The nearly zero interest rate environment will endure for a couple more years due to political gridlock and a poor economy, which perversely is good for the stock market, according to David Kotok, chairman and chief investment officer of Cumberland Advisors.

In a client commentary, Kotok said Washington, D.C. lawmakers will spend the next two months "dealing with the crazy crisis-resolution process they worked out" for the budget impasse, which is the backdrop against which the Federal Reserve Open Market Committee next has to meet.

On top of that, he noted, the Fed must contend with a change in leadership at the top, as Fed Chairman Ben Bernanke is stepping down when his term ends in January.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

"One thing seems clear. The zero interest rate limitation in the short-term end of the yield curve is going to persist for at least another couple of years. It may continue a lot longer," Kotok wrote.

"The shock of the U.S. government shutdown and the antics of our politicians have only exacerbated the slowing of the U.S. economy."

And what is the expected outcome when the Fed is forced to maintain a low interest rate environment? "It means that asset classes have a long and volatile, but favorable, upward bias," he proclaimed.

Kotok said the low interest rate environment and its knock-on support for asset classes is not merely a U.S. phenomenon.

"At this juncture, Cumberland equity accounts are fully and strategically invested around the globe using exchange-traded funds. We think that very low interest rate policies will remain in effect worldwide for some extended period of years."

Jeff Macke of Yahoo Breakout said the recent all-time highs in various stock indexes is "yet another disconnect between the fundamental realities of the economy and a stock market seemingly determined to make new highs day after day."

"It's becoming impossible to ignore the connection between a lack of fiscal control in the White House and the ageless bull market," he added.

Todd Harrison, founder and CEO of Minyanville Media, said, "It does sort of smack a bit of a 'Mission Accomplished' moment for the Obama presidency with the market at all-time highs, cats and dogs hugging in the street. Everybody has seemingly bought into the fact that the 'Bernanke call' has replaced the 'Greenspan put' and the market trades fantastic."

Harrison told Yahoo he believes bad economic news will continue, but the stock market will attribute it only as the temporary effect of the government shutdown.

"Fourth-quarter earnings have a mulligan," he predicted.

Editor’s Note: 5 Reasons Stocks Will Collapse . . .

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