becuase the stock market has nothing to do with long term income of individual companies. Companies are rewarded on the stock market for doing things that hurt them, suck as firing people and raising prices. The stock market is based on making as much as possible with as little investment and overhead as possible. Companies that invest back into the company and continue growing their business, pay less profit to shareholders, and thus are worth less on the stock market.
On Fri, Apr 18, 2008 at 12:56 PM, Edmund Storms <[EMAIL PROTECTED]> wrote: > I'm confused. Perhaps someone on this list has the answer. Everyone who has > discussed the issues here seems to agree to the following: > > 1. Increase in energy cost will drive up food and other commodity prices, > which will reduce consumer spending. > > 2. Increased cost of personal transportation will reduce consumer spending. > > 3. The collapse of the housing market will reduce consumer spending. > > > 4. The fed generated inflation will reduce consumer spending. > > 5. Loss of jobs will reduce consumer spending. > > Consumer spending determines the profit of companies. So, why then is the > stock market going up? > > Ed > > > > > > > Stephen A. Lawrence wrote: > > > > The government office concerned with such things has predicted that oil > prices will average about $101/bbl this coming year, if I recall correctly. > > > > Commodities traders don't seem to agree. As I write this, May crude oil > contracts are going for $116.82/bbl. > > > > That's up $4 in the last four days. > > > > > > Sorry if this seems boring or off topic, but I'm finding this run-up in > oil prices fascinating/horrifying. It's presumably driving the food price > problems, of course. And in turn, the oil price run-up is no doubt driven > in part by the nascent recovery in the U.S. stock market (which may very > well sputter again, of course, due in large part to the run-up in oil > prices). > > > > Leading indicators blipped up in March, for the first time in months, > despite the stock market still being down. Ratios of coincident to lagging > and leading to lagging are still both down, though, for whatever that's > worth. Here's the text from the first page of the March leading indicators > report: > > > > ========================== > > [begin quoted text] > > > > • The leading index increased slightly in March, following five > consecutive monthly declines. Money > > supply (real M2)*, index of supplier deliveries (vendor performance) and > the interest rate spread > > made large positive contributions to the index this month, offsetting the > large negative contributions > > from initial claims for unemployment insurance (inverted), building > permits and stock prices. During > > the six-month period ending in March, the leading index declined 1.6 > percent (a -3.3 percent annual > > rate), and the weaknesses among its components have been very widespread. > > > > • The coincident index also increased slightly in March, following a > decline in February. Industrial > > production contributed positively to the index in March, more than > offsetting the decline in > > employment. Despite this month's gain, the six-month change in the > coincident index has fallen to - > > 0.1 percent (a -0.2 percent annual rate) from September 2007 to March > 2008, down from 0.6 > > percent (about a 1.1 percent annual rate) in the six-month period through > December 2007. In > > addition, the weaknesses among the coincident indicators have been very > widespread in recent > > months. The lagging index continued to increase in March, and as a > result, the coincident to lagging > > ratio continued to decrease for the third consecutive month. > > > > • Since the middle of 2007, the leading index has been declining while the > coincident index, a measure > > of current economic activity, has also deteriorated in recent months. In > addition, the weaknesses > > have also become more widespread among the components of both indexes. > Meanwhile, real GDP > > growth slowed substantially to 0.6 percent in the fourth quarter of 2007, > down from 4.9 percent in > > the third quarter and an average of 2.2 percent, annual rate, in the > first half of 2007. The current > > behavior of the composite indexes suggests economic weakness is likely to > continue in the near term. > > > > > > > > -- That which yields isn't always weak.
