At the end of the day, I think it's fair to say no one knows anything when it comes to where the markets will be. But the vast majority of others don’t make sense nor are their prices reflecting reality. New comments cannot be posted and votes cannot be cast, More posts from the econmonitor community. I share your view point. The amazing thing to me is the United States is supposed to be number one example of capitalism and real competition. In late 2018, the bull market seemed to be running out of steam. … Governments across the world were running procylical fiscal policy with varying shades of abandon before the shock and this limited their flexibility to address this one. Share evidence, zillow screenshots … Decorate and personalize laptops, windows, and more. Created Jun 16, 2016. hide. They painted themselves into a corner. r/redbubble: A place for Redbubble creators to showcase their work or for anyone else to share something amazing they found! That’s why it’s time to opt out. So what happens if the recovery isn't as fast and/or vigorous as analysts like this expect? It doesn't seem like there's anywhere but stocks to get a return. US homebuyer foot traffic is slowly inching higher (chart 6) and mortgage purchase applications have not only recovered the COVID-19 shock but are at levels seen well before the US economy shut down in mid-March (chart 7). You can just say stocks are cheap because analysts are expecting earnings to be this much higher in 2022, 2023, 2024. I wouldn’t be so sure. Matte finish. q&a (suggested) level 1. One of my favourite examples was when demographics best sellers told us during the early 1990s recession that an aging population meant fundamentally changed behaviour and we’d never have another housing boom after the 1980s. If the earnings rebound turns out to be anything close to analysts’ expectations, then maybe….gasp…stocks are cheap and nobody wants to say as much. We do. The capitalism and competition in the economy? John Mauldin. People will still be hesitant to take a flight, go to a restaurant, visit Disneyland if a second wave hits. In fact, I’d go further than that and suggest that the Fed can stimulate away and should tolerate richer asset valuations yet. Stocks go up, it benefits the rich; stocks go down it damages the little savings or pensions of the working class. "Yet investors are buying on a price relative to forward earnings basis over multiple quarters ahead in anticipation of a rebound". Investors are just pricing in earnings for 2025 so stocks are currently cheap. I don't think the coronavirus needs to be curtailed in order to have a rebound, although the size of that rebound might be correlated. IMF warns of share price bubble as stocks slide before Fed decision - as it happened Fed set to stick to ultra-loose policy stance; Facebook, Apple, Tesla earnings also … Real competition means winning and losing (but that no longer applies, if you are big enough losing is no longer an option). It’s a little like the sort of socialism/communism that China has, where it isn’t so much socialism to support the masses, but where the line between corporations and government is very thin, if not nonexistent. The Fed has attempted to absorb all risk onto it's balance sheet. North American retail foot traffic is starting to recover, albeit out of a deep pit (chart 5). 0 comments. When the Fed's Everything Bubble implodes, all the "experts" and policymakers will drone in unison: "No one could've seen this coming." Is all of this durable? North American retail foot traffic is starting to recover, albeit out of a deep pit (chart 5). On the flip side, 10 yr Treasuries are back below 0.7% and bond investors have a much more dour view of the economic situation. Oops. And thus long-term expectations for earnings were reduced based on a short-term statistic. Capitalism has little to say about macroeconomics and so that's being regulated. The truth is that the United States is no longer the greatest example of capitalism or competition because it is beholden to one institution. 93% Upvoted. Talked to the oil patch lately? It’s not socialism or communism. Sort by. There is a growing school of thought that the Fed and other central banks are driving an asset bubble when the evidence is wanting. In terms of an asset bubble the system is flush with liquidity and rates are low(and for the next few years it seems). The current asset prices are pure speculation. Charts 1–5 show various other measures of S&P500 valuations including price-to-trailing earnings, price-to-forward earnings, price-to-book, Shiller’s CAPE (price to cycle-smoothed trailing earnings) and dividend yield compared to the 10 year Treasury yield. They have no connection to fundamentals or technicals. 3) This is an open forum but we expect you to conduct yourself like an adult. 1/8 inch (3.2mm) white border around each design. We do. Global air travel is gradually recovering (chart 4). BUT if you watch CNBC what do they talk about the most? Is it possible we are living in the time of an economic theory supercycle of the likes of time of kaynes v hayek? Bubbles are every where. Even as the housing sector has more than… When interest rates are this low where else are you going to put your money? The Fed Is Creating A Monster Bubble. Look at the evidence. Enough said. Online. Housing also doesn’t seem over-valued. This includes beginner questions and portfolio help. Blowing bubbles . "Bubble-like sentiment surrounds SPACs," Goldman Sachs analysts said in a recent research report. Sort by. They have no connection to fundamentals or technicals. And it is really alarming to see the possibility of corporations becoming so dependent on federal liquidity that they start depending on it as a source of vital income, rather than generating new value, which definitely does increase the danger that the fed could begin exerting undue influence. New comments cannot be posted and votes cannot be cast, Press J to jump to the feed. Commentary must come from a major financial institution. Collapse. Is all of this durable? Decorate your laptops, water bottles, notebooks and … There's no real evidence to suggest commodities are doing anything but trying to keep their respective heads above water hoping that everything comes back to normal and people start buying shit again. We abandoned the principles that made capitalism function as a semi-healthy form of economy decades ago. Yes a single institution is the most important part of the greatest example of 'capitalism' and 'competition' in the world. 