Stocks vs. Earnings: A Surprising Inverse Correlation

Earnings aren't always real, they are what an accountant says they are, run another chart on cash flow growth.

This market has been and will continue to be rigged....hence, the inverse correlation. Just look at the inverse correlation of the buying volume in the S&P. It's very obvious the Fed invests money into the market to avoid panic in the streets.

There is an injection of cash into the market that is immune to normal market investing... that is the steady injection of 401k type funding on a routine basis.

La Crosse, I have to disagree. You own a peice of paper when you own common stock. A good example is GM If I owned 100 shares of GM before they went Bankrupt, I ended up with nothing. None of their real estate, no factorys, no equipment, etc. After they reorganized, and re-issued new stock, of which I would get nothing. This happens quite often, Delphi did the same thing. Just the way I see it.

With tax rates that heavily favor investment over consumer spending, we may be heading for a generalized stock price bubble.

What I find strange is that many stocks with negative earnings have gone up a thousand percent while stocks with great earnings haven't risen. I think programmed Wallstreet formulas that funds are using to price stocks are off.

ETFs have long become disassociated with their underlying assets; this is especially true on the short side. Also, everything is run off the DOW. The Dow is being supported by the Fed, and Bernanke has a pretty loose hand in how he pumps it up. Watch the DOW and various indicies, whether it stocks, commodities, etc. Ther all follow the DOW direction no matter what the underlying asset of the ETF is doing. Uless, of course, you have significant news on a particular company or asset. Market manipulation by the Fed is destroying the free maekets, if they ever were free, and is also debilitating the economy. So everyone loses but the Wall Street firms.

Personal Oponion: Companies have cut headcount to keep profits and earnings up. That is ending as there is not much remaining to cut. The consumer is dead; paying off debt and wages have been low for a long time. If not for Gov, the stock market would be way down (Maybe this is good) simply because demand is not there, again, consumer has no money; paying off debt and taxes. This year will be fake due to election. Can the Fed invest in the market using treasuries, bond money?? maybe that is who is buying right now...

The rising market (despite falling earnings) is the result of Helicopter Ben's Magical Money Pump.

And yet the headlines are companies are beating the est. that have been lowered to half of what they were 3 months ago. Perception is reality

HELLO, stocks are a bubble folks! Our economy is based on creating bubbles (eg. housing) and like every other bubble that the Fed creates it will implode under its own weight and end disasterously.

The elephant in the room is that, according to the Comptroller of the Currency (US Treasury Dept.) US commercial banks are holding over $248 TRILLION in unregulated derivatives. That is amazing because there is only about $70 Trillion world wide in currency (both physical and digital), so there is more than 3 times as much "wealth" sitting in unregulated derivatives as there is in all the currency in all the world. Derivatives are a de facto currency and they are not based on soveriegn"full faith and credit", but rather on fraudulently rated securities. Tick, tick, tick...

Earnings have been high the past few years because employers cut their workforce and closed some facilities. Cut your expenses and earnings go up.

Expect to see more job losses and closings as businesses have no interest other than to keep investors happy.

Stock market is a Ponzi scheme. Ben Bernanke is supplying cheap money to the banks and banks are buying the bad assets or invest in stock market and fail everyday. This is the cycle. Fed is responsible for inflating the markets. Ben Bernanke should be prosecuted.

Media learned a new phrase today, "inverse correlation".

its called inflation. much of the money that has been injected into the system has ended up abroad and is now being invested in US financial assets. Treasuries are yielding too little so they are bidding up risk assets. No real gain in wealth for US investors here, just the first signs of inflation.

You is going to lose, Bubba! Is this now what happened in Oct 08, substance ruled over function. The market is living on the influx of new money?

Earnings for the last few years have been based on reducing wages and benefits which in the long run is unsustainable. The investor crowd still seeks out dated double digits returns that no one in the economy is seeing, especially the retired class and Main Street which continue to see 1% or less returns on their savings. The stock market growth is illusionary based on the fact that there is no where else to park their money. l

All I know is when the stock market goes up, working people's incomes fall and cost of living increases.

But but but....Gordon Gekko and Sir Roger et al have been screaming that the fundamentals show a rocketing market! Say it ain't so! Are Doom and Gloomers really just better educated on the economic situation! Gasp!