Crowd sourcing the market

[stoneaxe]

So when is this house of cards going to come tumbling down? Or if you think it's not...why?

http://www.marketwatch.com/story/us-stocks-rise-with-fed-speakers-on-tap-2013-05-21?dist=afterbell

[JeanG]

Do you refer to QE?

[stoneaxe]

Yes...what happens when the pump stops? I assume they'll ease out of it but it just seems like the market is a little artificial.

[lucabrasi]

I don't know but it just seems to be zooming along suddenly like the good old days from a few years ago.
I see all the shops around here with more riding mowers, four wheelers, tractors, cars, etc. than I may have ever seen on display in inventory for sale this spring. More than even five or six years ago. I would guess the sleds and snowblowers must have sold at quite a clip for them to order all of these months ago. I see vacant buildings coming back to life, some being added on to. I have seen more plans for homes (trophy/high end as always here) in the last few months than I may have ever seen in a similar stretch. These are breaking ground and being built, not just tire kicking people trying to get stuff for free and not building when they can't. There are an amazing amount of schools and other governement funded building going on everywhere. Plywood is up 30% since the first of the year. Other materials 10-30% too.  I hear of Boise, Denver, Las Vegas building like crazy. These places had miles of forclosures people walked from or never sold from spec endevours that are still sitting empty.
Are the banks waiting for the real estate prices to come back and then flood the market? I still can't quite figure out what is going on with all that and I am sure it is the same in Phoenix and Florida. I hear no one wants those homes now and that no one is building specs but..........that stuff has got to correct itself sometime. The banks can only shuffle numbers in columns so much for so long I would think. I don't know how that works but they are owned by someone and sitting empty......for years now in many cases. Even in the middle of nowhere here I could drive by 20 in the next hour I bet.
Market just seems to be zooming upward and upward.....way to fast.
It is going to come tumbling down. Something just isn't right it seems. If it happens this year or next......lots of stuff is going to be left in mid stride I think and make the last "crash" seem like kids play.

[PonoBill]

If you're talking about bond buying, then it's not that big of a deal, at current interest rates there's not much difference between a bond and a buck except for some psychological notion of obligation. I think wall street has become completely illogical, but that's no surprise.

As far as the general economy goes, it's not really smoke and mirrors. People make stuff and add value, people buy stuff. Lots of natural resources, lots of wind power and solar pv, lots of mineral and oil exploration. Reign in the feds a bit and things could be pretty robust.

[stoneaxe]

OH...I see a lot of that too. My company is very busy. I do see the improvement in the economy, houses, etc... I'm looking at existing houses as a possible investment and it's getting competitive. Decent places are getting bought up. But it seems to me to all be floating on the feds pump.

[JeanG]

The Fed is probably being a bit less active than they should be, if anything. Inflation is still a bit below trend/"target," so not anything to worry about.

[stoneaxe]

So the idea is to pump until it no longer needs propping up I guess? And then depend on increased productivity to pay the debt?
http://finance.yahoo.com/news/bernanke-signals-fed-maintain-stimulus-140054253.html

[JeanG]

The idea is to keep CPI inflation right around 2% per annum. It's currently running around 1.4%, I believe, which would suggest that the Fed is *under*pumping - and has been for the last several years.

[PonoBill]

OH...I see a lot of that too. My company is very busy. I do see the improvement in the economy, houses, etc... I'm looking at existing houses as a possible investment and it's getting competitive. Decent places are getting bought up. But it seems to me to all be floating on the feds pump.

Nah, the fed is a tweak. Interest for money is basically zero, so there's not a lot of places for it to go, and there's lots being made. If the banks don't do something monumentally crooked again the economy should be OK for a while. Most people with money are looking for a reasonable ROI these days, except for angel and first round investors, who are looking to win the lottery. In general that means a lot of small businesses being started, some houses being built, and some focus on value instead of low end consumerism.

[stoneaxe]

And then i read this....sheesh....what's a low level investor that counts on this to fund retirement in 10 years (hopefully) to do...
http://www.marketwatch.com/story/bernanke-out-by-august-qe-ends-rates-up-crash-2013-05-22

[JeanG]

That's just fearmongering. Yellen would make a great Fed chairwoman. Though it would be sad to see Bernanke leave, he's an excellent force on the board.

"Ms. Yellen is now widely viewed as a logical candidate to succeed the current Fed chairman, Ben S. Bernanke, when his term ends in January 2014. She has worked closely with him in shaping and building support for the Fed’s campaign to stimulate the economy and bring down unemployment."

[PonoBill]

No self-respecting (or maybe self-promoting) pundit wants to write about recovery. Crashes are fast and clearly marked--if you predict one and it happens, you win. Keep predict one and sooner or later you'll be right. Recovery's are slow and fuzzy--if you predict recovery no one can tell when or why it happened, so you lose.