Stock prices went down early this week and — oh my! — you'd have thought the world was about to end.
As I've been telling you — and others have since confirmed — the stock market is rigged.
Central banks, including the Federal Reserve, have kept rates so low that there really isn't any other money-making alternative for investors except stocks. But that's the old news.
Around the world, central bankers have also been actively buying stocks to keep equity prices up. Why? First, because the stock market is the only thing creating any kind of optimism in the world economy. And, second, because Central Banks need to make profits, too, and they can't with interest rates so low.
So it's a Big Rig — an 18-wheeler that's being driven by the Fed and other central bankers.
Stock indices have been hitting record levels of late even as the macro-economic statistics coming out around the globe are weak.
So, how long before the 18-wheeler jackknifes and stocks go into a skid?
Nobody knows. (Really, I'd tell you if I did.)
But we are hearing a lot of market warnings lately because fundamentals — the quaint old notion that corporate profits and revenues have to justify stock prices — haven't been looking so good.
For instance, first-quarter corporate profits for the 500 companies that make up the Standard & Poor's index rose 5.6 percent, but revenues rose only 2.9 percent.
And earnings are expected to be up 6.2 percent in the second quarter, which ended last week. But experts are predicting only a 3.5 percent rise in revenues. (Experts are always over-optimistic on earnings, so don't count on that 6.2 percent coming true.)
At the start of 2014, for instance, earnings were expected to have a double digit rise. The pros didn't come close on that guess.
What's this all mean? It means companies aren't meeting earlier earnings expectations. And the profit gains they do have are still coming from cost-cutting because revenues aren't growing strongly enough.
Worse, because corporate executives own their own company's stock and therefore want share prices to go higher, much of the cash being generated and money being borrowed by corporations are going to stock repurchases.
That's the third thing rigging the market.
The lack of adequate revenue growth has been going on for years. And the economy isn't going to recover if companies continue to cut back to maintain earnings.
Still, the rigged stock market doesn't seem to care. So you have my permission to be a co-conspirator in the desecration of the free markets. Buy stocks. But don't whine to me when it ends badly.
In the minutes of its latest meeting, Fed officials expressed confusion about why the unemployment rate is falling yet so many people are still out of work.
I'll spend a second on these minutes by saying to the Fed: The unemployment rate is wrong. Read my stories about the mess the Census Bureau and Labor Department are making of the numbers and you'll understand.
Then maybe you will stop complaining.
So I'll now move on to something more important that you'd probably like to know but were afraid to ask.
According to a study conducted by vouchercloud.net, the average extramarital affair begins just two years after the wedding, lasts six months and costs more than $2,600.
All of the 2,645 people who were surveyed were more than 25 years old and had been married to their current partner for more than five years. About one-quarter of those responding said they had, indeed, had an affair.
So look to your left and to your right and behind you. If you haven't cheated on your spouse, statistically one of those seated nearby in the office probably has. Is it her? Or him?
Well, it's probably him since 57 percent of the cheaters were men. (Like you didn't see that coming.)
But since this is a financial column, my focus should be on the money: The cheaters say they spent an average of $123 on hotel bills; $162 on dinner and drinks; $54 on gifts, $69 on movie tickets and such, plus $36 on "other" things every month. (I assume it's also the male that's doing the spending.)
Don't bother taking out your calculator. That's $444 a month or exactly $2,664 over the six-month life of the affair.
But only $123 a month for hotel bills? I've heard of rooms that rent by the hour but these people must have found places with meters.
And only $162 for dinner and drinks? I know this is not about the food, but you have to stay nourished and hydrated for this sport.
There is, of course, a simple solution if you can't afford this extra action: discount coupons. I dare you to show up with a half-off deal at the local motor lodge.
