Making America Great again

[Dashinka 25,887]

It is much too early to tell.  Many of the leading indicators are looking promising, but I think we need to see more before we can say for sure. The interesting thing is how we attribute positive and negative news regarding the economy to one branch of the government.  The congress may have even more impact on the economy than the president.  The nice thing to see is the positive feeling that seems to be in the air regarding the economy.

[OriZ 3,165]

10 hours ago, smilesammich said:

Trump did not add 235,000 jobs to the economy. Obama did.

 

Half true. Neither of them did.

 

9 hours ago, Nature Boy Flair said:

I guess this is because of Obama also huh ?

 

 

 

U.S. Consumer Comfort Just Reached Its Highest Level in a Decade

https://www.bloomberg.com/news/articles/2017-03-09/u-s-consumer-comfort-reaches-decade-high-on-economic-optimism

 

 

Sorry man I have to. Multi year highs in consumer confidence are less a sign of forthcoming consumer spending as a sign of forthcoming investor losses. Records are records for a reason.

 

 

 

 

 

My...so many people are going to end up with egg on their face. The more positive headlines you see everywhere, the faster you should run. Predicting where the economy is going by observing current data and lagging indicators is like driving forward while looking through the rear view mirror. As a mature expanding half cycle rolls over, take care to distinguish the forest from the trees.

 

https://fred.stlouisfed.org/graph/?g=cYBT

 

You guys knew I would show up to ####### all over your party right?

Edited March 11, 2017 by OriZ

[OriZ 3,165]

5 hours ago, CaliCat said:

 

Your analogy would be more on point if Trump had accomplished something and people were complaining he didn't. As it is, it seems the MDRs are trying to find something good and positive in the new administration, they are willing to forego the fundamentals of macroeconomics in order to do so.

 

As it is, the economy and the country are doing as well as they are because of the success of the previous administration. Denying that, would be the same as saying that Obama could turn the economy around, keep America safe, kill Bin Laden in the process, and the MDRs are so butt hurt he won twice, including the popular vote, they would argue the economy would heal itself anyway.

 

See how that is done? Analogies tend to work when they mimic or shadow reality, otherwise they just fall truly flat.

umm...got news for ya...the economy does heal itself. It's called market/business cycles, and the market would have recovered with Obama or without him, much like it's going to crash whether it is Trump or Clinton or even had Obama gotten to stay longer than 2 terms. Now that's not an alt. reality, that's how this stuff really works.

[OriZ 3,165]

9 hours ago, CaliCat said:

 

The economic recovery that president Obama started still continues. Trump is riding the wake of Obama's economic recovery. Lucky him, and good for the country. Obama did his job, and Trump should do his. 

 

Any middle of the road person would understand that, so you might want to reset your position. Your GPS might need new batteries. 

 

[spookyturtle 9,466]

He's only been in office 30 days and has had no effect on jobs or the economy. 

[Dianalorena 1,153]

Blindly supporting Trump despite the fact that not only is he a despicable human being but loves taking credit for everything good and never takes responsibility for anything bad, should be a crime. Having said that, I do want this country to be better. So if this gradually and eventually translates into measurable positive results, I'd have to swallow my pride and admit that at least he is genuinely being the best president he can be, and he does care for this country to some extension.

I've said it before, I'm waiting to be proved wrong. Even if I dislike him, I want him to do his job and do it well. 

Is he under a lot of scrutiny? Are we being unfair? probably, yes.  but he is certainly to blame for it, at least partially. He's said a lot of crazy, stupid things. Once you dislike someone it's harder to see them in a positive light, even when they do something right. He made his bed and now lies in it.  We have a right to be concerned and to question him, based on what we already know about him. 

[ready4ONE 5,400]

The Good Book sayeth "Though shalt hath no God lest it be Donald Trump." Can I get an amen? Hallelujah!

[CaliCat 3,957]

13 hours ago, OriZ said:

umm...got news for ya...the economy does heal itself. It's called market/business cycles, and the market would have recovered with Obama or without him, much like it's going to crash whether it is Trump or Clinton or even had Obama gotten to stay longer than 2 terms. Now that's not an alt. reality, that's how this stuff really works.

 

History disproves you. The 1930s depression was the result of the Liberal Classical theory of laissez-faire. Everyone expected the economy to rebound on its own, and the market to correct itself as it had until then. Only that it didn't, which gave us the 25% unemployment rate, and resulted in the 1946 Full Employment Act. Kennedy disproved you when he created NASA, increased government spending, ran a deficit and got the economy growing with very low inflation. Remember Nixon's scandalous "We're all Keynesians now."  However, history would also tell you the new formula failed horribly during the Nixon recession, and we found ourselves with high unemployment and inflation at once, neither of which would have been possible according to both Smith and Keynes. 

 

You are correct that the economy would have healed in time, but the question is how long it would have taken for that to happen, and at what cost to our global standing and at the expense of how many millions of jobs lost?

