The stock market is bumping up against all-time highs. The question is why. Are these legitimate levels based on fundamentals or is the excessive liquidity being pumped into the money supply simply going into stock because it’s the better (?) place now. David A. Rosenberg (Chief Economist & Strategist) at had some interesting comments in his Economic Commentary of March 25, 2013. He commented on the lack of economic recovery (“… the worst recovery in recorded history.”) and gave the following statistics:

  • Industrial production: -1.2% (1.2% lower than the previous cycle peak)
  • Manufacturing output: -4.3%
  • Real manufacturing and trade sales: -1.7%
  • Total payrolls: -2.2%
  • Full time employment: -5%
  • Real personal income ex transfers: -4.5%
  • Real disposable personal income per capita: -6.2%
And this performance is in the wake of:
    • Four years of $1 trillion deficits
    • Four years of 0 interest rate policies
    • A tripling of the Fed balance sheet (QE1, QE2, Twist, QE3, etc.
    • Bailout stimulus

Hummm-let me think about that!!!

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