A sage observer once remarked, "Speculation is going on when someone else is making money, and you and I aren't." Speculation (prompted by Fed policy) has been ripe, as hot money has raised the price of financial assets even in the face of disappointing progress in the real economy.
The U.S. stock market has lived a charmed life since the Generational Bottom in March 2009. Corporate profits have risen, inflation has been quiescent and valuations (price-earnings ratios) have expanded as stocks have more than tripled, while rising geopolitical tension, sovereign debt issues and other macroeconomic concerns have been ignored and dismissed.
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