I understand that the Dow Jones average consists of a very cherried-up bunch of stocks. Nevertheless, it usually is at least somewhat tied to what’s going on in the real world. That doesn’t seem to be true lately.
In the face of Middle Eastern instability; Iran being months away from having a nuclear bomb; a stagflation economy; a potential shutdown and, if Obama ignores the 14th Amendment, a default; and the Obamacare exchange’s disastrous, with all the future trouble that portends, the stock market keeps going up. That seems very counterintuitive.
I have to believe that what’s going on with the stock market now is a bubble. After all, because a stagnant job market, a weak economy, and unstable national security are all inconsistent with a strong, healthy market. Add in the fact that the constantly-changing Obamacare rules, regulations, and crony exemptions keep employers and investors befuddled and cautious, there should be no reason for the market to rise. And yet it’s rising. . . .
My question is twofold, I guess: Am I right that this is a bubble? And if I’m right, what the heck is causing it? Nothing I look at today signals to me that investors should be cheerful and optimistic.