Thursday, April 11, 2013

Sam Zell & David Rosenberg Discuss The Fed Driven Stock Bubble

Excellent interview with David Rosenberg and Sam Zell who describe how nothing in the real economy is actually getting better (and many of the macro indicators show that things are worsening), but the stock market goes up every day.

When Maria asks Zell about the cash on the corporate balance sheets (the cash that I explained doesn't actually exist in Next Stock Price Catalyst: Cash On The Sidelines?), he responds by saying that "I was never recognized for my cash, only my earnings growth."

Zell says that "this stock market feels very much like the real estate market in 2006."

The Fed driven liquidity party drives higher and higher with no real fundamentals backing the share price growth, until it the music stops. Then you will see a rush to the exits and collapse far bigger than what occurred in 2008.

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