Note at the 2002 bottom the FED stepped in and lowered rates t0 1% and held them there long enough to create the monster real estate and debt bubble that popped and has cause our current malaise, to which they AGAIN lowered rates this time to 0% and again the FED is seen as saviour.
BUT this time what has reflated is of course mostly not in their control. Commodities have exploded higher even as economies stagnate. Stock markets have risen in historical fashion without the fundamentals rising with them. Jobs lost and counting 8 MILLION, which is AMAZING in itself since Recession began, so when only 460,000 claims come in that's reason to celebrate? Less bad?
Housing continues NOT to respond to historic stimuli and government intervention, and the FED must be buyer of last resort for the MBS market. WHEN will they be able to step away and see the market function on its own?
It is true some backdrop to companies is beneficial, mergers on rise, cash abundent, but investment and hiring near non existant....many of the HIGH PAYING JOBS ARE GONE AND NOT COMING BACK.
Does anyone ask why the last 10 years have seen 2 aweful bear markets? 2 crashes? You cannot inflate your way to prosperity nor can you SPEND you way out of debt.
Consumers have pulled back, banks not lending, wages stagnant, gov deficits historic and approaching $14 TRILLION the size of a years GDP.
I have been saying trade what you see not what you feel.....but not unlike a good Chinese meal, this rally leaves me hungry.
D
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