It was close but no cigar for the major indices on Friday, as the exuberance from Janet Yellen’s Wednesday testimony continued to reverberate. Many market mavens were looking at the Dow 17,000 level and the S&P 500 2,000 level as market hurdles that were ready to be surpassed. The bulls were unable to cooperate on Friday, though, and we will live to make a run at those levels another day.
That was not to say that the new “Head of the Fed” was not trying. She gave it her best on Wednesday, but mere mortals sometimes have a rough time pumping up the biggest stock market and major indices on the planet. She did a decent job, though, and we should see newer all-time highs kick in sometime soon. That sounds cynical, but “Planet Janet” will never let this economy return “to earth.”
“Earth” is not an option. The speech Janet gave Wednesday, and the obvious commitment to zero interest rates forever was telling. We are now the “Japan” of twenty-five years ago, and the zero interest rates we saw there will likely become a permanent fixture here as well. That is a tough policy to understand, but it seems as though that will be what we get.
It is a disturbing policy mainly because it has already been tried. Japan saw zero interest rates and no growth for more than twenty years. Yes, they have a contracting (declining) population, but they still have a vibrant economy that could possibly do better. That is a tough question for Japan, and it is a tougher question for our own country as well.
We seem to be on the right trajectory, but we are seemingly on the wrong course. That is not to slam the knuckleheads in Washington at all, but they ARE knuckleheads, and they ARE in Washington. That said, maybe things will change soon and we will get leaders that can help us and deliver the change this great country so desperately needs.
The stock market is at (or near) all-time highs, but the broader economy still seems weak. People are scared about the future, and that is not the way to run a country. Stock markets are a great tool as a barometer for a country, but they do not always reflect the truth. They can sometimes get pumped up beyond belief (thank you for the reference Hans, Franz and Arnold!).
The $780 trillion TARP bailout and the billions of bond-buying that continues to this day are strange. It has never been done, and we had better get ready for what might follow. But the stock market and major indices keeps soaring, so there are no complaints for the time being. That said, the Gorilla wishes each and all a relaxing summer weekend. Happy Summer Solstice to all!
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