Hey, Fed – Where’s Our Silver Lining?

As I read the news and watch the markets, I’m struck by the yawning difference between what’s going on with the economy and what is happening with equities.

I know the worn out arguments.

People are buying stocks because they don’t have many choices. That’s fair, to some extent. The return on stocks (dividends, expected earnings growth) is higher than the interest paid on bonds.

Then there’s this one: Foreign investors moving to U.S. dollar-denominated holdings are driving up prices.

And my favorite: Stocks will keep going up because… they’ve been going up. I’m not sure how that makes sense, but I guess it follows some thread of logic.

There is some truth in each of these, but we need to keep one overriding factor in mind.

For years the silver lining has been