Are rising equities a good thing?

Daily update

There is a narrative that rising equity markets are good, and falling equity markets are bad. This is not true. Fairly valued equities are good, and bubbles or disorderly markets are bad. If the latest barrage of equity market measures by China’s government are aimed at correcting irrational pessimism and disorderly markets, they are economically beneficial. If they are driven by a desire to see equities higher just because they want equities higher, they are economically negative.
UK British Retail Consortium store sales data showed less of a slowdown than expected. These numbers do not adjust for inflation, so price discounting depressed the data. Discounting is important as consumers rebel against profit-led inflation. European retail sales data does adjust for pricing, but is expected to show negative growth. Some of that represents spending switching from goods to services.
Euro area inflation expectations will be determined by the prices of high frequency purchases. Food and fuel prices slowed in December compared to November, suggesting moderating expectations.
There are several Federal Reserve speakers on the agenda. Markets seem more focused on policy expectations than economic fundamentals. In a perfect world, these would be the same thing. In a perfect world, economists would run central banks, but here we are.