It may well be bogus, however, once the turmoil settles out, stocks like extended low rates, and stocks with substantial sales overseas like a lower dollar. There are a lot of stoicks out there with solid balance sheets, good earnings, and yields higher than Treasuries. As bond yields fall this makes these stocks relatively more attractive.
I agree with that longer term view. I think we were just talking about the weird run up in the last hour, which seemed to have no obvious catalyst since the market was already expecting "extended low rates". Anyway, the market is already taking some of it back.
<<...since the market was already expecting "extended low rates"...>>
If that was really the case you would have never seen the most violent rise is Treasury Bond prices I have ever seen on the short end of the curve, and a huge rally on the long end.
The short-term volatility is mostly fear, and fear tends to subside. I'm betting that high-dividend stocks will be higher 30 days from now than they are today. I also like foreign stocks here. Bernanke threw the dollar under the bus yesterday, and interest rates moved down to historic lows. That's what changed, or at least the timeframe for that changed. Two years? Most people were thinking that rates could rise next years. He gave people another year of "perceived" clarity about what short rates and the dollar would do. That's big.
The joke is that the Fed doesn't really know what the economy will do over the next two years. Couple that with the pride of beauracrats and their reluctance to admit that they are wrong, and they might just honor their word regardless of what happens, which could have even bigger implications for the value of the dollar.
Think of the value of a stock that sells equipment to China and Brazil, who are still growing at strong rates despite what's happening in Europe and America. Low interest rates means that company can refi their debt structure and lock in very low rates, their products are even more competitive price-wise, and their foreign earnings have a natural tailwind when re-converted back into dollars.