Why is the stock market going up? What is the latest comspiracy theory to explain this?
I think that the stock market is going up because the biggest expense for most businesses is employing people. Since people are still losing their jobs and there aren’t many new jobs being created, individual companies have lighter expenses.
Very easy answer to your question. Banks have been GIVEN trillions by the Federal Reserve. We KNOW they are not lending it to consumers because consumer credit is going DOWN not up for the first time since 2003. We know they are not lending it to homeowners, because foreclosures are still rising. We know they are not lending it to business, because businesses are laying off people, not expanding.
Where do you think the banks are putting this money? They are putting into stocks for one simple reason. The only way they can get out of the pickle they are in is to raise the price of their shares and thus increase the amount of equity they have. A rising stock price does exactly that. The banks are in essence investing inthemselves in order to make themselves look more healthy. This is all being down with the full blessing of Ben Bernanke and his buds at the Fed. The stocks of financials have risen more on a % basis than about any class of stocks, ask yourself how banks on life support a year ago are now suddenly healthy.
On a side note, gold and silver stocks are flying. This is merely GS and JPM and others hedging their bets in case USD collapses because Chinese tire of our games.
Layoffs increase profit. Plus bailout and stimulus money are being funneled into lots of companies, especially the “green sector”, with the promise of much more to come.
The market’s a house of cards right now.
>>Why is the stock market going up? What is the latest comspiracy theory to explain this?<<
Well, you gotta put the dollars somewhere and all the mattresses are full.
Wall Street hates uncertainty. As it becomes clear that we are thoroughly and permanently screwed, they become less uncertain. Hence, the market rises.
Just kidding. You could say that businesses have been forced to squeeze out their excesses, and are more lean and mean now, and that the market anticipates the future so it is rewarding the efficiencies business will experience when the recovery begins. Or you could say that the big boys are pumping things up to make some cash before we go over the next cliff. Maybe neither. Maybe both.
If you look locally, there is no new building of houses and foreclosure sales have hit their peak (atleast for the time being). House prices are slowly rising, but will never likely hit those high for sometime. Unemployeement at its current level is terrible but it shows sighs of slowing. That doesn’t mean the recovery is coming but it means the stock market is finding it’s middle ground. 6 is too low, 9...is about right.
I think everything on a tedious path....it can go south quickly or it can slowly go back to sanity. I tend to think if the white house doesn’t over reach itself, then the market with recover in due time.
Remember, after the crash of 1930, the market rallied even more strongly than this one has. Only to crash and burn and play dead for several years thereafter.
Look at it this way -- a 50% reversal, by no means out of the question, would take this market from a Dow of 6600 to a level around 10,500. That is what happened after the Great Crash, and which prompted Herbert Hoover to run on the slogan "Prosperity is Just around the corner" in 1932. Financiers of the day, like Andrew Mellon at Treasury agreed with him; just as the einsteins of today, like Little Timmy (Mommy please cut my meat for me) Geithner perceive "green shoots" in the desert.
Do not be deceived by false front goobermint and media circle jerkers. All they want is a good tradeable bump to help them get out whole before the whole f*ing issue blows sky high.