Why the Stock Market is at an all time High

On a day that saw Tesla put 8% of its corporate cash in Bitcoin, the market was at all-time highs. The day was February 8th, 2021. It was an incredible day at the intersection of multiple catalyst, which were:

  • Great Earnings, actually better than expected
  • Vaccine roll-outs
  • Low interest rates
  • Fed Stimulus and assurance it would continue
  • Anticipation for Government stimulus package deal ($1,400 stimulus checks per person)
  • Lower Covid-19 hospitalization rates
  • Bull-market immersion, mass herding behavior of over-optimism (basically group-think)
  • A stock market inversely correlated to the real GDP, unemployment rate, labor participation drop and female employment levels.
  • Unprecedented liquidity sitting on the sidelines in cash coming into the market
  • GameStop like gamification of trading popularization new accounts with young investors and those inheriting money from the Baby Boomers.
  • Oil rising on expectations of higher demand
  • Signs of the beginning of a real-estate recovery
  • Investor optimism that puts February at the start of the roaring 2020s.
  • A day where there was a rare simultaneously spiking of Bitcoin, the Stock market and small-cap stocks.
  • Renewed confidence in Washington and National leadership leading against the pandemic.
  • Multiple vaccines rolling-out around the world and the approval of new ones expected.

S&P at 3,915 and a NASDAQ at 13,987 is nearly at good at it gets.

Meanwhile small-growth momentum stock also saw a huge day as well as the Russell 2000 was up a staggering 2.50%. With the VIX under 25 again it appears that February is smooth sailing. If it weren’t for a strange ripple in the pandemic story.

While the WHO says vaccines only above 50% efficacy should be given, most vaccines likely aren’t even that against the more advanced variants.

The Fed might be winning against the pandemic in the cloud (on the stock market) but come Autumn of 2021 it could be another story. The stock market is typically seen as a 6 month forward predictive consensus picture, so that’s a bit too far out even for its range.

The stock market is the greatest nexus of data at the convergence of business, news, geopolitics, innovation and sentiment. Really good earnings helps in the middle of a pandemic.

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