Why has the stock market has been strong despite a weak economy?

Back about 40 years ago, an economist-wannabe co-authored a study in the Journal of Finance titled “The Supply of Money and Common Stock Prices”.

The article summarized an econometric study that demonstrated a tight link between the amount of money floating around and, on a slightly time-delayed basis, the price of stocks.

OK, fast forward to today.

Now, when the Feds expand the money supply, it’s called “Quantitative Easing” … or QE, for short.

Recently, Jason Trennert of Strategas Research Partners published a revealing chart that visually relates stock prices (the S&P 500) to the recent periods of quantitative easing.

Hmmm.

Looks like the supply of money and common stock prices are still related.

Partially explains why the Dow is over 13,000 despite a sluggish and uncertain economy.

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“Day of the Locusts – The Sequel” … Dylan gets knighted.

Earlier this week, President Obama honored Bob Dylan with a Presidential Medal of Freedom award.

Brought  back memories of my Princeton graduation.

It was during the Viet Nam War days … no academic robes, — just “together for peace” armbands … honorary degree recipient: Bob Dylan.

It was was a year of locusts in New Jersey ..  and, they were chirping loudly.

That provided inspiration for Dylan’s commemorative song : Day of the Locusts:

As I stepped to the stage to pick up my degree
And the locusts sang off in the distance
Yeah the locusts sang such a sweet melody
Oh, the locusts sang off in the distance
Yeah, the locusts sang and they were singing for me.

I put down my robe, picked up my diploma
Took hold of my sweetheart and away we did drive
Straight for the hills, the black hills of Dakota
Sure was glad to get out of there alive

Man, that was a long time ago.

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Ken makes the big time: cited in Wikipedia … what can possibly be better than that?

It was pointed out to me (by a Homa Files reader in the U.K.) that my posts have earned the ultimate external validation: cited in Wikipedia as part of George W. Bush’s bio.  (Look under “economic policies” and check out footnote 79)

Here’s the link to the article.

http://en.wikipedia.org/wiki/George_W._Bush

After Wiki, all else will pale in comparison