Why stock indices are all so high?

I do not understand how the stock indices are related to their corresponding currencies. Stock indices go high when the country's currency is weak or strong?

In 2014, some currencies (such as EUR, GBP, AUD, and NZD) weakened but stock indices went up; some currencies (such as CHF and USD) strengthened, and again their stock indices are high.

Why stock indices of almost all countries are going up now?

The current worldwide economic conditions are nearly as bad (in some areas much worst) than they was in 2008.

Stocks as you say are always higher, the reason:

Fed QE, QE2, QE3.
BOJ SuperQE
BOE QE
ECB QE

There is always a central bank injecting liquidity in the system, and part of this liquidity find its way in the stocks.
The reason of why CB inject liquidity constantly is that stocks (and bonds too) are ridiculously overvalued due to their artificial pumping, so the moment they stop pumping them, they will collapse like we've never seen before.

Here comes the solution: keep pumping liquidity in!
As long as one or more central banks are buying stocks, they will not re-adjust to their real value (collapse!), this strategy require some CB constantly buying in order to work.

The biggest buyer of the past few years was surely the FED (usa central bank), recently they stepped out (perhaps you've noticed the usd getting strong, thanks to the end of the last fed qe).
Then we have the Boj (bank of japan), a big buyer too, from many years, and still buying, every year more! (perhaps you can see how the jpy is losing value in the past years thanks to the boj).

The BoE (bank of england), a buyer but not a big one compared to the others.

The ECB, they never really pumped liquidity like the other CBs, however this year it's their turn!
On march the ECB will start printing and buying (injecting liquidity).
And, their QE will be different from all the others, it will be BIG, pretty BIG! And will last for at least one year.
So i think overall stock indices will continue to do good in the whole 2015, sure we can expect some dip (small and big ones!), but each and every bid will eventually be bought and stocks sent back to make a new all-time highs.

Hope it helped

The QE "money printing" myth really need to die. QE is just a fancy name for asset swap. Banks hold treasuries in their balance sheet as assets and the FED hold tenders to swap these treasuries for equivalents in cash.

Example: ABC Bank have $100 million in treasuries as assets on their balance sheet. The FED swap these treasuries for cash and hence ABC bank now has $100 million in cash instead of $100 million in treasuries on their balance sheet. No change in assets, just a change in asset type.

Another important point to take note. These excess cash are held in bank's reserve. As banks are required under regulatory obligations to hold them, these money will not circulate in the public and hence there cannot have any bearing on inflation.

Contrary to popular beliefs, the FED doesn't "helicopter-drop" money onto the streets through QE or "money printing".

In the fiat monetary system, new money are created and introduced into the public for circulation only when a loan is made. QE simply produced pressure to lower the interest rate and add excess reserves to encourage banks to loan out more money and businesses to borrow more to expand their operations or investments to add some growth to the economy.

In the case of US, on the demand side, the private sector are just not interested and see no needs to borrow more money even with record low interest rates. Most companies and corporations, still wary and licking their wounds from the 2008 crisis, are already holding huge excess cash reserves from profits saved up in the years after the crisis. Because of this, QE failed to create any sort of demand from the private sector.

To compound the failure of QE further, on the supply side, banks for the same reasons are loath to loan out money, preferring to keep their QE-generated cash as regulatory reserves. The fed also shot QE on its foot by offering to pay out interests on bank's reserve. So banks are happy to keep these excess QE cash as reserves to earn risk free interests from the FED rather than to loan them out as what QE had hope to achieve. As a result the number of new loans are still low as compared to the years preceding 2008 and that explains the low inflation rates of the US economy despite the many QEs.

To conclude: QE operation is a miserable failure. It failed to achieve any objectives on both the demand (companies and corporations) and the supply (banks) sides.

Yes i see your technicality and is beautiful, but let's not deny the reality here.

Take the ecb, they are doing the QE (bond buying program or whatever) in order to bring up inflation, as you may have heard that the european union have some deflationary problems right now.

As you say, QE "cannot have any bearing on inflation", damn.. looks like the ecb is going to do it all wrong then!
Better send them an email to let them know before they waste some trillions of eur

Seriously, they have a huge impact on inflation because these money are created and enter in the system, and as more units of a currency enter the system, the currency devalue itself (and then come inflation).

Saying that liquidity (money) is injected in the system doesn't mean that some "men in black" people go in the street and give 100€ to everybody they see, this liquidity is instead injected in the financial system, it do have a tremendous impact on inflation, interest rates, bonds, currency (weakness), stock market (up and always up), and eventually enter into the real economy.

New money are created, or if we want to be technically correct, new Debt is created.

(money is debt)
(debt is wealth)

"As you say, QE "cannot have any bearing on inflation", damn.. looks like the ecb is going to do it all wrong then!
Better send them an email to let them know before they waste some trillions of eur "

You will be surprised, even Nobel prize winning economists are biased to the schools they're trained in. They're after all, like us, only humans.

http://www.pragcap.com/william-vickr...myths-debunked

"Seriously, they have a huge impact on inflation because these money are created and enter in the system, and as more units of a currency enter the system"

As I already point out earlier "These excess cash are held in bank's reserve. As banks are required under regulatory obligations to hold them, these money will not circulate in the public and hence there cannot have any bearing on inflation."

Bank reserve cannot be introduced into the public, they are simply held in accounts with the Fed. Besides regulatory requirement, these reserves are only used for two things only: to create new loans and to meet public's cash withdrawal demands for savings held in the banks

"..this liquidity is instead injected in the financial system..."

