Irrational exuberance of the stock market

irrational-exuberance
Does anyone out there know why the U.S. stock market is so bullish?
Yesterday, the Dow Jones Industrial Average (INDU) rose to its highest level ever — closing at 14,253.77 — erasing losses from the financial crisis after a four-year rally fueled by the fastest profit growth since the 1990s and monetary stimulus from the Federal Reserve.
Jim Cramer, host of CNBC’s Mad Money, shows us how yesterday compares with October 11, 2007, the last time stocks were this high:

  • Dow Jones Industrial Average: Then 14164.5; Now 14253.77
  • Regular Gas Price: Then $2.75; Now $3.73
  • GDP Growth: Then +2.5%; Now +1.6%
  • Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
  • Americans On Food Stamps: Then 26.9 million; Now 47.69 million
  • Size of Fed’s Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
  • US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
  • US Deficit (LTM): Then $97 billion; Now $975.6 billion
  • Total US Debt Outstanding: Then $9.008 trillion; Now $16.43 trillion
  • US Household Debt: Then $13.5 trillion; Now 12.87 trillion
  • Labor Force Particpation Rate: Then 65.8%; Now 63.6%
  • Consumer Confidence: Then 99.5; Now 69.6
  • S&P Rating of the US: Then AAA; Now AA+
  • VIX (market volatility index): Then 17.5%; Now 14%
  • 10 Year Treasury Yield: Then 4.64%; Now 1.89%
  • USDJPY (US dollar to Japanese yen): Then 117; Now 93
  • EURUSD (Euro to US dollar): Then 1.4145; Now 1.3050
  • Gold: Then $748; Now $1583
  • NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

In other words, the fundamentals of the U.S. economy are in very poor shape. And yet the stock market is at a record high.
What goes irrationally up must come crashingly down. As Cramer puts it, “we all know it’s going to end badly, but in the meantime we can make some money.”
As long as you sell ahead of everyone else.
~Eowyn

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tonyn
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tonyn

You are right The fundamentals are not there . Whats different this time over Bushes time when the Hawks started calling the Stock Valuations Book Cooking is Obamas Federal Reserve QE is pouring that Cash into the portfolios of these stocks through the Corps and this Covers up the book cooking which is Now been fundamentally transferred over the Federal Reserve who is not subject to the same SEC regulations as the Corps as that Under the Bush era were and called out for Book Cooking with Private Debt accumulations , right ????? So there has to be another reason… Read more »

Ted Nougat
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Ted Nougat

40 Billion in mortgage-backed securities (bad loans) being bought by the Fed each month. Maybe this month’s check just cleared?

tonyn
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tonyn

If you want a economy valued off a true supply of inflation fighting goods rather than just a Bunch of paper Money that Obama is ordering from the Federal Reserve that Last Month was Over 200 Billion Bucks fed into the economic system around the world I suggest you email President OBama and tell him to Hear My Senator on this Trade Policy issue please !!!!!! https://www.youtube.com/watch?v=J5iC9FdYVoo&feature=player_embedded This next Video will tell you how the trade Policy is Controlled by the Same Elite group of Corps that Wall Street and the 2 big 2 fail banking and Federal Reserve print… Read more »

japoa
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“FIGURES DON’T LIE , BUT LIARS FIGURE “……….The fiat money is going a long way to buy time . Just enough time for all the ” everyday Joe’s ” to put their $ back in and then kaboom .

sage_brush sagebrushsays
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sage_brush sagebrushsays

Precisely.

tonyn
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tonyn

Yeah it will be the LAST roundup of Private wealth creating the scare that will open the doors to Social unrest and then the NWO can implement their plan of World economic domination for consumption rate controls and population controls all in the name of Saving earth eco system . Its all in the NSSM200 memorandum and i think they have been following this since 1972 when they delinked the dollar and went on the fiat system , its the only thing that makes sense of all of what we have seen in these years since then .

sage_brush sagebrushsays
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sage_brush sagebrushsays

Just watch how easy it will be for them to eliminate the dollar entirely, and how fast it will be accomplished. We may share a currency with Mexico and Canada, but with the speed with which is being accomplished – perhaps they’ll just bypass the Amero and go straight for the international currency. The same successful formula used in Europe is being applied here. 1972? I’d say 1910. So long in the making, the Rothschild formula that was so successful in 18th century England – PERPETUAL WAR – is now the basis of the destruction of the United States. The… Read more »

tonyn
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tonyn

I was relating the 1972 time when Nixon delinked the dollar as this times attempt to consolidate the wealth and resources away from the private sector and into the bowels of Government via the Plutocracy that has formed in the mega merger mania over the 40 years since then and I think its a Exact Blue Print that is described as a Way to do this in Kissingers NSSM200 . You know Kissinger has not missed a state dinner since Obama took office . I think they are trying to finish what Kissinger said was saying needed to be done… Read more »

japoa
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That’s why I’m keeping a sharp eye on the market . Gonna pull it all out in a week or two . Maybe sooner . 70% of something is better that 100% of nothing !!! You gotta do what you gotta do .

sage_brush sagebrushsays
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sage_brush sagebrushsays

Yes, Japoa. They are “shaking the rug out.” I’d say sooner rather than later. The middle class must go to accomplish the NWO. All the manipulating of the gas prices is designed to force us out of our cars and into public transit. Squeeze, squeeze, squeeze. . .

Ginny
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Ginny

The entire world has gone to hell!!

joandarc
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joandarc

Thank you Dr. Eowyn for this interesting post. There is no rhyme or reason to the stock market; this is why this is not good news, especially in light of the fact that employers are still not hiring!!!

alice wolf
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alice wolf

Congress needs to bring actions against the Obama Administration that will relieve the members of that body from their obligations, and put in a bipartisan group of men and women from their ranks, Congress’s ranks, to run the country until the economy is back up and running again. There is a bill waiting to be heard in the House that demands the reinstatement of Glass Steagall, and that is step number one. We need credit to be uttered through congress by a new national bank, that is if the FED is bankrupt in fact which is what has been reported… Read more »