Stocks at Record Highs for All the Wrong Reasons

by Rick Ackerman

The latest stats from Wall Street have confirmed what we already knew — that the dog days of this summer have been among the dullest ever recorded. “The past 30 days have been the least volatile of any 30-day period in more than two decades,” reported the Wall Street Journal Tuesday beneath the headline “Stock Market Turns Eerily Quiet”. Is it the calm before the storm — or simply a lull before the next big rally? The evidence is persuasive that it is the former, and that, in the current economic environment, it is ominous. For one, the stock market has been trending higher despite the fact that U.S. corporate earnings have fallen for five consecutive quarters. There are numerous other red flags as well. “Smart money has been coming out of the market for quite awhile,” notes our old friend Garrett Jones in his latest Observations. “The retail investor has been pulling money out, too. It seems it is the large multinational companies buying back their stock and the central banks that are responsible for the market’s advance.

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