Posted on 04/27/2013 6:08:51 AM PDT by SeekAndFind
Another lackluster quarter of economic growth is likely to have the same impact on the market as its predecessors—which is to say, not much.
Despite a prolonged period of weak improvement in gross domestic product, stocks have continued on a progressive, albeit bumpy, ride higher.
The 136 percent stock market surge over the past four years has come despite the weakest recovery since the Great Depression, and more recently signs that those expecting a period of stronger growth will be disappointed.
No matter, though, as investor—riding a wave of Federal Reserve liquidity and sentiment that the U.S. remains a safer store of money than its troubled global competitors—keep buying despite the slow economy.
"There's just this disconnect from reality," said Kathy Boyle, president of Chapin Hill Advisors. "The high-frequency funds are just controlling this market. Anyone who's rational thinks this market is overvalued and things are slowing down."
Yet a quarter that brought such lackluster growth—2.5 percent against expectations of 3 percent—saw the stock market surge 9 percent.
Friday's letdown had little effect either way, with major averages treading water around midday.
The GDP report came amid a backdrop of a so-so earnings season in which influential Dow Jones Industrial Average components Caterpillar and AT&T reported substantial slowness in their business.
"The major industrials are telling you things are not good," Boyle said. "China is in slowdown, Europe is in crisis. But la la la, we're still going to trade the market."
One of the main drivers behind the trading mentality has been the Fed and its $85 billion a month in asset purchases.
In addition to the basic liquidity, it's also fueled a belief that even if conditions don't improve dramatically, they'll be enough money around to keep equity prices floating.
(Excerpt) Read more at cnbc.com ...
"The Ship of State is awash in a sea of fiat currency and the Feds are using the rudder as a paddle." (A resurrected quote from bubba carter's time.)
None dare call it a subsidy.
So, while I worry that our currency is being debased, and our national debt is getting out of hand, I console myself by going along on the stock market ride. I've done very well the last several years, and as long as "quantitative easing" continues, I'll stay invested.
That said, the party has to end sometime, though whether by fire (hyperinflation) or ice (deflationary depression) is not known, or at least not by me. But the end won't be pretty. With this in mind, I've moved my portfolio in the directions of conservatism (adding gold and gold miner ETFs during the recent drop in gold; moved toward recession resistant and dividend paying "sin stocks" like Philip Morris International; maintained a substantial position in a well-run, profitable regional bank which has made some strategic moves I approve of; and have increased my exposure to Singapore and China).
Don't like the Fed's policies? Join the club. But don't pout about it; take the gifts they offer.
I'm not sure what you mean by this. When I invest, I don't use money that I need for other purposes. Anything I'm investing for short-term needs is put into safer investments, and I'm willing to take more risks on long-term investments where I can absorb losses.
It sounds like the folks you've observed were trying to earn a living through their investing, or were investing money that they had no business investing. How does someone lose a home due to failed investments, for example?
The Plunge Protection Team at the Whitehouse is working to make sure that the markets stay up.
It’s also driven largely by POMO ‘investments’ and the PPT, which saves the day just about every day there is a fall.
The DJIA is a joke of a bubble just waiting to pop.
The huge bullion bankers had a short on the price of gold so they caused the price of gold to collapse recently. So they made a fortune.
With the price down, I’m sure they turned around and snapped up lots of physical at the low prices.
The rich and powerful are running things and ruining things.
All we can do is heed my tag line.
You are most certainly correct.
No you didn't. Sir Alan made that stupid “irrational exuberance” gaffe way back in the mid-90's and the markets appropriately ignored him for years. Much later at the end of the decade when there really was a bubble threat he was (as usual) oblivious and was busy crusading against (you guessed it) Y2K!
Greenspan is an idiot. No way around it.
You are most certainly correct.
So say the bonkers-left that seems to have taken over. Reality is that folks like me who're rich and powerful got this way though hard work. We're doing fine, but the problem most people got is all the poor weak professional victims that are "running things and ruining things."
Mr Madoff concurs.
Don't ignore Greenspan's money-printing as a cause of the dot-com boom.
I believe you should watch China closely.
If we ever. Using that word advisedly, ever. Get a national goal of bringing back US production.
China is not the place to be.
I have seen zero sign either party is even considering that. Or has ever considered that. Or for that matter ever would consider that.
I merely say if it happens, don’t stay in China.
They have managed to disconnect the stock market from reality. What’s left is a straight up Ponzi gambling scheme
Which is why I'm scared to death that once the Fed stops printing money and injecting it into the economy (and since there's really no place else to put it, it's going into the stock market), the market is going to crash, and it will probably be a lot worse than 2008.
The stock market simply doesn't make any sense at this time, and it seems that stock prices haven't been based on company financial health for quite some time.
Mark
The gold bugs will also not happy as we will witness a repeat of FDR confiscation of gold (about 80 years ago to the day).
That is why when the Pauls, father and son, sought an audit of the Fed just like we force an audit of Apple for example, they were rebuffed big time. Likely the Fed has trillions in outstanding due bills receivable from the EU, Latin America and parts of Asia that should be classified as uncollectible. The Fed's true balance sheet would make Madoff's look like a solid debt-free enterprise.
It actually does.
The main reason the stock market surged over the last few weeks is because Obama lost the sequester fight.
Investors take heart when Obama is weak and Obama has been having a rough go of it lately. Same thing happened in the period of time after he initially took office. When it was apparent that he wasn't going to get cap and trade through (a major reason the market was weakening when it looked like he would take the Presidency) we had a major run up.
If he fails dramatically on the budget look for levels to rise even more.
> It sounds like the folks you’ve observed were trying to earn a living through their investing, or were investing money that they had no business investing. How does someone lose a home due to failed investments, for example?
Refinancing for more than the remaining balance to get cash in hand and having a marriage go down the drain due to the “addiction” all at the same time. Bad decisions after bad decisions.
You and others did. But, a large number have been corrupt. I've run into them personally. I don't circulate only the lower echelons of the socioeconomic classes. Some of the upper level folks are profoundly corrupt even though they may have made their riches honestly.
All hell is about to break loose. When it does, truth will be the first casualty as someone a long time ago said.
Sorry late getting back to your post...work day.
Yes they did...about three weeks ago...Re-hired Ullmman, (re-tired former CEO) to stabilize the plane from it’s nosedive....and he’s got a grip on all the handles very quickly.
Someone said not to underestimate Ullman...but he did keep Penneys stable thru the finaincial 08 fiasco. So I’m not surprised. But what he faces now is a far greater challenge.....looks like it’ll work...at least we’re seeing changes at the store level happening very rapidly now, so he’s wasting no time at all.
Well, it doesn’t sound like you got your cash by being smart.
What I was referring to was not you, and people who have a million or two socked away.
I was referring to the uber-rich and powerful: those who run JP Morgan and CitiBank, and Chase, and Goldman-Sachs; those who are the top echelons of the tier-1 banking cartel; those like Immelt and the Roberts of Comcast who use their corporate position and their money and influence in order to get involved with fascist-style governmental economics.
They are the ones who are running the show (pushing for QEternity, bail-outs, etc., all the while reaping their bonuses though their financial firms should have been put out of business because of their excessive risk and criminal behavior). They are the ones who are ruining things.
OK?
So before you assume that anyone who ‘blames the rich’ is playing the victim game and you attack them for stating what is wrong with our economic and especially our monetary politicy, ASK for clarification.
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