Earlier today the Dow industrials notched an all-time intraday high and now seem poised to exceed their record closing level of 14165 from October 2007. A record-setting stock market and an anemic economy? How does that make sense? Clearly Wall Street is all hopped up on “Fed steroids” rather than fundamentals, says USA Today.
Maybe not. Economist Mike Darda of MKM Partners notes that to reach a new high in inflation-adjusted terms, the Dow Jones industrial average would have to rise to 15,397.5, about 8% above its current level.
More importantly, the Dow hasn’t “really climbed much relative to two important nominal aggregates: profits and the money stock,” as the next two charts show:
He also notes there’s been “a very tight linkage” between jobless claims and stock prices, showing the market is keying off fundamentals.