Wednesday, November 04, 2009

Globalization Helps Decouple U.S. Stock Market From U.S. Economy

While there are other reasons (including over optimistic expectations about the future) for the stock market rally, Daniel Gross points to how globalization creates a decoupling between the U.S. economy and the U.S. stock market. I discussed this factor previously here.

His example of GM sales in America and China is interesting for other reasons, but misleading with regard to the U.S. stock market considering that GM went bankrupt a few months ago. GM stockholders will for that reason not be able to enjoy any profits in GM's Chinese subsidiary.