President Trump is seen at the White House in this AFP file photo.

You’d think that the new virus outbreaks in China and the dismal situation in some of the most populous states in the US might give stock market punters second thoughts when – or if – they look at stretched valuations and the vast discrepancy between the performance of equity indexes and the real economies.

And you’d be dead wrong. 

The US Fed’s Powell and President Trump have given them a ready-made excuse – or call it rationale, if you want to be polite. While they can’t (Powell) or won’t (Trump) do anything about containing the virus in the US, the Fed and the White House are throwing as much money at the situation as they can print or otherwise drum up, to the applause of the madding crowd.

And – so goes the bull logic – they’ll keep on printing and greasing while the virus lasts.

With stocks thus decoupled from reality and having found the right reason for doing so, currencies are sitting by the sidelines watching.

So, by and large, are bonds – though there’s some cautionary move up in US yields at the 10- and 30-year maturities.

With that, the US dollar has moved off its recent rock bottom and the DXY moved up to 97.2390 at 6pm Hong Kong time.

With the USD up a bit against the weakening trend when stocks are up, the yuan followed suit, weakened from Tuesday and traded at 7.0863 at 7pm, pretty much where the People’s Bank of China had set parity on Wednesday morning (7.0873).

It’s all now about equities as long as the mad rush lasts. The scene reminds me of the recovery phase from the 2007/08 crisis, when bad news was good news as it kept quantitative easing alive.

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This report appeared first on Asia Times Financial.