With the well-known fact that the markets are being artificially propped up by the Fed and record corporate stock buybacks, just what would the market be worth if you took those away?
By the numbers:
*Current Corporate Debt is at $9 Trillion USD
*Current Federal Reserve Sheet Balance is $4 Trillion USD
*Current Stock Market Capitalization in the US is $30 Trillion USD
*Subtracting corporate debt and the fed balance sheet from total market cap gives us a current value of 56% of its current value
The Real Value of the Stock Market?
The stock market would be worth only 56.66% of its current value without all the rampant manipulation which punishes Main Street and rewards Wall Street. Savers get decimated, losing out on trillions in potential income from lost savings due to artificially low interest rates to keep the stock market propped up.
To make matters worse, record price to earnings on stock shares are not producing good earnings for companies, housing prices are still out of reach of the average renter in hopes of one day owning their own home, and a global economic slowdown is unfolding, with even China facing its biggest financial risk from a European Union expected to go into recession sometime this or next year.
Current quantitative tightening may prove to be fatal for the current bull market, with recessions ensuing in 10 out of the last 13 times in history when the Federal Reserve raised rates after a period of lower interest rates.
It really is a matter of time before the next market downturn occurs with the US nearing its record for the length of a business expansion cycle. As shipping demand drops on lessened consumer demand, the next recession could be here sooner than people think.
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