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March of Zombie Companies Just Gets Louder in Stock Market

  • Loss-making small-caps beating profitable ones in rebound
  • Fed is pushing money out on the risk curve: GuideStone’s Spika
Converging perspective, view from below of office towers at the World Trade Center site in Lower Manhattan, New York City, USA
Photographer: Busà Photography/Moment RF
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To best observe the real-world impact of Federal Reserve largesse in the stock market, maybe focus on its fringe.

That is, places occupied by companies whose lease on life is weakest: small-cap firms that don’t make any money. Since equities bottomed around the time Fed Chair Jerome Powell pulled out all the stops to shore up markets, shares of these firms haven’t just rebounded. They’ve risen twice as fast as profitable ones.