The Stock Market Myth: Good News...Stocks Plunge!

[Faun]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

 

[edward37]

Economists change their tune every decade or so. 20-30 years ago everyone was focused on the M1 money supply like it was the key to everything. I haven't heard an economist mention the M1 money supply in 2 decades. Then it was the Fed, and how thick Greenspan's folders were. Thick was bad, it meant a rise in interest rates. Volker was the opposite, he raised rates to 20% to fight inflation. The good news is that the Fed isn't using the "punch bowl" lately and artificially lowering rates to create a "bubble". That was the worst. boom-bust-boom-bust-boom-bust.
Since the great recession in 2008 the economy has been growing slowly, lets keep it that way, nice and slow, 2%-3% of GDP is plenty.

The Fed isn’t using the “punch bowl” lately? What Fed are you referring to? They just lowered rates and stopped decreasing their balance sheet. According to the Republicans on this board the economy is humming along. Look how high the stock market is, they say. Yet Trump wants to cut the payroll tax, and called for a full 1% cut in rates from the Fed.

This market is a bubble (created in part by the Fed and Trump) and it will burst within 2-3 years.

And what of the tariffs he's discontinuing? Need to help our Xmas shoppers? But he says we're not affected by tariffs only China is ,,,,,,,,,,,,,,,,,,and Mexico is paying for the wall

 

[edward37]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

Inverted yield curve is not good news either

 

[kyzr]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

Inverted yield curve is not good news either

RV sales are slowing...recession coming...so what? It won't be as bad as the last one. Some deadwood lose their jobs, no big deal, they collect unemployment for a few months.

 

[edward37]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

Inverted yield curve is not good news either

RV sales are slowing...recession coming...so what? It won't be as bad as the last one. Some deadwood lose their jobs, no big deal, they collect unemployment for a few months.

I'm into the markets pretty heavy so I hope you're right ,,if it comes it's no big deal

 

[Rambunctious]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

Trump hasn't cut the income tax rate and the fed is not racing to cut the interest rate so what are you talking about?....if anything clowns like you will talk us into greater inflation....lol

 

[edward37]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

Trump hasn't cut the income tax rate and the fed is not racing to cut the interest rate so what are you talking about?....if anything clowns like you will talk us into greater inflation....lol

Is that why he's thinking of more tax cuts ? He spoke of those before the last election but afterwards the pos was silent

 

[Rambunctious]

Is that why he's thinking of more tax cuts ? He spoke of those before the last election but afterwards the pos was silent

Thinking about it for down the road as a tool to stave off any kind of down turn you libs and the media can scare the nation into....

 

[Toddsterpatriot]

Economists change their tune every decade or so. 20-30 years ago everyone was focused on the M1 money supply like it was the key to everything. I haven't heard an economist mention the M1 money supply in 2 decades. Then it was the Fed, and how thick Greenspan's folders were. Thick was bad, it meant a rise in interest rates. Volker was the opposite, he raised rates to 20% to fight inflation. The good news is that the Fed isn't using the "punch bowl" lately and artificially lowering rates to create a "bubble". That was the worst. boom-bust-boom-bust-boom-bust.
Since the great recession in 2008 the economy has been growing slowly, lets keep it that way, nice and slow, 2%-3% of GDP is plenty.

The Fed isn’t using the “punch bowl” lately? What Fed are you referring to? They just lowered rates and stopped decreasing their balance sheet. According to the Republicans on this board the economy is humming along. Look how high the stock market is, they say. Yet Trump wants to cut the payroll tax, and called for a full 1% cut in rates from the Fed.

This market is a bubble (created in part by the Fed and Trump) and it will burst within 2-3 years.

This market is a bubble

Based on what metric(s)?

Or just a feeling?

Sure- first consider the smell test. We have had extremely slow growth over the last decade yet valuations are at or near all time highs. There just isn’t enough growth to justify these high P/E ratios.

The corporate tax cut was supposed to spur growth-
Who Benefits From The Tax Cut 10 Months Later
So where is all the money saved from corporate tax cuts going? First, to companies’ bottom lines and second to stock buybacks, which were recently at a record high. So far, in 2018, the 500 corporations in the S&P Index have received $30 billion from the corporate rate cut, which in turn accounts for over 40 percent of S&P equity earnings growth. When economies are strong, equity values rise because the issuing corporations are engaged in innovation and other fundamental strategies to raise the real performance of the company. However, innovation and fundamental performance do not seem to be the cause of the rise in equity values. The Shiller PE ratio, which compares share prices to earnings, is now over 30, the highest since the expansion began mid 2009.

