by Patrick O’Hare
What goes up must come down. That’s what Sir Isaac Newton suggested anyway in his Universal Law of Gravity. It is easy to think in watching the stock market since the end of June, however, that it does not adhere to the law of gravity. It has gone up, and stayed up, with only some minor dips here and there that have been bought quickly.
The flotation device it has used in its run to record highs has been monetary policy. Specifically, it has been the notion that the Federal Reserve, and other central banks, aren’t going to take away the punch bowl anytime soon.
The conviction of that belief will be put to the test with the September 20-21 Federal Open Market Committee (FOMC) meeting and perhaps as early as the coming week when Fed Chair Yellen provides a keynote speech at the Kansas City Fed’s Annual Economic Symposium in Jackson Hole.