Why Is The Stock Market Doing So Well In A Bad Recession?

[Concart]

What does any of what you said have to do with why the stock market is booming, especially the conservative movement?

One doesn’t need an advanced degree in economics to understand the Fed’s actions are the driver of what we are seeing in the market (there’s also the element of betting on an economic recovery). This past decade we’ve experienced the worst economic recovery since the Great Depression yet the stock market boomed thanks largely to three rounds of QE and continued easy money policies of the Fed. Now the Fed is QE on steroids.

Additionally where else would you put your money right now?

Last point. Of course someone with huge piles of excess cash will stick it in the stock market. The point is that THEY SHOULDN'T HAVE THAT MUCH EXCESS CASH. The wealth gap is toxic to a growing economy. Wealthy people don't create jobs. They create absolutely nothing.

[Celticguy]

The recession is not tied to economics but rather a reaction to a public health scare. Nothing really wrong with the economy its just been temporarily muzzled.
As the muzzle comes off, it rebounds.

[Concart]

Hello Concart,



The 'job producers' seem to be on vacation.

They have been on vacation since Ronald Reagan was elected and instituted his disastrous economic policies.

[Jarod]

Trillions were pumped into it. Even a raft with a huge hole will stay inflated if you force lots of air into it.

[PoliTalker]

Hello cawacko,

What does any of what you said have to do with why the stock market is booming, especially the conservative movement?

One doesn’t need an advanced degree in economics to understand the Fed’s actions are the driver of what we are seeing in the market (there’s also the element of betting on an economic recovery). This past decade we’ve experienced the worst economic recovery since the Great Depression yet the stock market boomed thanks largely to three rounds of QE and continued easy money policies of the Fed. Now the Fed is QE on steroids.

Additionally where else would you put your money right now?

The economy is on life support and it's plugged into the government. Cut that off and things go downhill rapidly.

[Jarod]

Or... Maybe the market is going up because Biden appears to be winning, they are excited about a return to the Obama years.

[PoliTalker]

Hello Concart,

Supply side economics has provided the fuel for this poker game. Conservatives claimed that the rich guys would reinvest the money in the economy. They didn't. Consumer spending in the 80's and 90's was fueled not by real growth in wealth, but by consumer debt. That all blew up in 2008, but we learned absolutely nothing. That's why we have slow growth, a massive and growing wage/wealth gap, and a stock market that has little to do with what is happening in the real world.

You clearly don't understand what QE was all about. NONE of the money reached the money supply. It all sat in excess reserves. We are now slowly unwinding that balance sheet. The idea that it fueled the stock market is nonsense.

And the economy is running on government debt.

[Concart]

Hello Concart,



And the economy is running on government debt.

Yep. That can be fixed, but we've let it go on so long that only a drastic measure (the one time wealth tax is the best thing I've seen proposed) will correct it. We have to do something like that, and follow it up by significantly raising taxes on the top 1%. Will it hurt the stock market? Yep. That's what happens when house stops giving you credit.

[Celticguy]

Last point. Of course someone with huge piles of excess cash will stick it in the stock market. The point is that THEY SHOULDN'T HAVE THAT MUCH EXCESS CASH. The wealth gap is toxic to a growing economy. Wealthy people don't create jobs. They create absolutely nothing.

Dont undetstand markets do you ?

[cawacko]

Supply side economics has provided the fuel for this poker game. Conservatives claimed that the rich guys would reinvest the money in the economy. They didn't. Consumer spending in the 80's and 90's was fueled not by real growth in wealth, but by consumer debt. That all blew up in 2008, but we learned absolutely nothing. That's why we have slow growth, a massive and growing wage/wealth gap, and a stock market that has little to do with what is happening in the real world.

You clearly don't understand what QE was all about. NONE of the money reached the money supply. It all sat in excess reserves. We are now slowly unwinding that balance sheet. The idea that it fueled the stock market is nonsense.

Dude, are we looking at the same thing here? Unwinding of the Fed balance sheet? The Fed balance sheet has been exploding. What do you think the Fed’s been doing these last few months? We’re in a recession and a global pandemic yet the stock market is booming. It sure as hell isn’t economic fundamentals driving it.

And regarding the stock market the stock market isn’t the economy. You’re free to debate what economy policy you prefer but that’s not what’s moving equities.

It wasn’t economic fundamentals driving the boom the past decade. As stated, we had the weakest economic recovery since the Great Depression yet the equities boomed. QE punished savors. It forced people into more risk. Each time the thread threatened to stop QE the market dove, and ultimately the Fed would pull back because the market was addicted to the stimulus.

[Concart]

Dont undetstand markets do you ?

I understand them perfectly. If you have a point, why don't you make it instead of trolling?

[cawacko]

Hello cawacko,



The economy is on life support and it's plugged into the government. Cut that off and things go downhill rapidly.

Not following what you’re referring to here

[Concart]

Dude, are we looking at the same thing here? Unwinding of the Fed balance sheet? The Fed balance sheet has been exploding. What do you think the Fed’s been doing these last few months? We’re in a recession and a global pandemic yet the stock market is booming. It sure as hell isn’t economic fundamentals driving it.

And regarding the stock market the stock market isn’t the economy. You’re free to debate what economy policy you prefer but that’s not what’s moving equities.

It wasn’t economic fundamentals driving the boom the past decade. As stated, we had the weakest economic recovery since the Great Depression yet the equities boomed. QE punished savors. It forced people into more risk. Each time the thread threatened to stop QE the market dove, and ultimately the Fed would pull back because the market was addicted to the stimulus.

Up until recently, the Fed was unwinding the balance sheet that exploded because of QE. The point is that the money did not go into the money supply. So your posit is demonstrably wrong. That money went directly to excess reserves. Excess reserves are not part of the money supply.

[cawacko]

Last point. Of course someone with huge piles of excess cash will stick it in the stock market. The point is that THEY SHOULDN'T HAVE THAT MUCH EXCESS CASH. The wealth gap is toxic to a growing economy. Wealthy people don't create jobs. They create absolutely nothing.

They can put it in real estate, they can invest in new companies, they can put it in bonds. Where do you think capital comes from to invest in new ideas and companies?

[cawacko]

Up until recently, the Fed was unwinding the balance sheet that exploded because of QE. The point is that the money did not go into the money supply. So your posit is demonstrably wrong. That money went directly to excess reserves. Excess reserves are not part of the money supply.

Until recently? Ok. The thread is about why the stock market is booming in a recession. Look at the Fed balance. It ain’t unwinding.

It is not demostratobly wrong that QE punishes savors and pushed people into riskier investments (like the stock market) to find higher returns and was the driver behind the market booming.