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Nothing to see here as Dow crosses back over 21,000 and global markets hit new all-time highs

Nothing to see here as Dow crosses back over 21,000 and global markets hit new all-time highs

Despite continuing insolvency threats to Italian and German banks, economic data that shows the U.S. is well into a recession, and central banks that are tapering their punch bowls at a rapid pace, on April 25 the markets have summarily ignored all true indicators and are back into the sphere of ‘irrational exuberance’ as the DOW once again crossed back over 21,000, and world exchanges achieved new all-time highs.

Following the celebratory win by Emmanuel Macron in the first round of French elections, global investors took this as a sign that the status quo remains well strong and that it is just fine to buy equities that are even more overpriced than at any time in recent history.

Image result for baghdad bob everything is fine

Another day, another market record, this time in nice round numbers, as the Nasdaq hits new all time highs, rising above 6,000 for the first time ever …

While today’s surge may have been more muted, world stocks hit a new record high on Tuesday, with investors still cheering Macron’s victory in the first round of the French presidential election, supported by speculation about U.S. tax reform and the overnight report that Trump has conceded on the border wall, eliminating a government shutdown as a potential risk. As shown below, the MSCI All World Index has jumped to a new all time high, boosted by strong Asian markets. – Zerohedge

As we have mentioned many times before in recent months, the price of equities is overvalued to the point that P/E ratios are now even greater than they were during the time of the 1929 stock market crash, and even above levels just before the Dot Com bust.

The central banks have done wonders in their monetary engineering to prop up equity markets using the tens of trillions of dollars of freely printed stimulus, where anytime it appears that traders and investors are ready to capitulate, they are quickly broken by the infusion of even more money and billions of buy orders from computer driven algorithms.  And not withstanding the collapse of the real economy and GDP growth, the ‘Baghdad Bobs’ at the Fed are successfully masking that deterioration by getting everyone to focus on the one market that has nothing to do with the general economy.

Kenneth Schortgen Jr is a writer for The Daily Economist, Secretsofthefed.comRoguemoney.net, and Viral Liberty, and hosts the popular youtube podcast on Mondays, Wednesdays and Fridays. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.


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