NEW YORK ( ETF Expert) -- Over the last month, investors have witnessed a variety of strange events. The Republican party ungracefully bowed out of its bid to derail Obamacare during the tail end of the government shutdown. The Democrat party helplessly attempted to control damage associated with scores of consumers not being able to keep their health plans or their doctors.
Meanwhile, employment data have never been more antithetical, as employers created 200,000-plus net new jobs in October, yet 900,000-plus left the work force in the very same month; the workforce participation rate is the lowest that it has been since March 1978.
The extreme uncertainty surrounding the implementation of the Affordable Care Act as well as the potential for an adverse economic impact could have caused stocks to struggle. They have not. Similarly, the Chicago Fed estimates that retirees account for only one-fourth of the drop in labor force participation since the Great Recession's inception. This implies that millions and millions of Americans have not been able to come back to the ranks of income-producing, middle-class consuming citizens. Still, stocks have not missed a beat.
In spite of peculiarities, oddities and heebie-jeebies, investors prefer to remain on the bullish path. The only thing that seems to matter is the probability that a Janet Yellen-led
means more "cowbell." In fact, even the occasional angst over the possibility that the Fed will slowly rein in its trillion-dollar bond-buying spree has done little to deter the ingrained perception that monetary stimulus will be generous for years.
Is a singular sensation like cheap money enough to maintain a voracious risk-on appetite? Apparently so. Companies are not generating much in the way of revenue with the current price-to-sales (P/S) ratio of the
at its highest level since the dot-com collapse.
Yet, stock investors are ignoring the fundamental data. Margin debt has also revisited levels that have not been witnessed since the dot-com bubble. Still, nobody cares. As long as central banks around the globe continue to create dollars and yen and euros and pounds -- as long as they work together to depress global interest rates -- the cheap money is finding its way back into riskier assets.