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Stock markets are at their highest for ages, apparently. What effects does this have on our economy, and what does it mean? The article suggests rising confidence in the economies, so that means banks may lend more? Lack of which has been part of the problem, hasn't it?
Yeah? Plans to limit bonuses and high tax rates seem to be scaring off all those financial types and causing chaos in the financial markets as the politicians on the right have suggested
It means I'm wondering whether its time to cash in my shares I've had in a tracker fund since the building societies de mutualised and handed me a load of their shares which I sold into a PEP.
nah. Just tons of capital (thank you, central banks) looking for a home.
Fundamentals are still poor, but the capital has to go somewhere. Demand for any assets will raise their prices. Although I gather US corporate profits are looking good so maybe the yields are holding up as well.
Stock markets have risen strongly (from when the bears were at their most vocal) for three main reasons: (1) valuations were distressed eg banks trading at 70% discount to their net assets, (2) the Euro elite fudged another stop gap and (3) liquidity is abundant.
So this has created an element of a wealth effect. But note how many companies share prices have slowed again very recently (now that the new bulls have become vocal) as distressed valuations have been eroded but companies are still generating returns below cost of capital.
Share prices have also risen on very low volumes so ignore all the false headlines from stock-pushers claaiming a wall of new money. That is BS.
None of these hurts but as the latest figures show for the Uk there are other reasons why the banks are not lending. It will take more than a rally if distressed valuations to change that. Plus the latest round of Euro shenanigans is just around the corner. The people are speaking even if their elites are not listening.
Quantitative easing, inflation, and unintended consequences. Except it might actually be intentional.