Varney: America experiencing the 'wealth effect' as stock market rallies
'Investors are taking their cue from the retreating virus, and the recovering economy'
One-hundred million Americans have a 401k or an IRA. That’s a lot of people with private pension money: Take the time to open your account and take a look at it, this Wednesday, Sept. 2. Because you're almost certainly sitting on a very healthy gain. The best August for stocks in decades, the sharpest six-month rally ever: You've done well. The value of all stocks has gone up $14 trillion since March: You've got a piece of that....
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This is wealth creation, and it brings with it the "wealth effect". That is, the realization that you've made some money and maybe, you'll use it. You feel more comfortable with your financial situation. You're a winner. So perhaps you'll go for a better car or house. It’s the wealth effect.
It is financial optimism. Investors are taking their cue from the retreating virus, and the recovering economy. There is plenty of optimism about the economy, no matter what Joe Biden tells you. And there's plenty of money flying around: The Federal Reserve is printing trillions and bank accounts swelled to $2 trillion during the lockdown.
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There's also optimism about the kind of economy that will emerge from the pandemic. It’s going to be technology based, and it’s going to be led by American technology companies: That’s why Apple, Microsoft, Facebook, Google, Amazon, Tesla and even Zoom are being deluged with money: huge gains for those stocks. Huge gains for their investors.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| APPL | NO DATA AVAILABLE | - | - | - |
| MSFT | MICROSOFT CORP. | 415.00 | -11.89 | -2.79% |
| FB | NO DATA AVAILABLE | - | - | - |
| GOOGL | ALPHABET INC. | 172.49 | -3.09 | -1.76% |
| AMZN | AMAZON.COM INC. | 202.61 | -8.87 | -4.19% |
| TSLA | TESLA INC. | 320.72 | +9.54 | +3.07% |
| ZM | ZOOM VIDEO COMMUNICATIONS INC. | 81.14 | -1.49 | -1.80% |
That’s the wealth effect: The market has given us a healthy dose of financial optimism.....
We'll be talking about it, a few minutes from now, when we speak to Larry Kudlow at the White House.