Dow 11,000 despite an increase in job losses.

The markets continue to lift with the Dow closing above 11,000 last week for the first time since early May. Quite an achievement considering that the U.S. lost more jobs in September than expected and economic growth continues to be sluggish. So why such a disconnect between what’s going on in the labor market, the economy and the stock market? I hate to sound like a broken record but the point remains that as long as the Fed has such an accommodative monetary policy which includes record low interest rates and a commitment to buy treasuries when needed, where else can the cash go? Corporate America for the most part is also contributing to the market strength by continuing to beat earnings expectations by running their companies more efficiently and delivering higher profits to their bottom line. Here’s the problem: with all of this going on hardly anyone else from individuals to small businesses aren’t enjoying the benefits of higher profits and accomplishing new milestones because this tepid recovery is very bias and so far only a few components of the economy are benefiting.

My view is that in order for this stock market to continue to grow while minimizing volatility we must have an economic environment in which everyone is able participate in and benefit from. However, this requires real job growth and absolutely no tax increases amongst other things. My friends, in order for this to happen significant change in Washington must occur and from the looks of things, we are only a few weeks away 🙂

Have a great week.