Dow surges to record highs as rally continues

[Steve williams]

is this just another bubble waiting to burst???

Reuters By Angela Moon

NEW YORK (Reuters) - The storied Dow Jones Industrial Average surged to a new record on Tuesday, breaking through levels last seen in 2007 as investors extended 2013's rally.
Investors have poured money into equities in 2013 as signs of economic recovery take hold. The Dow has gained more than 8 percent so far this year, ahead of the S&P 500 and Nasdaq Composite Index.
If the Dow ends the day at these levels, it will also set a new record closing high, above 2007's 14,164.53.
Shortly after the opening bell, the Dow rose above 14,198.10, the intraday all-time high reached in October 2007, when the world was heading toward the financial crisis.
"We have a pretty strong market, the economy seems to be taking advantage of a low interest rate environment. What happens when this QE3 kind of evaporates or goes away, that's the major question in the back of my mind," said Anthony Conroy, head trader at BNY ConvergEx, an affiliate of the Bank of New York.
"But right now, the economy, the market, everything looks fairly healthy. Stocks still look fairly inexpensive."
Analysts said Tuesday's advance was due less to one specific catalyst and more to the same factors that have been driving the rally this year, namely attractive valuations and liquidity from loose monetary policy around the world.
The Dow Jones industrial average was up 129.77 points, or 0.92 percent, at 14,257.59. The Standard & Poor's 500 Index was up 13.72 points, or 0.90 percent, at 1,538.92. The Nasdaq Composite Index was up 33.12 points, or 1.04 percent, at 3,215.15.
Tech stocks jumped, pushing the Nasdaq up more than 1 percent. Qualcomm Inc was one of the biggest gainers, with shares up 2.3 percent at $68.15 after the world's leading supplier of chips for cellphones said it was raising its quarterly cash dividend by 40 percent.
United Technologies Corp was the biggest gainer on the Dow index, up 2.3 percent at $91.18, followed by Bank of America, up 1.8 percent at $11.61.
Stocks extended gains after data showed the pace of growth in the vast U.S. services sector accelerated to its fastest pace in a year in February.
(Reporting By Angela Moon; Editing by Nick Zieminski)

 

[edorr]

is this just another bubble waiting to burst???

Reuters By Angela Moon

NEW YORK (Reuters) - The storied Dow Jones Industrial Average surged to a new record on Tuesday, breaking through levels last seen in 2007 as investors extended 2013's rally.
Investors have poured money into equities in 2013 as signs of economic recovery take hold. The Dow has gained more than 8 percent so far this year, ahead of the S&P 500 and Nasdaq Composite Index.
If the Dow ends the day at these levels, it will also set a new record closing high, above 2007's 14,164.53.
Shortly after the opening bell, the Dow rose above 14,198.10, the intraday all-time high reached in October 2007, when the world was heading toward the financial crisis.
"We have a pretty strong market, the economy seems to be taking advantage of a low interest rate environment. What happens when this QE3 kind of evaporates or goes away, that's the major question in the back of my mind," said Anthony Conroy, head trader at BNY ConvergEx, an affiliate of the Bank of New York.
"But right now, the economy, the market, everything looks fairly healthy. Stocks still look fairly inexpensive."
Analysts said Tuesday's advance was due less to one specific catalyst and more to the same factors that have been driving the rally this year, namely attractive valuations and liquidity from loose monetary policy around the world.
The Dow Jones industrial average was up 129.77 points, or 0.92 percent, at 14,257.59. The Standard & Poor's 500 Index was up 13.72 points, or 0.90 percent, at 1,538.92. The Nasdaq Composite Index was up 33.12 points, or 1.04 percent, at 3,215.15.
Tech stocks jumped, pushing the Nasdaq up more than 1 percent. Qualcomm Inc was one of the biggest gainers, with shares up 2.3 percent at $68.15 after the world's leading supplier of chips for cellphones said it was raising its quarterly cash dividend by 40 percent.
United Technologies Corp was the biggest gainer on the Dow index, up 2.3 percent at $91.18, followed by Bank of America, up 1.8 percent at $11.61.
Stocks extended gains after data showed the pace of growth in the vast U.S. services sector accelerated to its fastest pace in a year in February.
(Reporting By Angela Moon; Editing by Nick Zieminski)

This has nothing to do with any fundamentals. It is just Bernanke's QE (Quantatiative Easing) money flowing into asset markets. The Dow took a big hit last week when there was some suggestion the FED might pull the breaks on QE. Meanwhile, with negative real interest rate, the small time risk averse saver that does not want to play the casino (and may lose his shirt if he decides to do so anyway) is getting monumentally screwed. When the next crisis happens that same small time saver (i.e. taxpayer) will be left holding the bag. For the record, the real motivation of QE has nothing to do with "unemployment". It is a backdoor scheme to recapitalize the major financial institutions, many of which are sill close to being insolvent. Under the current financial regime and FED policies are making out like bandits.....This is all a very cynical game.

 

[jazdoc]

From Zero Hedge a comparison of fundamentals compared to the previous 2007 stock market peak (http://www.zerohedge.com/news/2013-03-05/last-time-dow-was-here):

"Mission Accomplished" - With CNBC now lost for countdown-able targets (though 20,000 is so close), we leave it to none other than Jim Cramer, quoting Stanley Druckenmiller, to sum up where we stand (oh and the following list of remarkable then-and-now macro, micro, and market variables), namely that "we all know it's going to end badly, but in the meantime we can make some money" - ZH translation: "just make sure to sell ahead of everyone else."