It feels a lot like 1999 to me. Multiple IPOs with billions in valuations and no hope for profits in the foreseeable future. Buy at your own risk brother.

We have had extremely slow growth over the last decade yet valuations are at or near all time highs. There just isn’t enough growth to justify these high P/E ratios.​

S&P 500 PE Ratio

All time highs? Where do you see that?

The Shiller PE ratio, which compares share prices to earnings, is now over 30, the highest since the expansion began mid 2009.

Shiller?

Shiller PE ratio for the S&P 500. Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years,

It includes earnings from 2009. Next year, when 2009 drops off, assuming flat S&P earnings, that ratio would drop by about 6%.

Buy at your own risk brother.

Absolutely, but that's because the recovery is 10 years old, not because PEs are near all time highs.

 

[Faun]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

Trump hasn't cut the income tax rate and the fed is not racing to cut the interest rate so what are you talking about?....if anything clowns like you will talk us into greater inflation....lol

As always, you have no idea what you're talking about....

Fed Cuts Interest Rates for First Time Since 2008 Crisis

https://www.washingtonpost.com/busi...ab28ec-c2bd-11e9-b72f-b31dfaa77212_story.html

 

[Rambunctious]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

Trump hasn't cut the income tax rate and the fed is not racing to cut the interest rate so what are you talking about?....if anything clowns like you will talk us into greater inflation....lol

As always, you have no idea what you're talking about....

Fed Cuts Interest Rates for First Time Since 2008 Crisis

https://www.washingtonpost.com/busi...ab28ec-c2bd-11e9-b72f-b31dfaa77212_story.html

You dishonest little prick...you know that cut was not large enough to have been done with any concern of a coming recession.....nice try asswipe...

 

[Faun]

The economy is not failing or struggling...don't believe the media...believe your own bank account and your own eyes....

Of course the economy is sliding. The president doesn't give tax breaks in a good economy. The fed doesn't cut the federal fund rate in a good economy. The stock market doesn't turn flat in a good economy.

Trump hasn't cut the income tax rate and the fed is not racing to cut the interest rate so what are you talking about?....if anything clowns like you will talk us into greater inflation....lol

As always, you have no idea what you're talking about....

Fed Cuts Interest Rates for First Time Since 2008 Crisis

https://www.washingtonpost.com/busi...ab28ec-c2bd-11e9-b72f-b31dfaa77212_story.html

You dishonest little prick...you know that cut was not large enough to have been done with any concern of a coming recession.....nice try asswipe...

LOLOL

You dumbfuck, tax cuts are meant to fire up a failing economy.

 

[Deplorable Yankee]

Why is a measure of future corporate profits taken as a measure of economic well-being?

we can all agree on that
and
corporations used to take great care of their employees ...not just upper management
THOSE DAYS ARE LONG GONE...

 

[BuckToothMoron]

Economists change their tune every decade or so. 20-30 years ago everyone was focused on the M1 money supply like it was the key to everything. I haven't heard an economist mention the M1 money supply in 2 decades. Then it was the Fed, and how thick Greenspan's folders were. Thick was bad, it meant a rise in interest rates. Volker was the opposite, he raised rates to 20% to fight inflation. The good news is that the Fed isn't using the "punch bowl" lately and artificially lowering rates to create a "bubble". That was the worst. boom-bust-boom-bust-boom-bust.
Since the great recession in 2008 the economy has been growing slowly, lets keep it that way, nice and slow, 2%-3% of GDP is plenty.

The Fed isn’t using the “punch bowl” lately? What Fed are you referring to? They just lowered rates and stopped decreasing their balance sheet. According to the Republicans on this board the economy is humming along. Look how high the stock market is, they say. Yet Trump wants to cut the payroll tax, and called for a full 1% cut in rates from the Fed.

This market is a bubble (created in part by the Fed and Trump) and it will burst within 2-3 years.

This market is a bubble

Based on what metric(s)?

Or just a feeling?

This market is a bubble

Based on what metric(s)?

Or just a feeling?

Almost four hundred years of capitalism:

List of stock market crashes and bear markets - Wikipedia

In case you missed it, capitalism is an unstable system of successive bubbles.

Perhaps, but what has survived longer?

