What, if anything, are people buying today in this 2 day selloff?, page-201

Oh, now I see what you are trying to say (at least I think so):

I think what you are saying is:

The economy is down, but the stock market is up.
This cannot be.

Oh, but it can.

Because, according the accepted valuation theory, there is one determinant of the pricing of securities - notionally, it is quite small, but it is highly significant - that rates no mention of causality in any of your exhortations.

And that is the Cost of Capital.

Long-duration, income generating assets (such as publicly listed company stock) are valued on a Net Present Value basis, as you probably well know.

And what you probably also know is that THE most sensitive factor when it comes to discounting any future cash flow stream (i.e. future earnings and dividends) is the discount rate that is chosen.

And in the case of the contemporary investment world, the discount rate has been slashed.
As you know.

And, by the axiomatic laws of the Capital Asset Pricing Model (love it or hate it), the pricing of securities rises.

And a rough rule of thumb says that for every 100bps that long-term rates structurally fall by, the value of a given income generating security falls by 8% to 10% (depending on the starting level of the discount rate).

So, based on the fact that the yield on 10-Year Treasuries have fallen by some 500bp or 600bps, over the past decade-and-half, you might (rightly) say that this might explain a significant element of the rise in the value of US equities.

(And that, I think is what you are saying in your own inimitable way... I stand by the be corrected if I am wrong in this presumption).

That all said, unless you are calling for interest rates to start dramatically rising in the foreseeable future - and I certainly don't think you are - then I'm afraid that the disconnect between the underlying economy and the pricing of equities are highly likely to persist.

That's the "Bernanke (now Yellen) Put" in action for you.

But you are a capital market veteran... you probably know all this.