•Dow Jones Industrial Average: Then 14164.5; Now 14164.5
•Regular Gas Price: Then $2.75; Now $3.73
•GDP Growth: Then +2.5%; Now +1.6%
•Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
•Americans On Food Stamps: Then 26.9 million; Now 47.69 million
•Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
•US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
•US Deficit (LTM): Then $97 billion; Now $975.6 billion
•Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
•US Household Debt: Then $13.5 trillion; Now 12.87 trillion
•Labor Force Particpation Rate: Then 65.8%; Now 63.6%•Consumer Confidence: Then 99.5; Now 69.6
•S&P Rating of the US: Then AAA; Now AA+
•VIX: Then 17.5%; Now 14%
•10 Year Treasury Yield: Then 4.64%; Now 1.89%
•EURUSD: Then 1.4145; Now 1.3050
•Gold: Then $748; Now $1583
•NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

 

[Phelonious Ponk]

I (ie; small time risk-averse saver) bought some BofA when it was trading like a dubious penny stock. I think it still has quite a bit of climb ahead of it. No doubt some of this is rate manipulation. Probably even more of it is the fact that analysts and traders, with all their tools and data, are about as strategic as a bunch of gamblers headed to Atlantic City in their lucky socks. But some of it is fundamental. There still are real companies out there that are really undervalued.

Tim

 

[edorr]

I (ie; small time risk-averse saver) bought some BofA when it was trading like a dubious penny stock. I think it still has quite a bit of climb ahead of it. No doubt some of this is rate manipulation. Probably even more of it is the fact that analysts and traders, with all their tools and data, are about as strategic as a bunch of gamblers headed to Atlantic City in their lucky socks. But some of it is fundamental. There still are real companies out there that are really undervalued.

Tim

Bank of America market cap is below liquidation value (net tangible assets), which is basically the market saying they believe the book value of their assets are overstated. A few years ago they were insolvent. This is precisely why the FED is proping them up (and Citibank and others). Since they are indeed too big to fail, this may indeed be a sound investment.

 

[Phelonious Ponk]

Bank of America market cap is below liquidation value (net tangible assets), which is basically the market saying they believe the book value of their assets are overstated. A few years ago they were insolvent. This is precisely why the FED is proping them up (and Citibank and others). Since they are indeed too big to fail, this may indeed be a sound investment.

So far so good.

Tim

 

[GaryProtein]

It's too bad the stock market has no bearing on the REAL state of the economy, which presently is terrible.

 

[rockitman]

if your an investor who is more fixed income/bond heavy...a gradual shift to more equities is in order, espiecally when rates will start to rise along with inflation. Equities are a better hedge against inflation. Cramer is somewhat of a clown, imo and is to be taken with a grain of salt.

 

[cjfrbw]

Great, the stock market went back to what it was 6 years ago, I feel so much better.

 

[treitz3]

From Zero Hedge a comparison of fundamentals compared to the previous 2007 stock market peak (http://www.zerohedge.com/news/2013-03-05/last-time-dow-was-here):

"Mission Accomplished" - With CNBC now lost for countdown-able targets (though 20,000 is so close), we leave it to none other than Jim Cramer, quoting Stanley Druckenmiller, to sum up where we stand (oh and the following list of remarkable then-and-now macro, micro, and market variables), namely that "we all know it's going to end badly, but in the meantime we can make some money" - ZH translation: "just make sure to sell ahead of everyone else."

•Dow Jones Industrial Average: Then 14164.5; Now 14164.5
•Regular Gas Price: Then $2.75; Now $3.73
•GDP Growth: Then +2.5%; Now +1.6%
•Americans Unemployed (in Labor Force): Then 6.7 million; Now 13.2 million
•Americans On Food Stamps: Then 26.9 million; Now 47.69 million
•Size of Fed's Balance Sheet: Then $0.89 trillion; Now $3.01 trillion
•US Debt as a Percentage of GDP: Then ~38%; Now 74.2%
•US Deficit (LTM): Then $97 billion; Now $975.6 billion
•Total US Debt Oustanding: Then $9.008 trillion; Now $16.43 trillion
•US Household Debt: Then $13.5 trillion; Now 12.87 trillion
•Labor Force Particpation Rate: Then 65.8%; Now 63.6%•Consumer Confidence: Then 99.5; Now 69.6
•S&P Rating of the US: Then AAA; Now AA+
•VIX: Then 17.5%; Now 14%
•10 Year Treasury Yield: Then 4.64%; Now 1.89%
•EURUSD: Then 1.4145; Now 1.3050
•Gold: Then $748; Now $1583
•NYSE Average LTM Volume (per day): Then 1.3 billion shares; Now 545 million shares

Those are some scary numbers. Wow. Just Wow.

Tom

 

[Bill Hart]

I always found Jimmy Buffett to be more interesting than Warren Buffett for what it's worth.

 

[rockitman]

I always found Jimmy Buffett to be more interesting than Warren Buffett for what it's worth.

Yes, Buffet is another meddler similar to the righteous ego that is Bloomberg...