 

[BuckToothMoron]

Economists change their tune every decade or so. 20-30 years ago everyone was focused on the M1 money supply like it was the key to everything. I haven't heard an economist mention the M1 money supply in 2 decades. Then it was the Fed, and how thick Greenspan's folders were. Thick was bad, it meant a rise in interest rates. Volker was the opposite, he raised rates to 20% to fight inflation. The good news is that the Fed isn't using the "punch bowl" lately and artificially lowering rates to create a "bubble". That was the worst. boom-bust-boom-bust-boom-bust.
Since the great recession in 2008 the economy has been growing slowly, lets keep it that way, nice and slow, 2%-3% of GDP is plenty.

The Fed isn’t using the “punch bowl” lately? What Fed are you referring to? They just lowered rates and stopped decreasing their balance sheet. According to the Republicans on this board the economy is humming along. Look how high the stock market is, they say. Yet Trump wants to cut the payroll tax, and called for a full 1% cut in rates from the Fed.

This market is a bubble (created in part by the Fed and Trump) and it will burst within 2-3 years.

This market is a bubble

Based on what metric(s)?

Or just a feeling?

Sure- first consider the smell test. We have had extremely slow growth over the last decade yet valuations are at or near all time highs. There just isn’t enough growth to justify these high P/E ratios.

The corporate tax cut was supposed to spur growth-
Who Benefits From The Tax Cut 10 Months Later
So where is all the money saved from corporate tax cuts going? First, to companies’ bottom lines and second to stock buybacks, which were recently at a record high. So far, in 2018, the 500 corporations in the S&P Index have received $30 billion from the corporate rate cut, which in turn accounts for over 40 percent of S&P equity earnings growth. When economies are strong, equity values rise because the issuing corporations are engaged in innovation and other fundamental strategies to raise the real performance of the company. However, innovation and fundamental performance do not seem to be the cause of the rise in equity values. The Shiller PE ratio, which compares share prices to earnings, is now over 30, the highest since the expansion began mid 2009.

It feels a lot like 1999 to me. Multiple IPOs with billions in valuations and no hope for profits in the foreseeable future. Buy at your own risk brother.

We have had extremely slow growth over the last decade yet valuations are at or near all time highs. There just isn’t enough growth to justify these high P/E ratios.​

View attachment 275294

S&P 500 PE Ratio

All time highs? Where do you see that?

The Shiller PE ratio, which compares share prices to earnings, is now over 30, the highest since the expansion began mid 2009.

Shiller?

Shiller PE ratio for the S&P 500. Price earnings ratio is based on average inflation-adjusted earnings from the previous 10 years,

It includes earnings from 2009. Next year, when 2009 drops off, assuming flat S&P earnings, that ratio would drop by about 6%.

Buy at your own risk brother.

Absolutely, but that's because the recovery is 10 years old, not because PEs are near all time highs.

Ok, grab your freshman year Econ graphs, but now you have to learn calculus. PE ratios are ridiculously high with respect to growth. Like I said, you can buy all the stocks you want, but don’t blame the democrats for killing your party. You’ve been warned and this post has been book marked.

 

[georgephillip]

It's true that the stock market isn't necessarily indicative of the economy over the near term or even the intermediate term. For example, from 1966 to 1982, the Dow was flat while the economy went up by a third. However, rising stocks, like all rising asset prices, are a reflection of the accumulated wealth generated by the economy over time. Future profits are based upon past profits, and grow off the capitalized wealth accumulated in the retained earnings of the corporate sector.

What effects did Reagan's legalization of stock buy-backs have on the rising market?

Stock Buybacks Were Once Illegal. Why Are They Legal Now? - The Intellectualist

"The SEC changed policy during the Reagan administration in 1982.

"The notion of stock buybacks has gained increased attention in recent years, primarily in light of America's growing wealth and income inequality but also for the Republican tax plan that President Donald Trump signed last year."

Stock buybacks raise the price of the stock and the CEO whose salary is based on stock price makes a killing

Stock buybacks raise the price of the stock and the CEO whose salary is based on stock price makes a killing

Buybacks were illegal during a time when corporations were not committed to advancing shareholder interests at the expense of all other considerations, i.e., labor and consumer rights, environmental degradation, and ever-widening gaps in income and wealth.

Stock Buybacks Were Once Illegal. Why Are They Legal Now? - The Intellectualist

"Buybacks were illegal throughout most of the 20th century because they were considered a form of stock market manipulation. But in 1982, the Securities and Exchange Commission passed rule 10b-18, which created a legal process for buybacks and opened the floodgates for companies to start repurchasing their stock en masse.

