Quantcast
Get breaking news alerts via email

Click here to manage your alerts
In a crummy economy, why are stocks soaring?



< Previous Page


Despite the wave of optimism, though, a record for the stock market isn’t a sure thing. If the next few monthly jobs reports are as weak as the last few, the unemployment rate will likely rise — a discouraging sign that nearly everyone notices.

And corporate profits are expected to be down in the current quarter compared with last year, in many cases because of weak demand in recession-plagued Europe.

Join the Discussion
Post a Comment

Europe’s stability is far from guaranteed. In the three years the debt crisis there has loomed over markets, several apparent solutions have turned out to be false starts.

Economists’ greatest single fear is the so-called fiscal cliff, a set of automatic tax increases and government spending cuts that take effect at the end of this year unless Congress acts.

President Barack Obama and many Democrats want to allow certain tax breaks to expire only for wealthier Americans. Republicans want to keep them for everybody.

Without a deal, taxes will rise, reducing people’s ability to spend and invest. A separate budget standoff could lead to massive cuts in spending on defense and social programs.

If people are paying higher taxes while the government spends less, that could sink the recovery, says Ron Florance, managing director of investment strategy for Wells Fargo Private Bank in Scottsdale, Ariz.

"If Congress doesn’t do something about the fiscal cliff, the math adds up to a recession," he says.

Meanwhile, the Fed-fueled rally could easily push indexes past all previous records — a remarkable feat considering that unemployment is above 8 percent. During the Dow’s recent cyclical peaks — August 1987, January 2000 and October 2007 — unemployment was between 4 and 6 percent.

Jeff Sica, president and chief investment officer of SICA Wealth Management in Morristown, N.J., says investors shouldn’t put too much stock in whatever the Fed is cooking up.


story continues below
story continues below

The Fed has created a "false sense of security, that as bad as things get, the Fed is going to step in and make it better," Sica says. "The Federal Reserve would never expand their mandate had they not felt that the economy was very, very bad."



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment


About Reader Comments


Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Videos
Jobs
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.