logicalsinger

World War III: U.S. vs. China?

<< The bottom line is the Chinese, who are the largest foreign holders of United States Treasury Bills, have been underwriting U.S. economic growth for decades.>>

They have been underwriting mainly their exports of Chinese-made products in the US. At the root, economic growth came from America's tech boom and other innovations. Superpowers don't go to war against one another. Little upside since neither will conquer the other, and huge downside. They wage war through proxies just like the Soviet and US did in the Cold War.

Are Stocks Actually Cheap (And Is This a Good Time to Buy)?

The question "are stocks cheap?" is irrelevant by itself. You have to look at alternative uses for your cash, in particular bonds and other asset classes. You have to look at the return on risk-free investing (T-bill interest rate). At current levels of interest rates, stocks are very cheap, unless earnings collapse by another 50%. They got cheap because of a loss of confidence and because of forced selling/deleveraging by the banks and hedge funds. Some confidence, if the administration can indulge us, would boost the market 20-30% very quickly.

A Sideways Market For the Next Decade?

Cam, I also disagree but in a different way. I think stocks will be lower 10 years from now, not sideways. The current market is supported by a commodities/cyclical bubble and as you pointed out correctly, the market PE does not account for cyclicality right now, and is too high.

Saul (Crossprofit), your analysis is correct except for the fact that most stocks trade at a significant premium to book value already. During inflationary times, there will be goodwill compression even if book value grows, resulting in an overall decline in market cap for most companies.

The Week Ahead: The Fed Will Not Cut

The Fed is terrified of surprising Wall Street negatively. So even though I wish you were right, I think they will cut by at least 25bps.