Financial author Michael Lewis has garnered much attention over the last year for his theory that the stock market is rigged. Ace economist Edward Yardeni, president of Yardeni Research, thinks the market is rigged too, but in a different way.
Lewis thinks high-frequency trading rigs the market against individual investors, while Yardeni thinks massive central bank easing rigs the stock market in favor of all investors.
"These markets are all rigged, and I don't say that critically, I say that factually," Yardeni told CNBC
. "We have to deal with what it is, and the reality is I love the central bankers. They've been good to the stock market."
The S&P 500 index has tripled over the past six years amid the expansion of the Federal Reserve's balance sheet to $4.5 trillion.
It also has kept short-term interest rates at almost zero during that period. And many economists interpret the Fed's policy statement Wednesday as signaling it won't start raising interest rates until September.
"This is not about investing, this is all about the central bankers," Yardeni said.
To be sure, when the Fed finally does raise interest rates, there could be heck to pay in the stock market, says Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund manager.
Indeed, we could see a repeat of 1937, he and colleague Mark Dinner wrote in a note to investors obtained by the Financial Times
. In that year, the Fed tightened policy prematurely after the crash of 1929. This led to the Dow Jones Industrial Average falling by one-third in 1937 and continuing to decrease in 1938.
"We don't know — nor does the Fed know — exactly how much tightening will knock over the apple cart," the duo said.
"What we do hope the Fed knows, which we don't know, is how exactly it will fix things if it knocks it over. We hope that they know that before they make a move that could knock over the apple cart."
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