And the DOW is at $13,952.53 within the last twenty minutes. Based, not on rampant speculation but investors functional belief on the state of the economy... with earnings reports to come out today, we may (or may not) break $14k.
The stock market indices (DOW, S & P) are now back to the levels they were in 2000, before the decline, correction, or bubble busting, whatever you would like to call it. Now, inflation adjusted, it appears to me that the stock market may not correlate well with the economy at present or future.
However, you can look at the individual sectors of the market, like the national home builders, Home Depot, etc., and they paint a very different picture for the economy.
The market has been responding to a very weak and cheap dollar. Any international company has seen its stock price soar. That goes along with the dollar denominated product, services, or commodities. It does not mean that our economy is doing well. It means relative to the rest of the world visa-vie our currency, we are cheap and since we have flooded the world with dollars, investors are exchanging them for our goods and services.
Since we import more than we export, that is inflationary. To the degree foreigners are buying goods and services that we buy locally, they will inflate the price.
Housing has been stung by the subprime fallout for investors. They ain't willing to take on that risk level at the same price so that either reduces credit availability outright or makes it more expensive with higher mortgage interest rates.
Net, net, stagflation with a bias to rising mortgage interest rates, flat to declining home prices.
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