For most investors, the big news this week was the S&P index reaching new highs.
But there were two more obscure headlines that actually tell us much more about what's happening with stocks and the global economy.
The first was this: "Francis Crick DNA Letter Sells for $6 million." The news was that a 60-year-old letter written by Francis Crick – who co-discovered the structure of DNA – to his son was sold by Christie's auction house.
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The price was an astounding six times the low estimate of $1 million. "I'm sort of in a state of shock," said Michael Crick, the son who received the letter in 1953 and sold it.
Then there was earlier news that an investment fund backed by Qatar has bought London's famed Park Lane Hotel for more than $475 million. The price marked a whopping 62 percent premium to the price asked for the hotel in December. In the first quarter alone, commercial property sales in London were up 71 percent compared to 2012. And two thirds of those sales were by foreign buyers.
Stocks, old letters and London hotels all reaching new highs. What's the connection?
Global asset reflation. That may sound technical, but economists say that the somewhat baffling rise in U.S. stocks can be best explained by looking at asset values more broadly around the world. The river of money coursing around the globe is now approaching the flood stage, fed by a downpour of cash from the Federal Reserve and now from the Bank of Japan.
All that cash is searching for a home, and unlike water, cash tends to seek higher ground rather than the lowest. So all of the world's cash is pouring into higher quality assets with little concern for underlying values or economic fundamentals.
It's not that old letters, stocks and London hotels have suddenly become inherently more valuable. The amount of money chasing those assets has grown.
The swollen supply of money is pouring into everything from rental properties in Las Vegas and condos in Miami, to farmland in Brazil and office towers in Hong Kong to 1950s Ferraris, Gerhard Richter paintings and even old U.S. stamps. The bond king Bill Gross sold off around 370 lots from his prized stamp collection this week, fetching nearly $2 million for charity. Some of the lots went for twice the estimated price.
As a bond trader, Bill Gross knows the link between central banks and asset values better than just about anyone. As he once told the Washington Post, talking about stamp collecting: "The liquidity provided by central banks over the past two, three, four, five years has led to asset appreciation not just of homes, but of stamps and collectibles."
Of course, not everyone buys the money-supply theory of asset values. Plenty of stock markets around the world are underperforming. Carl Weinberg, founder and chief economist of High Frequency Economics, points out that outside of the United States, monetary easing has not substantially increased the supply of credit.
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Weinberg added that the rally in stocks and alternative assets "may be an argument for irrational expectations," rather than an oversupply of cash.
"Unfortunately there is no good data to prove this one way or the other," he said. "There are people who want to believe central banks have created asset bubbles. But it's hard to prove."
Unless of course, you follow the stamp market as well the stock market.