(Student answers may vary)**
The media hopped on the "stocks hit record highs" story even though at the end of the day only the Nasdaq was in record territory. The Nasdaq was powered by another strong move in Facebook which is now above $70 after dropping a cool $19 billion on an app that most people have never heard of. I know it's unpopular to try to interject logic into these scenarios but WhatsApp (the app bought by Facebook) has been downloaded a billion times because it offers free communication across many platforms. If Facebook tries to monetize these users through fees or ads, it is likely that someone will launch WhatsAppDoc or whatever and steal those billion users overnight. I have to be careful bashing Facebook too much because I know some people love it deeply, but I'll offer this anecdote -- I spent a week on vacation outside of the US and I didn't hear or see the word Facebook once. Before you assume that I was sitting in some remote corner of Uzbekistan, I'll say that I was in major metropolitan areas in Western countries and the word Facebook might just as well have been Myspace or AOL.
This is just one of the latest chain of events in the market that are very reminiscent of February 2000.
The market is now up between 6-7.5% in A MONTH after wobbling a bit back at the beginning of February. Today for example there was Dallas Fed business index number that was expected to come in at 3.0, but instead came in at 0.3!! Obviously, this is a sign that things are BOOMI.... oh wait, that's a 90% miss. Um, well, it snowed in Dallas one day in February so it was all the weather's fault. And if it is hot in Dallas in July, we'll blame the weather for that miss as well.
There is some thinking that says the new polar vortex will mean more cold in the Northeast and more weak data which means the Fed will have to keep supporting the economy. Thus, (in my best Oprah voice) you get a higher stock price and you get a higher stock price and you get a.......
At some point this merry-go-round will stop and people might focus on the collapsing Chinese economy, unrest in Venezuela, Thailand, Ukraine, etc., however, that day was not today.
** I read this note from a teacher in Georgia today that made me chuckle. "Last night, I was grading homework for a day when a substitute was in my classroom. I realized the kids must have obtained a copy of the answer key when 10 kids answered question #4 as 'Student answers may vary'. "