(
I-Canada-News.Com, June 15, 2013 ) Ontario, Canada -- In an October 1/12 online Money Map Report article, author Martin Hutchinson contends that the Dow and Standard & Poor’s cannot have a real (not artificially induced) Bull run for at least 9 years! According to Mr. Hutchinson, the REAL DOW number – the one that actually reflects what is happening now in the current U.S. economy, pegs the Dow at 8,800. If true, (and Mr. Hutchinson makes a compelling case that it is true) America’s Stock Market is ARTIFICIALLY INFLATED by a whopping 50%! He contends that the connection between the stock market and the U.S economy has been erased – and the U.S. Government has intentionally decoupled the stock market from the economy.
According to Mr. Hutchinson, that precise decoupling moment happened on February 23rd/1995 when Federal Reserve Chairman Alan Greenspan first suggested the loose monetary policy that has “Stolen the American Dream from so many investors! This abrupt reversal of policy spurred an immediate rally in stocks. And overnight, an unthinkable precedent was put into effect.”
“This OPENED THE FLOODGATES to QUANTITATIVE EASING, money printing and interest rate manipulation which has become The Fed’s MO for the past 17 years.” He cites a recent Federal Reserve Bank of New York report (July 11/12) that confirms “As much as 50% of the S&P 500’s gains since 1994 are due to market reactions to Fed monetary policy announcements. Since February of 1995, America’s average yearly inflation rate has been 2.48% and the average annual GDP has been only 2.38%!” If the historical relationship between GDP growth, inflation and the Stock Market Index held true after 1994 as it did between 1947 and 1993, the Dow would have closed the second quarter of 2012 at 8,808, not 13,000!
According to Mr. Hutchinson, a recent study by Robert Gordon of Northwestern University shows that America’s economic growth may be going the way of the Japanese economy and growth may slow to almost 0! Mr. Gordon’s study shows that U.S. GDP doubled in just 28 years between 1929 and 1957 and doubled again in the 30 years between 1958 and 1988! Morgan Stanley has recently reversed its forecast for America’s GDP growth in 2013 downward – to 1.75% from the previous 2% growth estimate. Mr. Gordon’s study makes a case that GDP growth in the U.S. may have ended completely!
At the end of the day, Mr. Hutchinson’s POINT IS THAT STOCK PURCHASERS NEED TO LOOK PAST SHARE PRICE APPRECIATION AND FOCUS on DIVIDEND STOCKS! His personal credentials are impressive, having worked in a number of major global investment banking operations, serving as an international financial consultant, advising foreign countries on behalf of the U.S. Department of the Treasury and serving as a Business and Economic Editor for UPI.
Disclaimer:
This report is based on information available to the public. The information and any statistical data contained herein has been obtained from sources we believe reliable, but we do not represent that they are accurate or complete and should not be relied upon as such. The material contained herein is for information purposes only.
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