Explaining the skyrocketing of US Equities

Hello fellows,

i would like to understand the mecanism which has driven the US equities markets to the sky and will try to make a quick explanation from what i do understand at this day:

The FED has decided the keep the rates low.
The investment and speculative banks do borrow money from the FED and the ECB at a cost near of 0 and they rejinject this money on the financial markets.
The US and European companies do the same to buyback their own shares in quantity which influence other investors to buy them too at a higher price.
The bad retails trader do sell these markets and get absorbed by iceberg orders from the big hands.
Brokers do nothing to help these to understand what happens here so that many people loose money.

Will there be an end to this rally if the FED & ECB continue to supply the market with low cost money, mountains of liquidity at low cost ?

How can investors can by Amazon or Apple at these levels ? Are they .... stupid ?

It is 9 years that the SP500 did not retrace. The coming back to reality should be terribly violent if there is one..

Thanks for your kind precisions.

LS

Because:

1. Cheap money - interest rates are so low you can just borrow into oblivion. Companies such as Amazon as you have mentioned actually use this as a business strategy to essentially kill their competition. They undercut competition at a loss until their competitors can no longer keep up.
2. Central banks are buying corporate bonds, which is effectively helicopter money for business buying up all their debt.
3. Many also believe that central banks are also busy buying stocks directly to prop up the market.
4. All central banks are "passing the baton" as it were to each engage in currency devaluation in the form of coordinated quantitive easing effort (as mentioned above), so there are no real relative consequences.
5. Dollar is a world reserve currency and has been rising (due to it's perceived safety) therefore compounding US stock gains and making them more attractive.
6. Many brokers sell ETF's which almost socialises investment and keeps many lesser businesses invested who perhaps otherwise wouldn't be.

But market conditions are changing:

1. Interest rates are rising (albeit very slowly) and cheap money is suddenly not so cheap anymore.
2. Central bankers talking of normalising balance sheets (though to be fair they've mentioned this before).
3. Dollar is beginning a bear trend and the next move down has very little resistance making foreign investment more attractive (this in itself could be a catalyst for money to flow out of the US Stock Market).
4. Economic benchmark figures lately are eye watering but somehow we have a topsy turvy trading environment where somehow bad news is good news because bad news means more cheap money is around the corner.

Are people stupid for buying Amazon and Apple? Not really. All the while investors have central bank backing, things like P/E ratios (for these blue chip companies - not saying it's true for smaller businesses) are kinda meaningless. Another example is Tesla which has never turned a profit either, but many are invested because of the future 'potential' and it's the same with Amazon. If the monetary winds start changing direction though (and there are signs they are as noted above), then we could be in for a bit of an economic bloodbath.

Remember this though... Janet Yellen said recently that she "expects no new financial crisis in our life times".