The stock market has been riding high as of late, but now may not be the best time to celebrate. There are numerous factors contributing to the stock market highs, so we’ll take a look at a few of them and answer the question, “why is the stock market so high?”
First, we can thank the bond market for the continued rise in the stock market. Bond yields are incredibly low. As of August 1st of 2016, daily treasury yield curve rates were 0.20% for a one-month note, 0.50% for a 1-year note, and 1.06% for a five-year note. What these low rates do is make stock dividends look more appealing. The average dividend for the S&P 500 stock index is around 2.1% which is almost double the percentage on a five-year treasury note. Therefore, investors are fleeing bonds and flocking to stocks as they seek higher returns. Read More
This past week the Dow saw its largest two-day drop since 2008, plunging 531 points as the sell-off turned ugly. Today the chaos continues with the Dow plummeting over 1000 points at the open. A variety of factors are converging that may be signaling a return to market volatility.
Here’s my quick take on what’s happening: Read More
Enter 2014. On June 25, the Commerce Department announced the U.S. economy shrank by -2.9 percent. This is not only the worst GDP pace for the same three-month period since 2009, it marked the steepest downward revision from second revision estimates since records began in 1976. The announcement was preceded by a dip in consumer confidence. According to Gallop, fully 58 percent of Americans say the economy is getting worse. Read More
Cathy and Bruce discuss the coming stock market correction on Safe Money Talk Radio. Bruce points out that historically, bull markets usually don’t last for more than five years and this bull market has exceeded that time frame.
There’s Nothing Irrational About Millennial Aversion To Stock Market Risk
Millennials are keeping their distance from the stock market, and according to writer John Aziz at The Week, that makes them financial neanderthals. Even the few lucky Millennials with ample cash to throw around are avoiding the equity markets, a move that Aziz calls “totally boneheaded”: Read More
Anemic growth barely hovering above zero in the first quarter of 2014 exposed the depths of a lingering and persistently weak U.S. economy. Gross Domestic Product edged up by a scant 0.1 percent, the slackest pace of growth since late 2012.
New Factory Orders gained just 1.1 percent in March, missing expectations of a bounce from a 1.5 percent rise in February. Wages were flat in April compared to March, with the average hourly wage for private sector workers settling at $24.31—a 1.9 percent from April 2013. The average workweek at 34.5 hours was also unchanged from March, though it was up slightly from April 2013. Read More
Bulls are a fast-disappearing species on Main Street. Spooked by the big sell-off two weeks ago in high-octane momentum stocks, the percentage of individual investors that say they are bullish is at the lowest level in a year.
Proving once again that Main Street is still wary of the U.S. stock market after the 2007-09 meltdown, only 27.2% of the members polled by the American Association of Individual Investors said they were “bullish” on the stock market as of last Thursday. That marks the lowest reading since April 18, 2013, when just 26.9% said they were bullish. Read More