally that began in the middle of last year.

So, why are the markets clearly turning a blind eye, at least for the moment? Discussions with a couple dozen trading desks this morning got remarkably similar responses: It's just not that bad, Bob. In fact, it's pretty good!

  1. The global macro picture really is really improving...Wharton Professor Jeremy Siegel just spent 20 minutes on our air talking about the strength in Europe and insisting that U.S. stocks are not dramatically overvalued.
  2. The dollar has been trending weaker, with the dollar index this week at the lowest level since the elections.
  3. Unemployment is in great shape.
  4. Earnings are growing, and guidance has been better than expected, with tech leading.
  5. The Fed is on the slow path to raising rates and to reducing their balance sheet.

And oil? I think it's a problem with oil below $50 for big energy stock earnings in the second half of the year. But the attitude of traders is, "Oil really is in the same relatively tight range that it has been in for the last six months ... or longer," one trader wrote to me this morning.

Like I said: "I don't want to hear it!"