THE BULL MARKET OF 2009

From about mid-March through the end of this year, the stock market indices have risen marketly. A common explantion of this increase in confidence in the investing community is that the week dollar is the cause. This may not be the case as the dollar was weaker in 2008 and the stock market indices declined.

From my post on Motley Fool - #313939 on the Investment Club Analysis/Macro Economic Trends and Risk.: About the stock rise being due to the falling dollar, from February 28th through August 5th in 2008, the dollar index spent only one day above 74.0 (June 13th at 74.06). All this period is lower than we have seen to date this year. I don't recall any boom in the stock market then. In fact the S&P500 fell from 1367 to 1285 during that period or 6%. Personally, I think the claim that our present stock market cyclical bull market is due to the weak dollar is pretty weak. I'm not sure what the bull market is due to, perhaps speculation that the stock market drop overshot in its decline? Optimism that the all the stimulation from super low interest rates and Federal stimulus is bullish long term?

Incidentally in an op-ed article on 3 December 2009, Robert Samuelson said, "Despite huge federal budget deficits, total borrowing in the economy dropped in the first half of the year; this hasn't happened in statistics dating to 1952." http://www.washingtonpost.com/wp-dyn/content/article/2009/12/02/AR2009120203400.html This is a measure of just how much borrowing has dropped in the non-govermental sector in 2009 to counteract Federal spending. In view of this, perhaps it is not surprising that inflation is tame.