US Equities Strong

Watch the Rubble today. The Russian Federation continued along its path of dictatorship and central, one-man rule as Czar Vladimir Putin removed a credible and popular candidate, attorney Alexey Navalny from standing in the election of 2018. The hapless citizens of mother Russians hardly have any sort of say in the workings of their “government” that is unless they are in the inner circle of the Kremlin, sort of just like under the Communists. However, now at least the capital markets can voice their votes on the jackbooted Putin regime. The USDRUB rate as of press time was rising, meaning that it was taking more rubles to buy a US dollar, i.e. the Rubble was weakening. As you would think. But remember, everything, including everything is rigged in the Russian Federation. You can be sure that the oligarchs and their minions will be ordered to sell US dollars to keep the Rubble artificially strong. There will be only so much intervention that is ordered to take place before the banks will bend to the will of the global markets and relent, letting the USDRUB rate rise illustrating a perfectly democratic statement about what is happening in Russia today.

Will you have a look at the S&P 500? Talk about the proverbial runaway freight train. When will it end? Each day or three, brings news of the index of the 500 largest capitalized US corporations reaching a new all-time high. Not to put the kibosh on this party but we need to be steely eyed with all aspects of capital market undertakings: These new records are not redolent with robust and vigorous surges. On the contrary, each new record, while indeed higher than the previous high, is not so by very much at all. The market is drifting to these new records. It is not surging to them.  Keep in mind too that with virtually no alternative to park your investment funds (are you really going to put your fun money to speculate with into bonds or bank accounts that pay bubkiss?), most investors place their capital in the stock or stock market derivative markets. With record profits reported by corporations in the last quarter, since they are not plowing profits into investments for the future, but instead buying their own shares back and increasing dividend payments, the stock value are indeed rising. Once interest rates start to approach their long term average of around 5.25% we will see a balancing between long term debt investment and equity speculation. But that is not here yet. Current interest rates in the US are 1.25%. No one is running to capture those fantastic returns. The stock markets of America will continue to rise for the foreseeable future.