The line has always been only loosely correlated with economic quality as experienced by the masses, and now it has finally become completely untethered.
Also, see reverse factoring, the new financial tool that let's companies pretend to have much better financials then they do and is probably the next big bubble that will entirely collapse when people start digging into it.
Ha ha, money printer go brrr. That's basically it. Enough artificial stimulus and enough buying of junk debt and investors know there are profits to be made in the short term. The fact that it's handing the federal government more power and ruining the economy in the long term doesn't matter for today's stock price. Don't fight the fed, don't fight the tape.
Err.. I mean, according to them, they are expanding the pool of money available, by buying out the junk bonds issued by corporate America. The same bonds from the cheap loans that they took out at super low interest rates, in order to buy back their shares, thus increasing their stock value, and enabling them to give millions of dollars in bonuses to their executives. While everyone else, gets an unpaid furloughed vacation and unemployment.
The Fed Reserve balance sheet is up about $2 trillion dollars due to COVID policy.
The Treasury has also spent about $2 trillion on jobs programs. About 70% of people on unemployment are currently getting more money than they were earning while working.
The Fed made it very clear that they will put as much money as needed to prop the stock market. They are even buying ETFs, which is one step short from buying stocks directly in the open market. That's why people holding stock feels confident while the economy is burning.
As I said, they're just one step short of buying equities. They're throwing money at investment companies and buying corporate debt, this can have no other result than inflating the stock market.
companies don't have to pay as many employees anymore so that means more money possible to be returned to shareholders
what's not to get about that
let me break it down:
money from a business operation goes into account. some money goes to costs such as employees. the rest doesn't go anywhere but is owned proportionally by shareholders. now the employees are fewer and most never needed to be there to begin with, but people - the clients - keep putting money into the account. the proportional amount for shareholders keeps growing, so other people are willing to pay an existing shareholder more for the existing share.
