Strategist Peck to Moneynews: Fed's Money Printing Sends Stock Market to Record High

Sunday, 10 Mar 2013 05:15 PM

By Glenn J. Kalinoski and Kathleen Walter

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Federal Reserve stimulus and government borrowing to meet its obligations are driving stocks to record highs on a daily basis, according to R.C. Peck, chief investment strategist and CEO of Fearless Wealth.

“It really feels like this is what $8 trillion gets you, between deficit spending and money printing,” Peck told Newsmax TV in an exclusive interview. “It’s been about $8 trillion over the last four years and I really don’t think we’d be at these prices [if it weren’t for that].”

Peck added that the total doesn’t take into account the liabilities that the U.S. has assumed during the period.

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“If you take that into account, it’s probably more like $25 trillion,” he said. “I don’t think people are buying the Dow because the values are incredible and at lifetime lows. They’re buying it because of the $8 trillion of printing, and they’re kind of feeling like they have to buy the Dow because a 10-year Treasury pays, what, 1.8, 1.9 percent? They’re being forced into the Dow.”

Video: Economist Predicts 'Unthinkable' for 2013 

Peck expressed concern that stock prices aren't going up because of value and long-term cyclical reasons. “It’s going up because this is yet another place that inflation is showing up,” he said. “[The Fed is] not allowing recessions to happen. When we do correct … we’ll correct sharper and harder than we need to.”

Also discussed was the Fed’s use of trial balloons when there is talk of the central bank ending the latest round of quantitative easing.

“They’re floating statements out there just to see what happens,” Peck said. “They’ll just wait and watch the market and just see how that statement gets … digested,” he said.

Peck also expressed optimism on two individual stocks in the news lately: Apple, whose shares have fallen to their lowest levels in about a year, and Google, which has been on a roll.

“I was relieved to see it have a very healthy correction,” he said. “If you bought it at $700, nothing about this correction has felt healthy to you. It’s really interesting how quickly people change their opinions when the price direction changes. I’m not sure that much has actually changed at Apple – so this is a company that’s going to stay around – that’s going to be a mega-cap stock for a long time to come.”

Heading in the opposite direction is Google. Peck was asked if the search giant will soon be a $1,000 stock.

“If someone said, ‘Do you think Google could go up another 15 percent? Absolutely,” he said. “Living 10 miles from Google and seeing … what they’re doing to create more revenue and profit for the company, it’s pretty impressive. And as long as that keeps going on, the market cap’s going to be going up. And this is not a market cap of $600 billion. There is room for Google to get bigger.”

Video: Economist Predicts 'Unthinkable' for 2013 



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