He is saying that if the Fed were going to raise rates the market would have forecasted in the front FF, until then all the talk about hikes is just hawkish rumor
Well, the market controlled the Fed a bit in 2008. There was the Soc Gen 125bps worth of rate cuts, which the FFF were 'calling' for. Then there was the Global rate cut, which only happened after a bunch of pundits start to call for in the media
Sir, I am afraid there is nothing they can do except watch the horror unfold and send out "jawboning efforts."
A bubble in stocks is necessary to revive the economy, to allow business owners to start investing again, and to increase employment. Why would the Fed want to prevent this?
If you talk about objective, then you must ignore any model that uses any mathematics beyond the basic operators of "+", "*", "/". Things with names like "Copula", etc... immediately disqualified. It should be honest, direct like our early cavemen ancestors of ours who have only one name for stone - "stone". The objective steps you need to do is as follow:- 1) start your web browser and go to yahoo finance, S&P 500. 2) choose chart for "all range" and "linear" 3) Imagine objectively drawing a smooth curve to follow the chart as close as possible. 4) Now clear your mind and just use only eyes. 5) Behold! A bubble!
Lol why would the fed prevent this? Its called a misallocation of capital. CAPITAL THATS SUPPOSED TO BE USED FOR THE ECONOMY SUCH AS BUILDING AND HIRING IS INSTEAD BEING USED IN THE STOCK MKT. WHY WOULD ANYONE USE THE MONEY FOR THERE BUSINESS WHEN THEY CAN CHASE STOCKS AND MAKE 10-30% A WEEK IN MANY STOCKS. and we're in a huge bubble compared to 2007 as earnings growth in many co's is down 30-50% yet many stocks are back to 2006 highs. a few examples are fdx,nke,utx and mmm. earnings and rev's off big yet there stocks back to 2006 prices.when you have basically bankrupt co's like aig,fnm,fre and cit leading the vol everyday it pts to a mania.WHEN YOU HAVE STOCKS NOT REACTING TO THE DOWNSIDE ON REPORT AFTER REPORT OF TERRIBLE NEWS LIKE THE CHICAGO PMI TODAY IT MEANS THE FED HAS FLOODED SO MUCH MONEY INTO THE SYSTEM ITS GIVEN A FALSE SENSE OF SECURITY THAT ONE CAN'T LOSE. THIS RALLY OFF THE BOTTOM HAS NO FUNDAMENTAL BASIS AND HAS BEEN A MONETARY EVENT. AS ALWAYS SOMETHING WILL HAPPEN TO BRING US BACK TO THE MEAN.
Trying to revive business investment is a misallocation of capital? Hardly. Where do you think businesses, and investors 'get' the money to create employment, to hire people, etc? They get it from reaping a return on their prior investments. Let's face it -- stock market investors, since 2000, have lost more than half of their investments, when measured in purchasing power. Stock investors are friggin *broke*. Once you get money into the hands of business owners (ie: owners of equity, stock owners), those people will hire, those people will ramp up production, create employment, and over time, the economy will go back to normal. But your rant that having money go into the stock market is nonsensical -- is, itself, nonsensical. You think that people who own businesses should perpetually take it up the ass, and reap no return on their investment, while people who took no risk, or even worse, invested in consumer goods (ie: houses, for instance), should be reaping all of the returns? Seriously, every business owner on earth would love to hire people, would love to go out and consume and spend right now. But they're not. Why? Its not because they have a giant pool of cash sitting in the back room they want to spend. Its because they can't -- their equity interests simply aren't making them any money right now, and re-investment would not be at all prudent. Until you fix that problem, by reflating the returns to business owners in the economy -- those business owners will be in no position to start growing again. Dude, the market is still down 40% from the top. The scenario of 10-30%/week *losses* in stocks is, statistically, far more common than 10-30%/week up. And those business people need to see a return on their investments before they can afford to make new ones. Bubble? Are you on crack? 2007 was 2 years ago, and the market was far higher then than it is today. If its a bubble today, then was 50% more bubble in 2007! The market doesn't reflect what's going on today, stocks are a prediction for the *future*. Yes, things are crappy today. Yes, the economy is horrible. But will it be that way 2 or 3 years from now? Hardly. We'll either be a bunch of smouldering ruins, or those companies will restructure, write down whatever debts they have, become more efficient, and return to profitability. The news that comes out today, or tomorrow really, in the whole scheme, doesn't matter. The fundamentals are stronger today than they were in 2007, when, looking 2 years out, the economy and corporate earnings turned out to be a disaster. 2007, with Dow 14,000, was the bubble. Not the valuations of today based on trailing P/E's (which are always high during downturns, and especially so since this one has been so severe and finance earnings were so artificially and fraudulently high!)