Is it fair to give Ben Bernanke (and his predecessor Janet Yellen) much of the credit for the current bull market? After all, many have come to believe that ultra-low interest rates, coupled with aggressive stimulus in the form of bond buying, has lit a strong and durable flame under stocks. These same folks also fret about the market’s eventual response when the Fed finally starts raising rates, perhaps in the middle of 2015. To be sure, the Fed’s actions haven’t hurt. The era of easy money has helped the current bull to become the fourth-longest since 1929. Longest Bull… Read More
Is it fair to give Ben Bernanke (and his predecessor Janet Yellen) much of the credit for the current bull market? After all, many have come to believe that ultra-low interest rates, coupled with aggressive stimulus in the form of bond buying, has lit a strong and durable flame under stocks. These same folks also fret about the market’s eventual response when the Fed finally starts raising rates, perhaps in the middle of 2015. To be sure, the Fed’s actions haven’t hurt. The era of easy money has helped the current bull to become the fourth-longest since 1929. Longest Bull Markets Start End # Of Days 12/04/1987 03/24/2000 4,494 06/13/1949 08/02/1956 2,607 10/03/1974 11/28/1980 2,248 03/09/2009 Present 2,062 07/23/2002 10/09/2007 1,904 08/12/1982 `08/25/1987 1,839 Source: Bespoke Investments Yet the Fed fixation obscures another key driver of the ongoing bull market: Corporate profits. They’ve been rising at a solid pace since 2009, for some fairly direct reasons, including: — Steady top-line growth, which, of course, is the key factor behind profit growth. — Automation enabling companies to produce more with fewer workers. — Economic insecurity, which has given employers the upper hand in salary discussions. Read More