The recovery in the US economy is hardly V-shaped like the stock market. The US economy has only recently stabilised and stopped getting worse. The consensus among economists is that there will be a very slow recovery..with a few people like Minister Tharman warning of a W-shaped recovery. So why has the stock market surged up?....Look at this chart:Yes, and the Fed will stop its quantitative easing soon....so guess what comes next for the stock market....
Tuesday, September 22, 2009
There is this message that tends to get drilled into your head when you watch enough of CNBC or Bloomberg TV - the stock market and the economy are closely linked and the recent strong stock market performance is due to a fast recovering economy. I think it is more like the strong stock market makes people think the economy stronger than it really is because they watch too much CNBC, Bloomberg and CNA and much of the MSM that tells them the 2 things are correlated. I recall a Buffett interview/talk during which he said that this is not true. I can't find the link for that interview but this guy on YouTube explains what Buffett said quite well:
Posting Time 2:05 PM
Posted by Lucky Tan