Straight Outta Stockton: Meredith Whitney Comes Out Swinging In 'Fate Of The States' [View article]
You forgot to mention the underlying driver - politicians anxious to buy votes with extra services their taxpayers can't really afford, and pension benefits to political allies that gladly get votes today in exchange for benefits to be paid tomorrow when they're safely out of office. Tomorrow is arriving fast.
S&P 500 Price Is 2 Years Ahead Of Earnings [View article]
Ah, but share prices will correlate with EPS, not total earnings per se. Imagine a world where earnings are barely moving forward but companies with no better alternatives use their excess cash to retire shares.
A False Dawn In The Land Of The Rising Sun [View article]
I wouldn't call Japan's demographics "frightening". I'd call exponential population growth in the face of limited natural resources frightening! At some point, the world as a whole will have to undergo a similar transition, at the very least to a stable population. This could happen as soon as 2050. Japan is giving us a peek into the future.
The Invidious 'Down Payment Requirement' Meme [View article]
It may not be about default risk at all. Long rates are at government-forced artificially low levels. Maybe banks just don't want to end up long a bunch of low-interest rate loans when/if the lid finally blows. Their source of funds is generally of much shorter duration. Only the GSEs have an unlimited appetite to (have taxpayers) eat these losses.
This 'Cycle' Certainly Hasn't Been Super [View article]
IT, while a lot of cash is being created by the Fed, it seems to be accumulating in the hands of entities that would rather invest it than consume it. Wouldn't you agree? Consumers have little pricing power w.r.t. wages. So, absent a government-sponsored feedback loop such as the ones driving higher ed, health care, and housing, it's unclear how prices for consumables could push higher. What's your thesis?
Warren Buffett And John Hussman On The Stock Market [View article]
Well, I can't disagree that there's little room for improvement on profit margins. Still, the Fed seems hell bent on printing to cover the deficits while keeping interest rates at 0% - inflation be damned! The new money is, by and large, not ending up in Joe Sixpack's pocket. So it's hard to see a mechanism to ignite commodity inflation.
From where I sit, the cash is ending up on corporate balance sheets or lining the pockets of well-heeled plutocrats and our political masters. Yes, these folks could buy up commodities and stockpile them (or buy futures), but...who would they ultimately sell to? Joe, who's still losing ground economically? My point is that ultimately, to make a profit in, say, oil futures, you'd have to turn the crude into gasoline and sell it to Joe, who can't pay. Since everyone knows this, finding a bigger fool may be difficult.
This sets us up for a kind of tilted "inflation" in assets that are attractive to the moneyed set - high end houses, jewelry, cars, planes, boats, fine art, large tracts of land. What about corporations? They're not really in the market for that sort of bling. My speculation (for the past two years) is that they'll begin to feed on each other, buying out smaller companies, or even their own shares, as a way to use up the excess cash.
Warren Buffett And John Hussman On The Stock Market [View article]
You mean those measures WERE predictive, don't you? The Feds money creation is completely unprecedented. Is there no amount of money they could print before you'd agree asset an asset price bubble was warranted?
Another thought-provoking article. Re. Pompano's observation, I'll add this: home prices are set by marginal buyers and sellers. Example: here in the SF bay area, there must be 1000s of people who couldn't afford to buy the houses they're now living in on their current incomes. Every year a certain number of these people retire and leave the area, or pass on, and the homes are sold to the marginal buyers, who have lots of cash.
The historic relationship between medians is interesting, but there are good reasons to think that the game has changed since the 1970s/1980s. The differential between wages earned by people with valuable skills and those whose skills must compete with those in low-wage countries has widened significantly. And, in some markets (e.g. here, Miami, New York, Vancouver) there's the added factor of wealthy foreign buyers.
I think the main point you're making still stands up to this. Thanks for the article.
Millennials: The Next Push For A Long-Lasting Bull Market? [View article]
I hope you're right. It's better to experience those bears when you're young. Experiencing the last 13 years of below-inflation returns from the markets after you've accumulated most of your retirement savings is a real bummer.
Thanks IT, I've long suspected this but it's good (if that's the right word) to see the actual analysis. I've tried making essentially the same point to the legions of Krugmanites I seem surrounded by, but they seem to think that because there's no inflation yet, all is well in the garden.
Straight Outta Stockton: Meredith Whitney Comes Out Swinging In 'Fate Of The States' [View article]
S&P 500 Price Is 2 Years Ahead Of Earnings [View article]
A False Dawn In The Land Of The Rising Sun [View article]
Beware Long-Term Damage From Stock Market Bubble Forming Now [View article]
This is a very important insight, and I can't understand why mainstream economists don't seem to realize this or even acknowledge it.
How Much Will Elderly Austerity Affect Consumer Spending And The Economy [View article]
The Invidious 'Down Payment Requirement' Meme [View article]
This 'Cycle' Certainly Hasn't Been Super [View article]
The 'Real' S&P 500 Index High [View article]
Warren Buffett And John Hussman On The Stock Market [View article]
From where I sit, the cash is ending up on corporate balance sheets or lining the pockets of well-heeled plutocrats and our political masters. Yes, these folks could buy up commodities and stockpile them (or buy futures), but...who would they ultimately sell to? Joe, who's still losing ground economically? My point is that ultimately, to make a profit in, say, oil futures, you'd have to turn the crude into gasoline and sell it to Joe, who can't pay. Since everyone knows this, finding a bigger fool may be difficult.
This sets us up for a kind of tilted "inflation" in assets that are attractive to the moneyed set - high end houses, jewelry, cars, planes, boats, fine art, large tracts of land. What about corporations? They're not really in the market for that sort of bling. My speculation (for the past two years) is that they'll begin to feed on each other, buying out smaller companies, or even their own shares, as a way to use up the excess cash.
JMHO.
Warren Buffett And John Hussman On The Stock Market [View article]
The Economy In The Plastic Bubble [View article]
The historic relationship between medians is interesting, but there are good reasons to think that the game has changed since the 1970s/1980s. The differential between wages earned by people with valuable skills and those whose skills must compete with those in low-wage countries has widened significantly. And, in some markets (e.g. here, Miami, New York, Vancouver) there's the added factor of wealthy foreign buyers.
I think the main point you're making still stands up to this. Thanks for the article.
Millennials: The Next Push For A Long-Lasting Bull Market? [View article]
Some Useful Charts And Thoughts About Personal Investing [View article]
Short But Sour [View article]
Limits On The 500-Pound Gorilla [View article]