Glad you asked. No, "the markets" are not simply a handful of rich people, banks and large corporations. The markets are also more than just "stocks."
In fact, the majority of "the markets" is actually bonds, and most of those bonds are debt issued by nearly all the countries of the world (sovereign bonds). I think roughly 80 Trillion dollars, but don't quote me.
If you live in a country with roads, infrastructure, buildings, etc.--then the markets are responsible for everything around you.
But you seem to be complaining about stocks since they get the most media attention, so let's look at those.
You may not realize it, but the future of every single country with a socialized pension system, sovereign wealth fund, etc. depends on the returns of global stocks. They make up only a portion of most pension portfolios, but deliver nearly all of the returns. Everybody has a stake in them even if they don't realize it.
Are the markets all-knowing or perfectly efficient? Of course not. But it's literally the only place where you can measure how a global herd of humans are feeling about the state of the world at any given time with a single number. This makes it a default reference for journalists to cite, ie. "thing happened, this is what the humans and their algorithms collectively think about it."
The journalists are often wrong and don't understand what's happening, but this case seems to be pretty straightforward.
See, this kind of thing really gets to me. Here's you circa 1290: "If you live in a fiefdom with wells, irrigation, castles, etc. -- then your Lord is responsible for everything around you." See how fallacious that sounds when you transpose it this way?
The central issue is that you're justifying a thing from the context of the thing itself. You're explaining modern capitalism from the framework of modern capitalism. It's circular, and you get ridiculous things like "the markets built the roads". Ahm, no, workers built the roads!
>Are the markets all-knowing or perfectly efficient? Of course not. But it's literally the only place where you can measure how a global herd of humans are feeling about the state of the world at any given time with a single number.
They are a weighted way of seeing how some humans are feeling about things. A number that gives as much weight to 8 guys as it does to 3.7 billion. It's a pretty shitty indicator, I'd say.
Of course it sounds fallacious--you've constructed a straw man out of my original argument.
There's nothing circular about the concept of debt. It's a fundamental aspect of how our economy works. The way debt is raised is through markets. Again, this is not a controversial or political statement.
Of course workers built the roads. And they were paid to build those roads by debt raised via bond markets. Governments and organizations use debt to bring the future into the present and amortize large investments over long periods of time. The liquidity and demand for this debt in the global markets allows them to do this.
No marketplace for debt = no way to reliably execute big infrastructure projects for all but the richest of countries. The market (the demand for debt) is literally the enabler.
Nothing I've said here is a mischaracterization of reality.
> It's a pretty shitty indicator, I'd say.
Again, I'm not advocating that short term financial market gyrations have any explanatory power for the future. I'm simply explaining why journalists use it: because it's easy.
I'm not yet but hoping to be...
> They are neither wise nor competent
That's me again, but doesn't preclude my success...
However this 1995 paper (1) indicates that the S&P 500 behavior does "Granger Cause" changes in USA GDP. i.e changes in S&P 500 does predict changes in GDP from 1 to 3 quarters out. So that's the one legitimate reason to be encouraged by rising markets. Perhaps the woman who cuts my hair will be able to get off food stamps by spring.
1. https://digitalcommons.iwu.edu/cgi/viewcontent.cgi?redir=1&a...
Or are you lamenting that much attention is given to something that is primarily driven by wealthy organizations? I guess I might sympathize with you there.
There has been other vaccine news in the past which my friends/family talk about excitedly but the broader market didn't budge much.
I don't see any problem in using it a general barometer for this sort of news.