DJIA New Cycle Highs! Wait, What? My Theories on the Current MarketO
Good News Monkeys!
The DJIA just hit new cycle highs last night, closing near 14,036! Pretty awesome, right! Highest close since the fall of 2007! Do you monkeys have any idea why? Anyone? Bueller? Don't feel bad if you don't, neither does Goldman's S&T desk, who notes (somewhat hilariously):
A solid rally today and new cycle highs for US equities – but that’s where the story stops. No obvious catalyst. No bullish data. European stocks traded well, with most people pointing to a better German ZEW print, but it’s not clear why that would translate into such a strong USsession. Maybe it’s best though not to look a gift-horse in the mouth.
Fun Fact: The reason you don't "look a gift-horse in the mouth" is because back in the day, while (unless you're buying beef lasagne). So, when you're getting a free horse, you'd be acting like something of a jerk if you check to see if it's a high quality horse. I mean, come on, the horse is free, don't be that guy.horses, you could tell the age of a horse by looking at it's mouth. An older horse's dental condition would be worse than that of a younger horse, an important fact when you're trying to avoid getting ripped off in the horse market
Now, back to the question at hand. Why are equity prices skyrocketing? Europe isn't doing so well, China doesn't appear to be anywhere near the double digit growth so many economists count on, and Japan's Shinzo Abe has requested that their elderly "hurry up and die." Not exactly what I'd call a recipe for global economic success. But, that doesn't mean I don't have a few ideas for what could be powering these new cycle highs for equities. Here's a few, in ascending order of likeliness:
- Europe is Better: Maybe Europe is better than we all thought. Perhaps Spain actually has a debt to GDP ratio of 85.3%, and that number is totally right and probably fine, as opposed to totally contrived nonsense trying to hide a far worse picture.
- The Current Season of The Bachelor is Driving Economic Growth: Week 7 of The Bachelor attracted nearly 400,000 more viewers than the previous season, which is clearly translating into stronger consumer spending in the US. Is this actually a very likely scenario? No, it's absurd, it's just more likely than Europe being healthier.
- Massive, Coordinated Central Bank Intervention in Developed Economies: As we're all familiar, the Federal Reserve, the BOJ, the BOE, the PBOC, and the ECB have all been engaged in sterilized and (recently) unsterilized market actions. Since the money, as you all know, has to go somewhere, why not equities?
What do you monkeys think? Do any of you ascribe to any of these totally well thought out theories? Or are some of you of the mistaken, and ridiculous impression that American Idol is driving global growth? I mean, come on, that's just crazy.