 

Without the government's intervention the crisis would have lasted much longer than it did, but all the same it would have been illegal for Obama not to do anything, because of the 1946 statute. So, in the end, however much it makes the MDRs cringe, the Obama administration did manage to turn the economy around. I really truly hope Trump can continue on the same recovery path. 2017 will be a good year for the markets and the economy. I am very curious as to what the Fed will do with interest rates, and how it will all play out in 2018. Fortunately for the country, Yellen doesn't work for, nor reports to Trump. I doubt his ego will come out unscathed from an eventual confrontation. 

 

 

[bcking 3,157]

23 hours ago, eieio said:

Its just funny watching the libs meltdown. 

I think you are confusing "meltdown" with "laughing at you".

 

We are laughing at you.

[smilesammich 10,727]

31 minutes ago, bcking said:

I think you are confusing "meltdown" with "laughing at you".

 

We are laughing at you.

confirmed.

[OriZ 3,165]

7 hours ago, CaliCat said:

 

History disproves you. The 1930s depression was the result of the Liberal Classical theory of laissez-faire. Everyone expected the economy to rebound on its own, and the market to correct itself as it had until then. Only that it didn't, which gave us the 25% unemployment rate, and resulted in the 1946 Full Employment Act. Kennedy disproved you when he created NASA, increased government spending, ran a deficit and got the economy growing with very low inflation. Remember Nixon's scandalous "We're all Keynesians now."  However, history would also tell you the new formula failed horribly during the Nixon recession, and we found ourselves with high unemployment and inflation at once, neither of which would have been possible according to both Smith and Keynes. 

 

You are correct that the economy would have healed in time, but the question is how long it would have taken for that to happen, and at what cost to our global standing and at the expense of how many millions of jobs lost?

 

Without the government's intervention the crisis would have lasted much longer than it did, but all the same it would have been illegal for Obama not to do anything, because of the 1946 statute. So, in the end, however much it makes the MDRs cringe, the Obama administration did manage to turn the economy around. I really truly hope Trump can continue on the same recovery path. 2017 will be a good year for the markets and the economy. I am very curious as to what the Fed will do with interest rates, and how it will all play out in 2018. Fortunately for the country, Yellen doesn't work for, nor reports to Trump. I doubt his ego will come out unscathed from an eventual confrontation. 

 

 

Oi....I don't even know where to start, honestly. I bet you also believe Obama lowered gas prices, give me a break. How come it is always those who shout loudest that everyone is living in an alt. reality or that people don't learn from history, who are the ones that live in an alt reality and have not learned from history? Considering I've spent over 35,000 hours studying markets and their history, it does not disprove me and I have 39 pages of my own thread to prove it. I guess I can't blame you for what you consider to be history though, because the mess we're currently in, it's going to take historians decades(if ever) to realize the true reasons for it, but it's going to be much easier to just blame Trump for a while. So how exactly is Obama and the FED creating a bubble a good thing? Being a part of the biggest bubble in history(tied only with the dot.com bubble but even then, many measures are more extreme today) does not make him a hero in my eyes. I said it before and I will again Obama planted the seeds for this crisis.

 

Now, it's going to be Trump's fault as well, because of his protectionist policies, and because he's shooting himself in the foot. Even before the elections, I wrote that the next president needs to just sit on their hands and let things crash to restore some sanity. Then, he would have been able to correctly share the blame with the previous president as it would have not been far away from the end of their(Obama's) term. However, not only has Trump encouraged an extension of the bubble since sitting in office, but he is even taking credit for it publicly, thus setting himself up for being blamed for everything to happen later on. Dumb move, but I know the truth and have shared it many times including this post which was after the elections:

 

 

 

 

 

I fully expect about $13 trillion to be wiped out of the US Equity Market alone by the end of the decade. Now, if there was historical evidence to demonstrate that activist FED policy had a significant and reliable impact on the real economy, and didn’t result in ultimately violent side effects, I would argue that a Fed hike here and now might be a “policy error.” In reality, however, not only does the FED not set interest rates(they are actually set by the markets but more on that later) decades of economic evidence demonstrate that activist monetary interventions(deviations from straightforward rules of thumb like the Taylor Rule) have unreliable, weak and lagging effects on the real economy.

 

Nothing was learned from the global financial crisis, when the Fed holds interest rates down for so long that investors begin reaching for yield by speculating in the financial markets and making low quality loans, the entire financial system becomes dangerously prone to future crises. If the Fed's mandate is really to support long run employment and price stability, the first priority of Congress should be to rein in this cycle of activist FED intervention; to end the FED's ability to promote yield seeking speculation and malinvestment that only produces inevitable crises and weakens long run U.S. economic prospects.

 

The fact is that a third quarter point hike comes too late to avert the consequences of years of speculation, and while the hike itself will have little economic effect, the timing is ironic because a recession is already likely. The main effect of a rate hike will be to add volatility to an already speculative and now increasingly risk-averse market. The Fed’s real policy error, as it was during the housing bubble, was to hold interest rates so low for so long in the first place, encouraging years of yield seeking speculation and malinvestment by doing so.

