Me speaking to a money manager today:
Me: The market seems disconnected from corporate earnings.

MM: It's being driven by all the free money that's sloshing around from the corporate stimulus & the Fed

Me: So the stimulus isn't saving people's jobs?

MM: No..../1

...It works the other way. (The stimulus) is being booked as cash on hand. They can't rehire employees because that will just increase expenses when revenue hasn't recovered. It's a way for them to keep earnings from collapsing by eliminating huge variable costs (employees).../2

...to account for the lost revenue, but keeping operating cash for fixed costs.

Me: So is the market is disconnected from earnings, how does anyone calculate the value of the stock market?

MM: You really can't. It's just a bet on when the free cash runs out. It'll keep..../3

...the market up for awhile. And there's an expectation that, when there needs to be a new infusion to allow them to operate without employees, the Republicans will get another bailout (that was the word he used) pushed through, or the Fed will do something. If that doesn't.../4

...happen, then the market will fall, way below earnings projections, but then it will stabilize back to projected earnings.

Me: This really sounds like market manipulation.

MM: (laughs) Ya think? I mean, it's legal. But yah, all this money is helping push up the market.

fin