Prices continue streaking higher in this bull market – already the longest and sharpest expansion in recent history. Today’s count is 1,181 days since the last bear close in 2009, outpacing the 1,154 day 2003/2007 bul market. Further, the S&P500 gain of 266 percent from its 2009 low, exceeds the previous 254 percent record of the 1996/2000 recovery.
Consider the fundamentals supporting this record performance.
1. Interest rates now at unprecedented lows will not rise given the strong hint of further Fed’s Board of Governors,
2. The current low rate of inflation should continue as unemployment hovers in the seven percent range.
3. Contrary to the ‘stagflation’ reality of the previous, recent recessions, prices will remain stable given the rash of Asian imports for durables, electronics and other new consumer items. Whereas the continuing disquiet at the country’s foreign indebtedness takes center stage, the fact is that these low cost-high quality imports have broken the cycles of wage push inflation enabled by the oligopoly of steel and auto sector and by the strong union power it engendered.
4. Further, the disquiet at the expansion of the minimum wage service sector neglects the price stability resulting from the lack of market power by the franchised retail sector and of their employees.
These realities serve to support this bull market: it owes much to the continuing unemployment that restrains inflation. It allows the Fed to maintain its purchases, maintaining the low interest rates that yield high asset prices.
DJIA .54 percent
NASDAQ .33 percent
S&P500 .42 percent
