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Many credit the Federal Reserve's quantitative easing program for the stock market's 25 percent rally this year, but a new research report from the McKinsey Global Institute suggests that the impact of QE on the market has been badly overblown.
Rather than looking to the low interest rates fostered by the Fed, the main author of the report, Richard Dobbs, says that stocks have rallied on the back of stronger corporate fundamentals.
"The market is not being driven up by QE," Dobbs said on Thursday's episode of "Futures Now." "The reason the market's up is that profits are up and that cash levels are up in companies."
Dobbs, who is the London-based director of the McKinsey Global Institute, said that the market has been fooled by the short-term reactions to QE-related news.
"If you look at the announcements of QE programs ending or being continued, you do get short-term movements," Dobbs acknowledged. "But if you look at the following week, those moves get unwound. So we're not seeing the short-term thing sustaining."
(Read more: For Fed Chair Yellen, it was a perfect hearing)
But what of the oft-made argument that by squashing interest rates, the Fed's QE program leads investors to exit bonds and seek out a higher return in stocks?
In the Wednesday report, entitled "QE and ultra-low interest rates: Distributional effects and risks," Dobbs and his co-authors write that this rationale only makes sense "if investors see equity investment as a true substitute for fixed-income investment. There are reasons to believe that this is not the case. For example, equity markets have been highly volatile since the start of the crisis, which in all likelihood should persuade many fixed-income investors to avoid investing in these markets."
The Francis Bacon painting "Three Studies of Lucian Freud" was sold for a whopping $142.4 million as part of a $691.6 million Christie's sale on Tuesday night, making it the most expensive work of art ever sold at auction.
Some argue that the sale is giving us a message about inflation that investors aren't getting from the action in gold, the Dollar Index, or the government's official consumer price index data.
"Asset inflation took another leg higher last night," wrote Peter Boockvar in a Wednesday morning note. "Thank you Federal Reserve, and thank you Bureau of Labor Statistics for not including art in the consumer price index."
The traditional measures of inflation have shown little decrease in the value of a dollar. The Dollar Index, which tracks the dollar against a basket of four other currencies, is barely higher on the year. Gold, which is thought to track inflation, is 24 percent lower. And the consumer price index produced by the Bureau of Labor Statistics shows only a small increase in 2013.
But Francis Bacon inflation is booming. In May of 2008, another Bacon triptych (meaning a three-panel piece of art) was sold for a mere $86 million. And while every work is different, the fact that the more recently sold triptych garnered 66 percent more money is notable.
By contrast, the CPI has only increased by 9 percent since then (though it may be worth noting that the price of actual bacon, a CPI component, has risen by 56 percent).
"It's indicative of the time," Boockvar, the chief market analyst at the Lindsey Group, told CNBC.com. "Stocks and bonds and rare comic books and high-end New York City apartments are all doing the same thing. What we're seeing is massive asset price inflation generated by what the Fed is doing. And while they continue to want us to look at the lack of consumer price inflation, asset price inflation is just inflation under a different name."
The Winklevoss twins may say that bitcoin resembles "gold 2.0," but CEO of Euro Pacific Capital and Peter Schiff says the somewhat mysterious online currency more closely resembles tulip mania 2.0.
"A bubble is a bubble," he said. "And there's a bubble in bitcoins."
Schiff was responding to comments made by Tyler and Cameron Winklevoss, who have invested a great deal in bitcoins and are attempting to start a bitcoin exchange-traded fund. (They also happen to be well-known for suing Mark Zuckerberg over the creation of Facebook.)
On Tuesday's "Squawk Box," Cameron Winklevoss said that "some definitely view it as gold 2.0," adding, "In terms of a store of value, it definitely has the properties of gold, and people are viewing it that way."
(Read more: Winklevosses: Bitcoin worth at least 100 times more)
But on the Tuesday episode of "Futures Now." Schiff, a longtime investor in gold, literally laughed at the comparison.
"I don't see bitcoins as an alternative to gold," he said. "If anything, [the creators of bitcoin are] modern-day alchemists, but you can't make gold digitally. It's no better than a fiat currency."
Schiff said that what he does see in the peer-to-peer currency—whose value has risen from $13.50 in January to $375 on Tuesday—is a bubble.
Traders and strategists say the market rally is likely to continue through December for a deceptively simple reason: Stocks have rallied significantly all year, and those gains are likely to beget further gains.
The market "should do pretty well into the end of the year," writes Nicholas Colas, chief market strategist at ConvergEx Group. "There's plenty of cash that probably feels it should get off the bench, and so many managers have underperformed in 2013 that many of them will probably want to look fully invested by December 31."
In other words, since most fund managers have returned less than the market, there will be a temptation to buy into the end of the year to try to capture some last-minute gains—or at least make it look like they have owned the winners all year.
"Year-end melt-up, here we come," Colas continued in a recent note.
After all, owning anything other than stocks has not been a winning maneuver in 2013.
"Commodities and bonds have given investors little or no return this year, while the S&P is up 20 percent," points out Anthony Grisanti of GRZ Energy and a CNBC contributor. "If you would have invested in gold over the same period, you would be down over 20 percent."
The surprisingly positive October jobs data that was released at 8:30 a.m. EST hurt the bond market, but it must have been especially painful for those who bought bond futures seconds ahead of the report. At 8:29 a.m. EST, five-year note futures soared to a nearly five-month high—before losing all those gains, and then some, to hit a three-week low. Ten-year note futures similarly moved much higher before dropping.
The move was so powerful that it led the CME, the exchange on which Treasury futures trade, to automatically pause trading. CME Group told CNBC.com that a "velocity logic event" was triggered, meaning that the market was automatically paused because of an extreme move. Not only was the five-year Treasury note paused, but the 30-year Treasury bond and the 30-year Ultra Treasury bond were paused as well. The 30-year was paused first, starting at 8:29:57 a.m. EST and ending at 8:30:02. The five-year note pause began at 8:30:01, and ended at 8:30:06.
The 204,000 jobs created in October, which was well above expectations, fostered perceptions that the Federal Reserve will reduce its $85 billion monthly bond-buying program earlier than it otherwise would have. As a result, bond prices dropped, and Treasury yields rose.
But at literally the last minute before the report was released, five-year note futures advanced to the highest intraday level since June 19.
Bill Fleckenstein says that investors who buy into the stock market at all-time highs are making a grave error. Comparing the current situation to the infamous bubbles of 1999 and 2007, the noted contrarian and short seller says that bulls are ignoring fundamentals at their own peril.
"People are, once again, being fooled," Fleckenstein said on Thursday's episode of "Futures Now." "In the stock mania in 1999, people were bullish because stocks were going up. In 2007, people were bullish because stocks and real estate were going up. They didn't look at—Why are they going up? Is this sustainable? Is this healthy?—and in both cases, it was not."
In this case, the bubble Fleckenstein points to is powered not by tech stocks or real estate, but by the Federal Reserve's quantitative easing program.
(Read more: What is the Fed talking about?)
"Now we have the Fed suppressing the bond market such that rates are ridiculously low, and capital is being misallocated everywhere, and the price of nearly everything is out of whack," Fleckenstein said.
But he says the Fed is starting to lose control already—meaning that stocks could crack even if the Fed continues to buy $85 billion worth of assets each month.
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