Unusual Monday: Stock Market Open/Bond Market Closed

For reasons unknown to man (at least this one), every once in a while the stock market trades while the bond market remains closed. Today's one of those "once in a whiles." Oh, and I know of no time when the opposite holds: bonds trade when the stock market is closed.

And so goes one of those anomalies that cut through the "day-after-day/same old-same old" of most of life.

Meanwhile, it seems the entire world's economy if finally picking up steam. No, seriously. Yes, we've heard that tune before, but this time it's for real - maybe. After all, over the weekend the Wall Street Journal published this:

Central Banks Pull Back as Global Growth Picture Brightens

Besides bright, it's pretty bold, isn't it? I'd say so. And if you're not sure about just how serious they are this time around, we read this:

A synchronized global economic expansion is leading to a big shift in monetary policy around the world—toward central banks shrinking rather than growing—with implications for markets, inflation and the outlook for growth.

Yessiree, central banks are betting with their wallets this time around: a synchronized expansion has now caused a synchronized shift in policy. It's like a scene in a Hollywood musical when, right in the midst of the "real" world, everything stops and the actors break out into a thoroughly synchronized song and dance routine.

Imagine Janet Yellen (Fed), Mario Draghi (ECB), Mark Carney (BOE), and Haruhiko Kuroda (BOJ) talking at their recent gathering at Jackson Hole. Suddenly, a simultaneous light bulb switches on over each of their heads. Hey, the world's economy really has taken a turn. Things are looking up. Economic activity across the board has picked up and it sure looks like it's going to continue that way for the foreseeable future...It does, doesn't it? And so the music starts and the song and dance begins...

But wait! What about this:

“This feels sounder than any of the other false dawns we’ve had before,” said Kristin Forbes, a professor at the Massachusetts Institute of Technology and former member of the Bank of England’s monetary policy committee.

"Feels"? That's it? It feels sounder? And this from a professor at the Massachusetts Institute of Technology and former member of the Bank of England’s monetary policy committee?!! Nothing more than a feeling? Isn't there some sort of hard evidence Madam Professor, former Central Banker. We're going on feelings here?

For now, the central bank retreat has been given an enthusiastic “all clear” by investors. 

And so they will all apparently pursue their announced policy of ceasing the bond purchases that began after the 2007-2009 crisis. But it seems that - despite all the singing and dancing - their hoped-for results may not be so assurred. 

Still, the central bank retreat could become an unwelcome stumble...“There is no prior experience of rolling back (bond purchases), so it is very tricky to know how markets will react,” said Peter Nagle, a global macro economist at the IIF. “Even if the pace of rundown happens as expected, we should not be complacent about the risk of market dislocations.”

And what happens if we do get one of those "dislocations"? What happens to the economic expansion? Does the song remain the same or we get a reversal of the reversal of central bank policy?

Well, it was a weekend story after all. So maybe we should just ignore it.

In any case, Happy Columbus Day!