Today’s bull market is the fourth biggest since
the 1929 crash after stocks have nearly tripled since the
financial-crisis low set in early 2009.
But more than any modern bull market, this one stands alone in that it’s
squarely out of step with economic growth. It’s being driven higher by
just a few wealthy participants and traders who have tacitly, perhaps
even unknowingly, agreed to drive prices higher.
The main reason for that is two-fold.
First, low interest rates have made other investments unattractive. The 10-year U.S. Treasury
BX:TMUBMUSD10Y
-0.39%
is yielding only 2.58%. Inflation is running at an annual rate of 2%.
That makes corporate bonds, certificates of deposit (which yield less
than T-bills) and other fixed-income products largely a losing
proposition. Those who have been buying bonds have been doing so for
safety.
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