8:49 PM
High frequency. That's how I describe the market economy these days. We have to be on a whole new high frequency to keep up with what's going on. Or at least I'd like to think so. We have had quite a bit of information to digest. With Quantative Easing in place with the Fed buying mortgage backed securities at a furious pace, which will keep interest rates low; perhaps as far out as 2016, giving investors more incentive for dividend paying stocks. ETF's are also a big product now (no more stock picking).
What will Treasuries be like in one year? Flatlined? Well, maybe. The demand for them surely can't be increasing. Someone must know something I don't. Well.... yeah.
The S&P 500 has had a good three-year run. Throughout it all.... fiscal cliff, etc., the S&P has been a leader as far as market barometers go.
The economy still has a demand problem.
Labor share of income hit an all-time low in 2012. Corporate investors reaped nice gains as the labor market stays weak. The Retail ETF (XRT) beat the S&P 500, while the Homebuilders ETF (XHB) was the cream of the crop.
And all of a sudden housing is back. Thank you Ben! The Fed move is tying more to housing than what I had expected. With that...........
expect housing to continue the recovery.... watch home affordability. And continued labor market woes. Recovering labor yes, but at a slow pace.
The central banker remains at the forefront around the globe. Bernanke really wants the world to jump on board his program for more bond buying. Will the foreign central banks also but mortgage backed securities. Will they invest in our housing? They just might.
That should ease unemployment. But what about inflation? Are we against the inflation clock? The Fed does not expect inflation to go above 2% at all. Someone, somewhere has to be shaking their head and wondering what the Fed is taking. It really can't be a dose of reality, can it?
I feel the Fed has told the world that we are all in this together. Will all the players come to the table and play the Fed game? We shall see.
34 charts from theatlantic.com was used as a source story.