Markets right now

[swag]

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[Wounded Bear]

1. Cute...

[SouthernCal_Dem]

2. There is no such thing as a free market when it comes to American capital markets

The Fed will eventually be buying stocks. They've already gone down the path of buying US treasuries, corporate bonds, and high yield junk bonds. Stocks are next.

The buying of corporate bonds and high yield amounts to a form of social welfare for businesses which allows them to borrow money at much lower rates than they should be. Many of those businesses are very risky and tax payers will be on the hook for any bailouts. Privatize the profits and socialize the risk.

[Yavin4]

4. Is the Fed going to buy coke for the brokers as well? n/t

[MoonlitKnight]

5. I would not be surprised if they aren't already buying stocks

And acting as a market maker.

But the purchase of high yield junk bonds has pretty much had the same effect. It freed up that cash as elevated prices that those hedge funds are now just plowing into stock purchases. And the oil deal to limit production has helped stocks as well.

They need to purchase and refinance mortgages. Buy them up, refi to 3% 30 year fixed with first payment in three months no interest with the homeowners having the option to decline if they like what they have. No fees, no appraisal, no paperwork at all. Then they can start reselling them on the open market gradually.

[SouthernCal_Dem]

6. Exactly right...

The fed purchasing of high yield not only allows risky companies to sell bonds at lower rates than they should be, but hedge funds who own those same bonds turnaround and sell them to the fed, take the cash and buy up stocks chasing the stock market higher.

If you look at stock valuations right now, one could make the argument that the stock market is not only more overvalued now than it was at the all time high in feb, but it’s even more overvalued than the dot com bubble. This is because forward earnings have crashed due to the coming depression. The forward earnings crash is sending p/e valuations higher.

There’s so much money out there and it’s going to all the wrong places. Our economy cannot efficiently allocate capital and give it to the right people.. Everything is broken.

[MLAA]

3. True, true