To repeat myself "In the fiat monetary system, new money are created and introduced into the public for circulation only when a loan is made" Money created by QE are deposited in bank's reserve, and they are held in accounts with the Fed. These money only enters the real economy when loans are made out by banks on demand by the public.

No increase demand for loans = no increase in money supply in the economy

Whether its $100 million in treasuries or $100 million in cash, ultimately on bank's balance sheet they are just the same $100 million worth in assets, hence there are no change or net increase in assets or liquidity on bank's balance sheet.

"...it do have a tremendous impact on inflation, interest rates, bonds, currency (weakness), stock market (up and always up), and eventually enter into the real economy."

Yes, this is a common argument that the demand side will somehow increases with the injection of QE. Actually that was what the FED had intended, yet as I already stated, new money are introduced into the system only with the creation of new loans, but the private sector are not borrowing them as they're already have excess cash of their own siting in their bank accounts doing nothing.

"tremendous impact on inflation"

Current inflation in the US is below 2%. With QE slowly tapering off, where's the 1000% hyperinflation in the past QEs crazed years?

"tremendous impact on....interest rate...bonds"

The US is currently paying the lowest interests for its debts since 1970s. I will also not recommend shorting US treasuries.

"tremendous impact on...currency"

This is true.

"tremendous impact on....stock market"

There are many factors working together contributing to the stock market's rise, to name a few: the employment figures, technological changes, new market trends, change in demographics, QEs and even irrational exuberance of the crowd, all of them are just a tiny part of the equation. QE also created "self fulfilling prophecies" from hedge fund managers and investors frontloading the FED by buying up stocks in anticipation of "increased" liquidity brought in by the QEs.

"Yes i see your technicality and is beautiful, but let's not deny the reality here."

I haven't seen any hyperinflation around here. Perhaps there's a difference between reality on what is happening now and reality on what is suppose to happen?

"New money are created, or if we want to be technically correct, new Debt is created."

Fiat money are agents of the government, imposed on the public through the law. In a fiat monetary system, why and what does governments need budget surplus for? Is Uncle Sam the government saving up for education or retirement?

Looking at the interest rate paid for debts by the government of Greece vs the governments of UK/US, I'd like put this question up:

"How does a country goes bankrupt on debts denominated in a currency it prints?

Also, please don't bring in Weimar Republic's example. The German government was obliged under the treaty of Versailles to pay the Allies war repatriations (aka debts) in Gold marks. Gold is not something a government can prints

You know, the point of QE essentially is to boost the financial markets:

The bonds (by buying bonds, the interest rates used from government to borrow money drops).
By having a lower interest rate, governments are inclined to borrow more easily, most of these borrowed money are then transferred to the real economy, via welfare, public workers (military sector, polices, firemen, doctors, politics, marine, traffic wardens, scavangers, etc. etc. etc. the number public workers is very big), private companies that have contracts with the state, bailout of local factories and companies, overall most of the money that a country borrow goes straight to the real economy.

The stock markets (by buying the stocks, the stocks goes up).
With the market going up, all investors earn a considerable profit, part of which will be withdrawn and used to buy things, pay services, etc. In other words, will hit the real economy.

It's true, maybe only 5% (it can be 0,5% or 20%, i don't know the exact number) of the QE liquidity hit the real economy, so it is not a big deal for the average joe.
On the other hand however, even this small percentage of liquidity is of tremendous help to the economies, true the average citizen cannot see the QE effect on one day, the qe effects are big yet slow, so the average joe don't even realize what is happening.

It's the same for austerity, the average joe didn't know or care what austerity was and how it was going to affect the economy, but after a few years the results are impressive (40% of private sector destroyed, ridiculously high taxes, unemployment doubled, deflation).

So your question is, why the usa after 3 QE still have an inflation well under control?

First of all, don't take the official CPI reads as the only real and totally genuine inflation data, it show less than 2% yes, however there are many other "Shadowstats" that show usa inflation well above 5%, some even near 10%.

Second, the us dollar is still the most used currency in the world, this mean that an hyperinflation scenario cannot happen.
The usa will enter in hyperinflation only when the usd will not be the world currency reserve, the big boys in washington know this very well, so every time somebody plan to do something to weaken the reserve-currency state of the usd, he get taken out with force (war).

"How does a country goes bankrupt on debts denominated in a currency it prints?

It doesn't matter if the debt is denominated in a currency or another, a country goes bankrupt when it cannot pay back its debts.
Now, if a country have debts with his own central bank (like japan or usa), it can never go bankrupt.
However, the debt level and the speed with which new debt is made, must be take under control, as scenarios of hyperinflation may get triggered from the market (for example when a country is just printing without rules and is full of bullshit).

Greece for example, they don't have a central bank.
The ecb is a private company, and they don't buy greece bonds to keep interest rates low.
So they can go bankrupt very well.

The central point here is that, debt, on a large scale, is not to be intended as it is intended for a single citizen.

On large scales, debt is money.
Money (debt) is needed to create and feed a big economy, therefore the biggest an economy is, the biggest the debt such country will have.
And these debts are never meant to be repaid, there are simply not enough money in the world to repay the debts (interests), and even if there would be, by repaying all debts a country would become a 3° world country in one moment.

Do you know which are the countries with the smallest or no debt?
Yes, the 3° world, under industrialized, under developed, poor, weak and uneducated countries.