The so-called BLISS trade, analysts say, helps explain the incredible run on stock markets

Subscribe: http://ab.co/1svxLVE Read more here: Wall Street is regularly breaking record highs as the big tech firms continue to surge in market value. SpaceX's launch this week and it's subsequent share price rise has highlighted how enthusiastic investors are about the future economy and the investment environment. This comes despite persistently higher inflation, the threat of rising interest rates and ongoing tensions in the Middle East, despite an apparent deal to end the Iran war. This week, for example, the S&P/ASX 200 closed up slightly. The S&P/ASX 200 closed lower Friday, dropping 82 points or 0.92 per cent to 8,828. The index is currently 4 per cent off of its 52-week high. One explanation for the overall ongoing market enthusiasm is the so-called BLISS trade, a term coined by Harvard University professor Gita Gopinath. BLISS stands for Big Lasting State Support. It's the idea that the stock market's simply too big to fail so, even when it wobbles, governments will step in to support it. NAB Trade director Gemma Dale agrees and says that, "The amount of fiscal support that has been provided to the economy, GFC and post, has been simply astonishing." Ms Dale thinks that as a result moral hazard has become a clear and present danger but she believes the idea that the market cannot crash is also "risky". "The amount of index money, which is estimated to be 30, 40, 50 per cent of the market, depending on which market you're talking about -- these are very basic algorithmic trades. We buy when people are putting money in. If people start to withdraw at some point, then you get the alternative spiral. It goes the other way. So this idea that we can never see a meaningful downturn, I think, is risky." #ABCNEWS #ABCNEWSAustralia