A few working theories.
Massive “wealth effect” causing risk assets to surge. The wealth effect occurs when stocks are way up and degenerates peruse markets for greater gains.
Fed and government stimulus which has increased the money supply causing excess risk taking. This is classic inflations and we’re seeing it in RT in the markets.
Low rates. With rates this low, it pays to borrow to speculate.
The ancillary beneficiaries of the soaring market, presently valued at near $60 trillion, is the surge in cryptos and other non-traditional assets like art and other collectibles. The knee-jerk reaction is to fade this idea — because manias come and they go and they always go a lot faster from whence they came. But what is thew catalyst in the near term? We have a government on the cup of doling out another $1.9t and the ball is quickly rolling downhill.
At the end of it all is the notion of confidence. There is hubris embedded in this tape — extreme confidence. You cannot will it away. In order to break this spell, you’d need some significant damage to important momentum sectors.
My advice: keep going until it stops working.Comments »