Is The New Record High In Stocks Irrational?

Published Friday, November 8, 2019 at: 7:00 AM EST

The Standard & Poor's 500 stock index, the key benchmark of current financial and economic conditions, closed at an all-time high for the second week in a row.

Is it irrational exuberance?

These four charts show the latest data on key fundamental economic factors driving financial market prices.

Third quarter economic growth reported by the U.S. Bureau of Economic Analysis came in at 1.93%. Three of the four factors in economic growth — business investment, net exports, and state and local government spending — did not contribute to growth but consumer strength offset them and was the source of the 1.93% quarterly growth rate for the U.S. in the third quarter of 2019.

Meanwhile, the manufacturing sector — which accounts for just 11% of U.S. growth — remained in recession but rebounded slightly last month, according to the latest data from the Institute of Supply Management. It may have bottomed.

The Federal Reserve's key lever in promoting growth, the yield curve, uninverted, indicating that fears of a recession may be overblown, and the financial obligations ratio — a key measure of consumers' free cash flow after paying monthly fixed expenses — remained near its strongest level in decades after ticking lower last quarter.

No one can predict the next move in the stock market. However, the latest economic data indicates that the record stock prices are pretty darn rational.


This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial or tax advice without consulting a professional about your personal situation. Tax laws are subject to change. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. No one can predict the future of the stock market or any investment, and past performance is never a guarantee of your future results.

This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation.

Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.

2021

    2020

    2019

    2018

    2017

    2016

    2015


    Investment Updates

    • The Bad And Good Financial News This Week 

      Retail sales dropped sharply in December and business-owner optimism plunged but events in the Washington, D.C. overshadowed everything. Yet share prices of America’s blue-chip stocks did not drop very much and the consensus forecast of economists released today predicts a strong recovery for the next

      Read more >>

    • Read More

    Newsletters Sign Up

    Account Login

    Contact Info

    Kohlhepp Investment Advisors, Ltd.
    3655 Route 202, Suite 100
    Doylestown, PA 18902
    Phone: 215-340-5777
    Fax: 215-340-5788
    Email: Info@KohlheppAdvisors.com

    Securities offered through Cambridge Investment Research, Inc. a Registered Broker/Dealer, Member FINRA/SIPC. Investment Advisory Services offered through Kohlhepp Investment Advisors, Ltd., a Registered Investment Advisor. Kohlhepp Investment Advisors, Ltd. and Cambridge Investment Research Advisors, Inc. are not affiliated.

    Due to various state regulations and registration requirements concerning the dissemination of information regarding investment products and services, we are currently required to limit access of the following pages to individuals residing in states where we are currently registered. We are licensed in the following states: AZ, CA, CO, DE, FL, GA, IN, KY, LA, MA, MD, NC, NJ, NY, OR, PA, RI, SC, TX, VA, VT, WA


    Check the background of this firm on FINRA's BrokerCheck