While the increased monetary base may not be the only reason stocks are higher recently, it is difficult to look at a chart like this and not make assumptions that all the money sloshing around the system has at least some impact on stock prices over time.
The question is what happens to stocks when the Fed begins to remove much of this from the system.
I think the key is how quickly the monetary base is adjusted. Frankly, I think the base should be adjusted downward just a bit right now to keep the DOW at around 10,000. The hit from 14k to 10k sucks, but it's livable, and I think the rates should be adjusted very slowly upward, keeping the DOW near 10k, until it is back up to at least 2%.
November 13, 2009 at 11:03 am
aboutthis blog
Brian Sullivan joined FOX Business Network (FBN) in April 2008 as an anchor. He co-anchors the 10am-12pm ET hours of the FOX Business block.
Prior to joining FBN, Sullivan served as an anchor for Bloomberg Television where he hosted the programs Morning Call and In Focus.
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Corey in GA
I think the key is how quickly the monetary base is adjusted. Frankly, I think the base should be adjusted downward just a bit right now to keep the DOW at around 10,000. The hit from 14k to 10k sucks, but it's livable, and I think the rates should be adjusted very slowly upward, keeping the DOW near 10k, until it is back up to at least 2%.