The reason that the stock market is doing so well is because the companies represent real value, regardless of the worthless dollar.
RE: The reason that the stock market is doing so well is because the companies represent real value, regardless of the worthless dollar.
Don’t forget Bernanke printing money.
Bruce Johnson of the American Thinker is correct when he observes:
As long as Ben Bernanke decides to keep money loose, the stock market will rise.
Restated, as long as one man holds to one mindset, the market will rise.
Does this sound like a free market? Or, does it resonate as a managed affair sponsored by a semi private powerful agency run by one unelected man? Bernanke is arguably the most powerful man in the word without a military.
As models and programs chase historically modest dividend returns one wonders of the fragility of this entire arrangement. The money is in a forced accommodative low rate mode by the Federal Reserve. It is reasonable to assume that free rates would be somewhere above the current near zero rates forced by Bernanke.
Rates are forced to these levels, as the reasoning suggests, because we are still in an emergency mode. There seems nothing so permanent as a temporary emergency mode implemented by a quasi government agency.
Loose money is supposed to increase employment. We can see it increases stock prices, but its impact on employment is moot.
The question is then, “where would the market be if rates were free to find their own level?” Where would rates be if the Fed didn’t lend money to the Treasury each week? Could this market handle a .5% rate increase? What would that do to all the dividend capture programs long the market?
The Federal Reserve is in an unmanageable position, and some of the board members are acutely aware of the dangers. To ease out or unwrap the Federal Reserve balance sheet would be a catastrophic awakening for the stock market
Actually, the worthless dollar are the main reason for the higher stock markets here. I gave up a while back trying to equate rising stock prices with values. It’s mostly about Fed Policy these days.
Hi Eva. The fed is pumping 85 billion a month in new money. Interest rates on treasuries are near zero. The money ends up in equity markets by the big players because all money is fungible. It costs the banks virtually nothing to borrow money and that money finds it’s way into the equities market. That’s called a bubble and once the fed takes the air out of the bubble it will collapse on itself. By then the smart players will have moved their money back into cash and safe havens. The mutual fund investors will take a bath and life will continue on it’s inevitable way. The rich will get richer, the middle class will be raped by government and the takers will be oblivious as always.