“After an absence of 15 years, investors briefly watched the Nasdaq Composite trade above the fabled 5,000 threshold on Monday (alt)…with many global equity benchmarks recording all-time and multiyear highs, as central banks continue pumping money into the financial system, the Nasdaq is finally approaching a peak that many investors thought would take decades to reclaim.” Meanwhile, Gavyn Davies is capitulating to his fear of heights: “The global equity bull market, at least in the advanced economies, has been driven by two key fundamentals — a moderate but continuous recovery in real GDP and corporate earnings, and aggressively easy monetary policy. Because the US has been at the forefront of both these phenomena, the S&P 500 has vastly out-performed the global market for 6 successive years. Both of these key fundamental drivers are now less convincing than before.” Furthermore, “about three-quarters of the rise in US equity prices in the past 12 months has been due to a rise in the market’s price/earnings ratio (ie ‘multiple expansion’). This has taken market valuations into fairly expensive territory compared to long term history.” Meanwhile, Draghi’s QE moves to the starting line as the outlook in Europe brightens: “Draghi will have an opportunity in two days to add to details of the 1.1 trillion-euro ($1.2 trillion) quantitative-easing plan…Purchases under the expanded asset-purchase program are set to start as early as this week.” Which might explain why European debt has gone negative recently. But people are scared: “the fundamental concern is not the specifics of the small Greek economy or the legalities of leaving the euro or the EU, but rather Europe’s continued inability to resolve its Greek tragedy…’Much of Europe is at risk of difficult economic times, and when you have difficult times and populist parties, politics becomes extremely unpredictable.’” For example.
Krugman says Walmart’s announcement to raise wages for half a million workers is “a very big deal, for two reasons. First, there will be spillovers: Walmart is so big that its action will probably lead to raises for millions of workers employed by other companies. Second, and arguably far more important, is what Walmart’s move tells us — namely, that low wages are a political choice, and we can and should choose differently.”