The fed is relying on running up the price of stocks to casue a wealth effect to offset economic weakness and jobless recovery.....it will not stop until valuations are disgustingly high..now they are njust stupid
Don't know if you caught the Aussie PM last night jabbering on about how the high Aussie Dollar is now hurting thier nominal vs real GDP - basically the deflation argument.
In Europe, Germany is showing signs of heading towards recession along with the rest of Europe.
Japan of course has gambled everything now on a massive devaluation.
Chinese data is minimal at best, completely false if you believe Chanos, etc..
Point of all of this is that everyone is trying to boost their economies through devaluation. The Fed wants a bubble indeed but so does Japan, Australia, China, and Europe. The economic policies are in fact creating INSTABILITY for corporations. They are hoarding cash, cutting costs and jobs, and leveraging their balance sheets to support stock valuations.
Massive central bank balance sheet expansion has failed to maintain any brief economic expansion because as soon as any whiff of withdrawal is mentioned, corporations tighten their belts even further, fearing a rising interest rate environment - bad for their consumers of course.
Revenues are the key indicator IMHO. Analysts are lowering the bar and yet companies are consistently missing that bar and showing a retraction of the consumer.
I would offer that valuations are disgustingly high already due to the balance sheet manipulation of the earnings profile of the stock market.
Sentiment: Strong Sell
PAul..you are spot on. However, the market will continue to be inflated by these forces. It makes it difficult to buy into becasue there are very few cheap companies. Revenue growth is all but non existant yet companies are selling at 20-24x earnings with 7% earnings growth at best. The market is a bubble in as far as the valuations dont reflect the terrible revenue and earnings growth. But it will go higher as people see the stupidity and try and short driving it higher. Also, these buy programs that come in throughout the day are relentless.
5 million jobs added while 9 million were cut. This recovery has had the worst level of job growth vs any recovery in the last 200 years. That is why the fed has targeted 6.5% unemployment before they stop printing.