Taking stock of equities run up

Yesterday we spoke of traders window-dressing their returns at year’s end to make clients portfolios look better.

Monday’s trading was not that, it was the black-box algos trading up to set new all-time high records on the Dow Jones industrials, the broader S&P 500 and the tech-laden Nasdaq.

The President-elect’s honeymoon is being extended as he rages on so do the machines.

Donald Trump’s war on the media, which gave him little chance of winning throughout the campaign, is the perfect illustration of “Things will change around here.”

And while traders don’t like change, the algos love it, thrive on it to make incremental bets a million times an hour to eke out profits.

On March 9, 2009, the Dow Jones was at 6,547.05. Today we may see Dow 19K hats on the trading floor.

Now as I have written many, many times, most of those gains came at the expense of Americans not in the stock market — in the form of zero interest rates.

The savings interest you would have received on your bank accounts, instead went to Wall Street in the form of cheap loans from Fed chief Janet Yellen to bolster profits in the ailing banking system.

It’s the ultimate zero-sum game. Main St. got zero, Wall St. got some.

And many middle class Americans lost that game, with some of them not even counted anymore as middle class because of lost jobs, homes and opportunities. But here we are.

So when a major exchange crosses a milestone number like 19K on the Dow, it’s headline news. And good fodder for the conversation around the Thanksgiving table.

But remember the Dow, S&P 500 or the Nasdaq are not the economy and in this cycle are almost contrarian bets to the health of the US.

 

 

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