"The SEC's decision to make this shift came against the backdrop of President Ronald Reagan's era of deregulation and coincided with the rise of 'free market' economists preaching a new type of social responsibility for business: increasing profits.

"This shift in corporate mentality is well appreciated in statements on social responsibility from the Business Roundtable, a politically conservative association of chief executive officers of top American companies, as they differ from 1981 to 1997.

"The 1981 statement still held that companies were obligated to consider their social impact alongside making profits"

Perhaps some enlightened capitalists are now rethinking shareholder value?

Shareholder Value Is No Longer Everything, Top C.E.O.s Say

 

[georgephillip]

Economists change their tune every decade or so. 20-30 years ago everyone was focused on the M1 money supply like it was the key to everything. I haven't heard an economist mention the M1 money supply in 2 decades. Then it was the Fed, and how thick Greenspan's folders were. Thick was bad, it meant a rise in interest rates. Volker was the opposite, he raised rates to 20% to fight inflation. The good news is that the Fed isn't using the "punch bowl" lately and artificially lowering rates to create a "bubble". That was the worst. boom-bust-boom-bust-boom-bust.
Since the great recession in 2008 the economy has been growing slowly, lets keep it that way, nice and slow, 2%-3% of GDP is plenty.

The Fed isn’t using the “punch bowl” lately? What Fed are you referring to? They just lowered rates and stopped decreasing their balance sheet. According to the Republicans on this board the economy is humming along. Look how high the stock market is, they say. Yet Trump wants to cut the payroll tax, and called for a full 1% cut in rates from the Fed.

This market is a bubble (created in part by the Fed and Trump) and it will burst within 2-3 years.

This market is a bubble

Based on what metric(s)?

Or just a feeling?

This market is a bubble

Based on what metric(s)?

Or just a feeling?

Almost four hundred years of capitalism:

List of stock market crashes and bear markets - Wikipedia

In case you missed it, capitalism is an unstable system of successive bubbles.

Perhaps, but what has survived longer?

Perhaps, but what has survived longer?

Land, labor, and enterprise predate capitalism.

Over the past five hundred years, capitalism has become the dominant economic system; however, that doesn't mean it's eternal.

History of capitalism - Wikipedia

"The history of capitalism has diverse and much debated roots, but fully-fledged capitalism is generally thought to have emerged in Northwestern Europe, especially in the Low Countries (mainly present-day Flanders and Netherlands) and Great Britain, in the sixteenth to seventeenth centuries.

"Over the following centuries, capital has accumulated by a variety of different methods, in a variety of scales, and associated with a great deal of variation in the concentration of economic power and wealth.

"Capitalism has gradually become the dominant economic system throughout the world.[1][2][3] Much of the history of the past five hundred years is, therefore, concerned with the development of capitalism in its various forms."

 

[Bush92]

Why is a measure of future corporate profits taken as a measure of economic well-being?

Good News: The Stock Market is Plunging | Beat the Press | CEPR

"If there is one item about the economy that we can be sure will be repeated every day, it is the movement in the Dow or the S&P 500. And, needless to say, an upward movement is good news and a downward movement is bad news,,,"

"This view that the stock market is a measure of economic well-being is bizarre, because it is so completely at odds with what the stock market is.

"The stock market is a measure of the expectations of future profits of companies that are listed in the exchange: full stop.

"That is not some left-wing radical analysis of stock prices, this is the textbook definition.

"The stock market is not going to rise because people are getting better health care and living longer lives. It won’t rally because workers are getting paid family leave and guaranteed vacation.

"And, it certainly won’t rise because workers find it easier to organize and union membership soars."

Investors in GE, Microsoft, and other corporations will only ask how each of the above mentioned benefits will affect future profit margins of the companies they hold stock in.

If they are likely to lead to lower future profits (rising union memberships or paid family leave), they would expect stock prices to fall.

"It is important that people be clear on this point as the 2020 elections draw closer.

"Many of the policies being proposed by the leading Democratic candidates would be expected to reduce after-tax corporate profits.

"This means that they should be expected to lead to lower stock prices.

"For example, most of the Democratic presidential candidates are advocating strong measures to address climate change.

"These measures will almost by definition mean sharply lower demand for oil and natural gas.

