New concerns about stock market after Dow hits record high
FBN's Melissa Francis weighs in
- Duration 4:23
- Date Mar 6, 2013
FBN's Melissa Francis weighs in
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This transcript is automatically generated
We're tracking questions about this Wall Street rallies -- this news yesterday the Dow hit an all time record high.
Some saying it is a sign the US economy is on the mend pretending it be in the market they say.
But there are new numbers suggesting what's happening on Wall Street maybe disconnected from what's happening on main street and that has some folks very worried.
About where this is likely to go.
Melissa Francis is host of money with Melissa Francis on -- -- she is here -- arena on our parade.
Now I liked it better when I was hearing the folks say well.
-- and I'd be rich I mean if you're in the market you're thrilled to adapt and you know unfortunately a lot of Americans -- their money out of their 41 -- they had to pay their bills.
But you look at the basic statistics.
Of where the economy is now vs where it was the last time we were -- these highs in the market.
To see if it's really justified we have a lot of them for you.
I mean if you look at gross domestic product that is the size of our economy and the growth of that that's what tells you how healthy the economy -- Back then in 2007.
It was growing at 3% now.
It's barely growing at all.
Gas prices are higher look at the number of people unemployed.
Back then it was about seven point two million.
Now it's better than twelve million we have twice as many people on food stamps so that tells you that a lot of the fundamentals aren't they aren't the same time.
Look what we've spent to get here those -- the bottom two numbers in your screen right now.
The debt as a ratio of JD GDP that's how much we're spending.
As a percent of how much were making it -- worth spending a fortune we know that but that fed balance sheet.
That's that's where you -- me I know -- I'm down to make it's -- before and that's the -- out there buying bonds all the stuff they've been doing to prop up the housing market.
To make sure that you can get mortgages everything they've been out -- doing the bond market their balance sheet of gobbling things out.
Has gone from less than a trillion to three trillion.
They're gonna have to sell that stuff and that's what a lot of really Smart economists are starting to worry about that unwind.
When they come in to sell that stuff does that make the stock market numbers that we -- yesterday artificial -- artificially high is that the theory.
There are a lot of people worrying about that that you you know you don't wanna get out right now because the Fed isn't gonna stop doing what it's doing.
But when it does right when you see and start to move for the door and it -- a lot of expense Uighurs in perpetuity right so it will stop doing this and they have sat in fact that they're gonna keep doing what they're doing until unemployment ticks down to six point 5% I mean he basically told us.
At what point they're gonna start selling all that stuff they've gobbled up -- you think Garcia tumbling think that 141000 Amber's gonna go down way down a lot of Smart people have said that they -- -- be at the exit before the Fed gets there and the Fed has sat in black and white when they're going to be the exits you have to wonder.
If the stock market will be able to hang on after that.
The only way Whitney is at the economy's very strong at that point and -- we've really seen the economy roll back.
By the time -- him when he gets to six point 5%.
And maybe this stock market will be able to hold it together but if you look at the fundamentals.
Are strong corporate earnings out there that is one -- There aren't a lot of other plus.
Not hiring people whatever they're making a lot of money that they're not hiring known -- -- they don't believe in the economy either when I was reading up for the segment and I don't do a lot of you know.
Is on user obviously I don't -- -- I'm not as Smart as you and go to Harvard I don't get it I -- and -- a math lessons have great.
But they -- they said okay so what should investors do we got here in the stock when he got 401K which you -- any advice was.
Being nimble yeah that's helpful I think also -- Carla -- we never touch it -- -- nimble well -- -- rise or fall based on the the gods.
It's true it if you jumped out after the big decline -- you missed the way all the way back in the market is back where was your your 401K in theory.
If you just hung on is back where -- lives so.
Enjoy it like -- and then when you see the -- pulling out and limit six point 5% you're gonna get out.
I -- I think when -- gets close to six point 5% that's when you start really paying attention and and seeing what the economic fundamentals look like but it's interesting this is just to hear your theory that looking at the Dow is not that's not the benchmark for how -- the economy is there's a little isn't -- Dow is inflated eight used to be but now it's really about the fact a -- Thank you Melissa -- rough I actually understood that F I F you very much.