20 days ago. Log in or sign up to leave a comment Log In Sign Up. Reddit rebellion is 'another epic parabolic bubble' that will burst, investor Peter Boockvar warns . Anyone here having success with red bubble? Now we have a phenomenon where an individual stock soars – again with no connection to reality. Stock index levels don’t mean much, however, in that they are just a price absent a comparator over time. The Fed. Sticker types may be printed and shipped from different locations. First, on stocks, traditional relative measures that were recapped in yesterday’s note showcase how stocks are not cheap but there is nothing particularly out-of-sample going on here. The Fed-fueled economy is unstable, and as the Austrian theory of the business cycle teaches us, sooner or later is bound to suffer from recessions. Published Thu, Jan 28 2021 8:33 PM EST Updated Mon, Feb 1 … share. Would be interesting to watch trading volumes. save. ", I don't believe the Fed is directly increasing asset prices or anything like that, but in my opinion they are indirectly increasing asset prices by saying interest rates are going to be staying at the lower bound. Heck, that’s not even entirely a forecast as there is evidence that conditions are already headed there such that by the time GDP growth returns to the black in Q3 we’ll already be well into recovery mode. Global cases of COVID are surging, and US cases in the south and west are rising rapidly. If so, then daily gyrations aside, stocks could have considerably more room to run. Press question mark to learn the rest of the keyboard shortcuts. Bankruptcies are starting to rise precipitously; 30 and 60 day delinquencies doubled MoM; Airlines are still -90% demand YoY; Crude stores are on the rise again. Buy Bitcoin, and get off zero. The sudden comedown will leave thousands of exuberant first-time traders with hefty losses in their Robinhood accounts and exacerbate the … In general, talk of marching toward record highs is so far truer for the unadjusted indices than the relative valuation measures. No news articles, no media outlets, no opinion pieces. It's math. The effect of the shutdown on the market is akin to radiation sickness - there's clearly been damage to the underlying economy, but things "seem" fine. This means that competition has been absolutely crushed and mega corps have become addicted like a crack head to the flow of cheap liquidity from the Fed, using it for stock buybacks and to “lobby” (buy off politicians and/or install their agents, see the FCC for a prime example), and they’ve learned that there will be no punishment). I wouldn’t be so sure. report. Features. 2020-05-13 | TG Watkins. Probably not. report. Listen to amazing real life answers to real life questions while … German restaurant bookings are soaring (chart 2). Get a constantly updating feed of breaking news, fun stories, pics, memes, and videos just for you. During COVID, it is expected that 2020 is going to be bad for earnings, so investors are punishing companies less for short-term misses and valuing them based on an estimate of what return to normal looks like. I’ve been doing this gig in one form or another for about a quarter century which is just barely enough time in the grand sweep of history’s humbling lessons to have learned that every time a shock arises, we’re told we’ll never be the same again and things will never return to some sense of normalcy. If we hadn't mandated shutdowns in March I think you would have still seen a big drop in demand regardless. How do you compete with nature? Source: https://jessescrossroadscafe.blogspot.com. In 2020, 229 SPACs raised a staggering $76 billion. The Fed is regulating how much buying in the aggregate occurs. Yusko, the CEO of Morgan Creek Capital Management, pointed to signs of extreme market speculation, such as the 1,625% spike for GameStop ( GME) in January. German restaurant bookings are soaring (chart 2). They didn't price in any risk from this virus until it was actually abundantly clear lockdowns were going to happen here. The valuations aren't bubbly. We have way further to go before getting to that point, but i don’t like seeing hints of that. But will that stop the economy again? Yet investors are buying on a price relative to forward earnings basis over multiple quarters ahead in anticipation of a rebound. Opinions expressed by Forbes Contributors are their own. I think there is a lot of wishful thinking in this piece, including minimal continued effects of coronavirus. 49. Apple's earnings have cratered the last couple years as demand for their only real product tapered off into a saturated marketplace. I am a bot, and this action was performed automatically. You’d really rather see our society return to the stone ages than allow the Fed to purchase some bonds? Markets . share. get reddit premium. I live in Canada and I can tell you that housing prices have seemed ridiculous for a long time now when looking at Toronto, Vancouver, etc. Talked to the oil patch lately? This manipulation is a losing game. Join. If you can just say stocks are cheap because investors are anticipating a big rebound in earnings as per analyst expectations for 2021, then you can make that claim at any point in time. One of my favourite examples was when demographics best sellers told us during the early 1990s recession that an aging population meant fundamentally changed behaviour and we’d never have another housing boom after the 1980s. A place to freely discuss and investigate the current US housing bubble. … History offers abundant evidence. One insitution controlling the economy. Finally, one of my t-shirt designs got sold today!! In fact, I’d go further than that and suggest that the Fed can stimulate away and should tolerate richer asset valuations yet. Disagree, argue, criticize, but no personal attacks. I'm not an economics major, I don't know shit but this is what I don't get, they make it sound like investors are always anticipating the future (and somewhat accurately I might add). 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