"This will mean sharply lower profits for a major sector of the economy, which will surely depress the stock price of fossil fuel companies."

Because of international markets, what’s good for Wall Street investors is not always good for Main Street USA. Average working class Americans...in fact most Americans...can’t afford an “investment portfolio.”

 

[georgephillip]

Economists change their tune every decade or so. 20-30 years ago everyone was focused on the M1 money supply like it was the key to everything. I haven't heard an economist mention the M1 money supply in 2 decades. Then it was the Fed, and how thick Greenspan's folders were. Thick was bad, it meant a rise in interest rates. Volker was the opposite, he raised rates to 20% to fight inflation. The good news is that the Fed isn't using the "punch bowl" lately and artificially lowering rates to create a "bubble". That was the worst. boom-bust-boom-bust-boom-bust.
Since the great recession in 2008 the economy has been growing slowly, lets keep it that way, nice and slow, 2%-3% of GDP is plenty.

How many rate cuts are you expecting before November 2020?
What happens if profits of tech, insurance, and phrama decline in anticipation of that election?

Good News: The Stock Market is Plunging | Beat the Press | CEPR

"In the same vein, most of the Democrats are proposing measures that will sharply reduce the profits of the insurance and prescription drug industries.

"These measures should be expected to lead to sharply lower stock prices for the companies in these sectors.

The same story applies to the tech sector, where at least some of the candidates, most notably Elizabeth Warren, have proposed measures to break up dominant firms like Facebook and Google. These measures would be a big hit to some of the most highly valued companies on the market."

1. I'm expecting the Fed to move SLOWLY, from 2.5% to about 1% prior to the 2020 election. The economy shouldn't go into a recession, two or more quarters of negative GDP. The economy might slow to minimal growth, but I'm not anticipating negative growth. There is simply too much money in the economy and consumers wallets for that. The US economy is 70% retail, so as long as buyers buy we're fine. RV sales took a hit and are slowing, global economies are also slowing, so there are concerns, but nothing like the "great recession" when:
"Major causes of the initial subprime mortgage crisis and following recession include: International trade imbalances and lax lending standards contributing to high levels of developed country household debt and real-estate bubbles that have since burst."

2. If profits slow for tech, insurance, and pharma, as well as other sectors, the Fed lowering interest rates should keep the stock market from crashing. A recession is a 6-month dip in the stock market. Some people get laid off. Its part of the normal economic cycle. A recession is better than a depression. The "recession" might depend upon if Trump and Xi can get a trade deal. I'm not seeing the old boom-bust-boom-bust economic cycle.

View attachment 275288

3. I'm optimistic that no socialist will win in 2020, so assuming Trump wins, the economy will be his ongoing focus.

I'm expecting the Fed to move SLOWLY, from 2.5% to about 1% prior to the 2020 election. The economy shouldn't go into a recession, two or more quarters of negative GDP. The economy might slow to minimal growth, but I'm not anticipating negative growth

Investors seem to be flocking to bonds in anticipation of an upcoming downturn; are you concerned about that?

"The yield curve is a line plotting out yields across maturities. Typically, it slopes upward, with investors demanding more compensation to hold a note or bond for a longer period given the risk of inflation and other uncertainties.

"An inverted curve can be a source of concern for a variety of reasons: short-term rates could be running high because overly tight monetary policy is slowing the economy, or it could be that investor worries about future economic growth are stoking demand for safe, long-term Treasurys, pushing down long-term rates, note economists at the San Francisco Fed, who have led research into the relationship between the curve and the economy."

The yield curve inverted — here are 5 things investors need to know

 

[georgephillip]

Unemployment is low....and the job increases we have seen are skilled well compensated employment...people have capitol to spend and a hunger for it too....they are confident that they will have their jobs for the foreseeable future...you can't show that in a chart and Obama never had that kind of consumer confidence.....

Anyone that is trying to talk the economy down should be laughed at....they are doing so for politics only...imagine that...they hate Trump so bad that they want to ruin your life to make you vote like they want you to....that is evil....

Most of the jobs are in the service sector and don't pay enough for a single worker to keep a roof over her head in many parts of the country as evidenced by the rising cost of consumer debt since Trump took over:

"NEW YORK (Reuters) - More people in the United States appear to be struggling to keep up with their credit card and student loan debt, which could put pressure on one of the strongest drivers of economic growth."

Past-due student loans, credit card debt could weigh on U.S. growth - Reuters