Market makers and day traders contribute to the majority of the daily trading volume. Market is highly manipulative. Patient investors may see short term loss in a fluctuating market. Market makers manipulate down the market on investors worry of a stagnant economy in which the majority of household do not see improvement in personal wealth due to suppressed wage, depressed home price, and a low return of money market.
It has been mentioned in late 2010 that the "economic" (wealth?) recovery is gathering speed, especially for the rich who recover the majority of wealth since the beginning of financial meltdown. At the present moment, most of the rich should have fully recovered the wealth if not surpassing the peak. However an undesirable consequence of the recovery is concentration of wealth. The wealth gap now is wider than at the economic peak in 2007 before the financial meltdown. It has been a combined effort of wealth creation and transfer of wealth. The rich are at a much better edge than the average household.
Post-Recession, the Rich Are Different
Bentleys and Hermes bags are selling again. Yet the wealthiest Americans are emerging from the financial downturn as different consumers than they were.
Though many of these people might seem unscathed by the financial crisis -- they didn't lose their homes, jobs or retirement savings -- they were deeply affected by what took place around them.
What's showing up in the latest research is a broad-based caution -- a sudden aversion to salespeople, a tepid response to ads focused on brand images, and a new interest in price-shopping.
Items the rich do value at full price are one-of-a-kind clothes and accessories and experiences that create fond memories.
Rich spend, others scrimp, retail reports show
The rich are back to pre-recession splurging: Saks Fifth Avenue and Nordstrom customers are treating themselves to luxury items like $5,000 Hermes handbags and $700 Jimmy Choo shoes, and they're paying full price.
The wealthy were the first to start spending again after the recession. Middle-class Americans' spending started picking up late last year.
"While the U.S. economy is showing some signs of improvement, we expect the recovery will continue to be slow and uneven, particularly for more moderate-income households," Gregg Steinhafel, Target's chairman, president and CEO, said on a conference call with analysts Wednesday.
The divide is prompting retailers to alter their strategies: Luxury stores like Saks Fifth Avenue, which had added more items, from shirts to suits, at lower prices after the financial meltdown in late 2008, are again rebalancing their assortments. Now, it's back to the $300-plus dress shirts.
World's Billionaires 2011
This 25th year of tracking global wealth was one to remember. The 2011 Billionaires List breaks two records: total number of listees (1,210) and combined wealth ($4.5 trillion).
While nearly all emerging markets showed solid gains, wealth creation is moving at an especially breakneck speed in Asia-Pacific.
The Yes-Yes Stock Market
The doubling of the stock market has almost precisely tracked the path of large-company earnings. In 2009's first quarter, when the Standard & Poor's 500 bottomed below 700, earnings of S&P companies were $12.83 per share. In the current quarter, the consensus forecast is $24.69. It's hard to get closer to an exact doubling of Corporate America's bottom line.
It would seem that cheapness isn't the reason to buy stocks at this stage of a bull market, yet stocks aren't so blatantly expensive that valuation argues for bailing out. The economic data will need to re-establish momentum for the market, but re-leveraging and merger-and-acquisition activity will remain supportive.
Effect of QE2's End May Be Greatly Exaggerated
The economy's acceleration was well under way when Fed Chairman floated the idea of QE2 in late August, he points out. Moreover, no serious economist doubts the dictum that monetary policy works with long and variable lags. Indeed, gross-domestic product growth slowed to a 1.8% annual rate in the first quarter, from 3.1% in the fourth quarter of 2010.
The most important impact may have been psychological; because the market participants thought QE2 was affecting prices, they did. And so the dollar fell in response to the Fed's securities purchases, mainly because that's what traders, expected, he concludes.
There is no argument that QE2 has had limited impact on economic growth so far, which no serious economist would assert was the case given the lagged impact of monetary policy. Moreover, data show no response in the money supply from QE2 as the Fed's Treasury purchases merely have expanded excess reserves in the banking system, as David Levy points out.
QE2 has had negligible effect on the economy, at least so far. Any improvement in employment was the result of what happened months before the Fed started buying securities.
No comments:
Post a Comment