Carpe Diem

Global stock market rally: The MSCI world index reached a new record high yesterday and surpassed pre-recession peak

worldstockI reported in January that the total value of world stocks (based on data from the World Federation of Exchanges) reached a record high in December of $65.3 trillion and recaptured all of the global equity value that was lost due to the severe global recession and the various financial, mortgage and housing crises in 2008 and 2009. Scott Grannis reported this week that another measure of global equity values from Bloomberg reached an all-time high in recent weeks.

Consistent with those recent record highs for the market value of world stock markets, the MSCI World Index reached an important milestone yesterday by closing at a new all-time record high and surpassing the previous, pre-recession high in October 2007 for the first time (see chart above). Over the last year, the MSCI world stock market index increased by 17.5%, marking the 12th straight month that the world stock market index has registered double-digit gains on a monthly basis.

Bottom Line: The global stock market rally over the last five years to a record high yesterday for the MSCI world index has added back more than $36 trillion to world equity values since 2009, and demonstrates the incredible resiliency of economies and financial markets to recover and prosper, even following the worst financial crisis and global economic slowdown in at least a generation.

21 thoughts on “Global stock market rally: The MSCI world index reached a new record high yesterday and surpassed pre-recession peak

  1. There is a side note to this. Governments have been pumping money into financial institutions for many years now and the easiest place to put free money is in the stock market or real estate loans.

    This is fantastic for the governments because what is really inflation in housing and stocks is not reported on the CPI. Housing inflation is calculated though imputed rent – for instance and rents have not been going up – and they have not been going up as fast s house prices.

    So while it is nice to see the markets so high -I don’t believe it reflects a true picture of our overall health and may just be overinflated due to monetary goosing.

    • i think that is very much the case.

      it’s a form of cargo cult thinking.

      if strong stock and housing markets are signs of a good economy, then, if we make those markets strong, the economy must be good.

      alas, that is working out about as well as the “if we can get poor people to buy houses, bingo, they’ll be middle class” idea did.

      capital investment is low, job creation is punk, growth and income remain stuttering and depressed, and all the gains in unemployment have come from a drop in LF participation.

      it’s a VERY weak recovery, the weakest since the 30′s.

      but it has been one of the strongest stock market recoveries. i think that’s largely down to QE and ZIRP, not an economic boom.

      • They always try to mess with housing starts in the government because it considered a leading indicator and an easy one to affect with pumping money. Stock market is similar.

        But one you distort those markets for political effect the indicators are no longer valid.

        • “But one you distort those markets for political effect the indicators are no longer valid.”

          indeed.

          i find it deeply ironic that the same fed that has pinned short term rates at the zero bound and then spent what, $3.5 trillion flattening the yield curve then publishes a risk model based on rates and yield spreads as though it means anyhting.

          it’s like watching a butcher put his thumb on the scale right in front of you (while telling you he is doing it) and then saying, “yup, that’s an 11 pound steak!”.

    • It isn’t at all, and that’s the critical point. Very good observation.

      The underlying reality is virtually entirely disconnected from the market currently, and if we remove all the stimulus and support, look out below.

      The Fed has backed itself into a very dangerous corner here, saying they want to taper, but won’t remove QE if markets react severely, so markets now have an expectation of perpetual QE.

      Here’s a better explanation –

      http://www.zerohedge.com/news/2014-03-05/mark-spitznagel-warns-feds-frankenstein-markets-are-totally-illusion

  2. robert-

    your trolling is as transparent as it is financially illiterate.

    gee, you think the unprecedented in all of human history sized interventions into asset markets in the us might lift prices?

    shame it hamstrung jobs, led to punk growth, big drops in labor force participation, and continuing declines in personal income (which has not recovered from the recession).

    you use bad framing and silly taunts to try to sell a lump of coprolite as a diamond.

    in truth, you are simply a repetitive and financially/economically illiterate troll spouting talking points you do not even really understand the meanings of (which has become increasingly obvious from your repeated inability to actually speak to any of the issues or answer any questions)

    you are just a dogmatic troll and a fraud.

    i would continue to bury you under more data and logical arguments, but it is clear that you have no interest in such and likely could not understand them if you did. there are always going to be guys like you who have no idea what’s going on and, as a result, feel cheated and want someone to blame because others have more than you do. it’s quite sad really. your envy and incomprehension lead you to adopt absurd beliefs and you use them to feed your entitlement.

    but, in reality, you are just an uninformed, repetitive, dogmatic troll. alas, there is little to be done about it. if guys like you could be swayed with data and logic, you would not be guys like you….

    so, i’m just going to ignore you as there seems to be little point in engaging.

    it’s like trying to teach a pig to whistle.

    wastes my time and annoys the pig.

    • QED.

      more banal talking points, not a drop of info, just like on the previous threads combined with straw men you know to be lies. for example, i am not a conservative and have repeatedly told you so, so, are you a liar or simply unable to assimilate simple information? which of those 2 makes you a worthwhile conversational partner?

      you have made my point for me.

      thanks.

  3. First, America is still a capitalist nation.

    Second, just because Obama is the president during a long stock market rally does not mean causation. As history have shown, businesses and the US stock market are quite resilient despite natural disasters, disease outbreaks, terrorist attacks and legislation with much unintended consequences.

    • i find there is a great deal of partisan selectivity in causality assignment.

      the stock market is up! obama!

      income is down. blame bush!

      8 million jobs lost! market failure!

      50 million jobs gained in the prior 25 years! jobs fairy!

      etc etc.

  4. So your claim is that Obama’s theft of trillions of dollars from hardworking Americans to give to his politically connected buddies on Wall St is somehow not the actions of a socialist? That’s pretty much the definition of socialism: taking from the politically out of favor (politically unconnected) to give to the politically in favor (politically connected).

    The ROI Wall St is now receiving from their bought and paid for president (a president who received more contributions from Wall St bankers than any other presidential candidate) is the largest ROI in the history of mankind.

        • Agreed, correct.

          I’m a big fan of subsidiaries – they contain all the poison of the parent co, with better service.

        • Yes. The saying “You shall know the tree by its fruit” is very apt. The poisonous fruit brought forth by the tree of socialism has killed more people and wrecked more lives than anything else in the history of the world.

    • robert, that was one of the most screwed up misstatements of someone else’s comments and such a complete misstatement of facts that i am literally astounded.

      i am beginning to think you are not even a person, but rather some sort of spambot.

      i have real doubts you could pass a turing test.

    • I’m wondering where in my original comment I mentioned a recession. I’m also curious as to why you think that TARP was the only transfer of money from taxpayers to Wall St. And I’m curious where you think I’ve defended TARP or Bush.

      Just an FYI, I think you’d be hard pressed to find a republican partisan on this site. Not being a democrat and head over heals in love with Obama doesn’t mean that one is a republican or even a conservative.

      Have you anything related to what I said or are you going to continue to change the subject to whatever it is you want to talk about?

    • The recession started in 2007“…

      Ahhh, the year the Dems took control of the House and Senate…

      Must be mere coincidence…

  5. The global stock market rally over the last five years to a record high yesterday for the MSCI world index has added back more than $36 trillion to world equity values since 2009“…

    Is that measured in quantitatively eased dollars or real dollars?

  6. In today’s world, financial “Markets” must be written in quotations as they are not free markets anymore. They are controlled by Central Banks. The CB’s manipulate the gold pricing through fractional reserve policy. QE money is put to work manipulating equities through the futures “markets” and currencies through the forex “markets.” If anyone believes the “markets” are free, they are not looking closely enough. If QE were to stop tomorrow, equities and bonds would crash.

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