By the logic of many, the stock market is being propped by the Federal Reserve. How is the Fed propping the stock market? Pushing interest rates down and keeping them down and possibly considering going negative on rates.
As we’ve consistently maintained, the Fed doesn’t matter. The following is an example of when it appeared as though the Fed was doing everything in their power to undermine the rise in the stock market.
The standard arguments to the increase of the Dow Jones Industrial Average include the New Deal programs implemented in 1933 and/or WWII which began in 1939. These claims sound good but don’t quite explain the reversal of the Dow Jones Industrial Average in July 1932.
If the claim is that the Fed is propping the stock market now then it is because an examination of the extensive history of rate increases from 1942 to 1968 hasn’t been reviewed.
Finally, if the claim is that the Fed is bound and determined to use every tool in the playbook to increase the stock market, then by the record of the period from 1934 to 1971, we should see the discount rate increase ten times and a constant fiddling with the margin rate.
It is possible that the low rates and unlimited “stimulus” measure is actually capping the rise of the stock market.