There are many ways to evaluate the stock market, from fundamental research to examination of charts or even the alignment of planets, but when I hear the media bang the drums over and over again about the top 1%, it gives me the feeling stocks are going higher and pass the point of reflecting a great presidency to reflecting the inequity of capitalism and how the rich horde all the wealth. With the market going from rally cry for administration's policies to rally cry for politics of envy makes me think it's going a lot higher before correcting.
Of course if there was any justice in the world a market crash would be the comeuppance the rich need to learn how to be more generous with money they earn from working and investing and taking risks and making sacrifices. The fact is that during the Great Recession incomes for the top one percent fell much faster than the rest of the population. The subsequent rebound is a result of not panicking (it helps when your cushion is rather large) and being owners in stocks and other assets.
One thing to note is when there are calls for higher taxes, income from dividends and capital gains are talked about as riskless windfalls that deserve even higher rates of punishment ... tax rates. Yet, for the table above and other "data" on share of income, all income streams are lumped together. Principal investments are most often sourced from net income already taxed while earned. Then dividends are first taxed as income at the corporations before taking another hit when divvied out to shareholders. That's a lot of hits for a riskless source of income.
Everyone is invited to step up to the plate but it means you'll have to park the hate-the-rich card at the front door. Or you could hate the rich, distrust the market and spend all your money at the mall.
By the way, the rich are fighting back not just in America but around the world. Many are simply saying let's separate in places like Italy, Belgium, Spain and northern California. Tomorrow: We want to work, be prosperous and not just to funnel money to others willing to watch, complain, and demand more and more.
Even Wall Street Bearish
For all the talk about the Fed pumping up the market, the fact remains that Wall Street is woefully trailing the market and extraordinarily bearish. According to a piece in Bloomberg's Business Week, while bullishness among sell side analysts has risen to its highest point since April 2012, bearishness continues to linger near the lows of March 2009. Stock allocation on the Street is 12 percentage points below the traditional mark of 65%.
This situation creates a huge groundswell of buyers that must step up to the plate at some point. Right now it is manifested in late-day spikes like the one witnessed yesterday. Fear mongering and dismissing the rally are still the top stories for professionals that have missed this rally. Some will stick to the doom and gloom until there is a correction and say "I told you so," others will not have the luxury of underperforming much longer. To be sure there are hurdles ahead but clearing them only gives the market momentum, especially when they were considered un-scalable weeks ago.