Yesterday’s snooze fest was not without historical purpose, since the pause will allow the Dow Industrial Average to set a new record high on a Friday -- a theatrical flourish that we could have expected. The Indoos settled yesterday at 13913, meaning they will have to rack up only a further 109 points this morning to achieve the milestone. The only question is whether the blue chip average will slip back to finish the day below record highs, or instead hold onto enough of its gains to close at a new record. Either way, the words “Record High” are going to find their way into this evening’s headlines, giving investors something to feel smug about over the weekend.

And yet, even as I write these words, business reporters for the Wall Street Journal and the New York Times are probably pecking away diligently at weekend-edition stories intended to raise doubts about the stock market’s performance --  or rather, to affirm the doubts we already have, seeing the stock market at record highs while news from the housing sector grows grimmer by the day. Unfortunately, because deadline pressures tend to make reporters habitually go for the easy story, none of them will get it right. (Full disclosure: I was a newspaper reporter and editor myself for seven years.) Instead, they will quote self-aggrandizing charlatans like Larry Kudlow, who would say absolutely anything to get in front of the camera; or even worse, credentialed imbeciles who are so frighteningly stupid as to actually believe there are valid reasons for the stock market to be acting so bullishly.

Metaphysical Forces

The real reasons are more complex, however, touching even on the metaphysical. Which is to say, the Indoos are trading at record highs for the same reason that Jupiter and Mars are where they are in the heavens right now. There are more mundane forces at work as well, including a financial system with the ability to imbue practically any financier with a hole in his ass and a couple of paragraphs in Who’s Who with sufficient creditworthiness to tender a three billion dollar offer for a company he has only read about.

Adding further to the buoyancy of shares is that the companies themselves have strong incentives to use whatever cash they’ve accumulated or can borrow to buy back their own stock (since none of them, with the ubiquitous exception of Starbuck’s, seems eager to expand).  As we all know, the big money is made these days not by growing one’s company and producing more widgets, but by driving the price of its shares higher.

With short-covering now making this happen more or less automatically, perhaps Wall Street should think about erecting a Tomb of the Unknown Bear to honor the one true hero of a bull market that long ago outlived all reason and logic.  Either that or a monument to hubris that stretches to the sky.