 

Some would argue that much like Obama, the Federal Reserve “saved” us from the global financial crisis. I couldn’t disagree more. My view is that the financial crisis was caused because the Fed overly depressed interest rates in the early 2000’s, encouraging investors to reach for yield in mortgage securities. In response, poorly regulated financial institutions and other institutions having inadequate capital requirements, created a huge mountain of new, low grade mortgages in the frenzy to create more “product.” The easy lending created a housing bubble, but someone had to hold the mortgages when they went belly-up, and those holders were banks, insurance companies, hedge funds, and individuals. As the mortgages went into foreclosure, banks had to mark the value of those mortgages to market value on their books, to the point where the value of their assets was less than the value of their liabilities: insolvency.

 

The crisis actually ended - precisely - in March 2009. How? The Financial Accounting Standards Board changed rule FAS 157 and overturned the mark-to-market requirement, instead allowing financial institutions "significant judgement" in the way they valued their assets: often called mark-to-model (or as some of us call it, mark-to-unicorn). That has given financial institutions time to build up their capital and clean up their balance sheets, for the time being. The FED’s policy of buying up government backed mortgage securities (Fannie Mae, Freddie Mac) can certainly be credited for stabilizing the housing market in the depths of the crisis, but don’t think for a second that years of zero-interest rate policy nor Obama's economic policies is what produced the recent recovery.

 

The FED is in a rather unpleasant situation of its own making. A U.S. economic recession is already likely, regardless of what the FED does. A 1/4 point rate hike isn’t likely to have any material effect on the real economy, but given the already elevated level of risk-aversion, a rate hike could be viewed as aggravating that risk. Undoubtedly, any further market deterioration would easily be blamed on the Fed’s “policy error.”  Yield-seeking speculation, intentionally encouraged by the Federal Reserve, is perhaps the single most destructive force in the U.S. economy, and in the lives of the American people.

 

As repeatedly noted before, Valuations, trend uniformity, and yield pressures are now uniformly unfavorable, and the market faces extreme risk in this environment. There are also other risks. Historically, consensus economic forecasts have never correctly warned of an oncoming recession. Market action is profoundly more informative, particularly interest rate and credit spreads. Based on the most reliable set of leading indicators, a recession is increasingly likely.

Once technicals, valuations, and market internals start showing a shift towards more positive and risk-seeking willingness, I will be the first to turn bullish, and warn that a bottom is near much as I was in 2003 and 2009, before Obama was even sworn in. Right now we have a long way to go.

 

Regarding the Great Depression, here is a good read - https://mises.org/library/great-depression

I'm sorry but the Full Employment Act had nothing to do with it as the market had already bottomed in 1932, and then made a secondary bottom in 1942. It also tracked valuations precisely as it should have, but more on that here.

 

 

Kennedy got the economy growing?  Again I suggest you look here.

 

 

The chickens are going to come home to roost. I don't mean to burst your bubble(no pun) but Obama did not save the economy, and anyone who believes that is a fool where that is concerned. Via valuations you knew the market was overvalued in 2007(and it is much moreso today) and with valuations you also knew at the end of 2008 that the market was becoming undervalued, and with technical analysis you also knew the market is close to bottoming. Again, I wrote a long piece here about valuations and their impact and the influence or lack thereof of presidents. 

 

Regarding the FED, it doesn't lead, it follows. That's how I was able to precisely predict the two times that they did hike(and those times and only them, unlike the "experts" who thought they were going to about 15 times in the last several years) because that's what T-Bills were saying. At this point for next week I think it's a 50-50% chance, still not certain about it. If T-Bills stabilize above 0.75% then they will, but if they don't then I doubt it. At the end of the day it doesn't matter what they do nor would it matter what Trump does, a recession and a 50% run-of-the-mill market crash is already baked in the cake, and it should be completed by the end of the decade. I see the chance that Trump doesn't deal with a recession to be right around 0.5%. You can truly hope Trump can do well all you want, but the truth is it's not as up to him as he, or his supporters or his detractors believe. If he does by some miracle manage to avoid one, he would be the first president in recorded history to do so under the same conditions and circumstances as we currently witness. 

 

And I quote myself from July 2016:

 

The downturn was cyclical and so was the upturn that followed. What has transpired since, is that reckless FED encouraged speculation has been allowed in the market with Obama standing by. A president that I could get behind is one who would stop the madness, which neither Trump, Obama or Clinton seem to be willing or able to do. The very weak recovery that we have seen and the fact we are not yet already in another crisis have no positive correlation with Obama's policies while in office. Under normal circumstances, we would have already seen another recession. And we will, in due time, but these are no normal circumstances. No doubt, whoever the sitting pres is at the time will be blamed for it, but the truth is the seeds were planted during Obama's term and you read it here first.

 

In an experiment that will ultimately have disastrous consequences, the FED's policy of quantitative easing intentionally encouraged yield seeking speculation in this cycle far beyond the point where the market, and as a consequence the economy(and not the other way around) would react harshly in the past. In other cycles across history, patient adherence to a value conscious, historically informed investment discipline was rewarded, if occasionally after some delay. In the advancing portion of this cycle, Ben Bernanke’s blind, stubborn recklessness made patient adherence to a value conscious, historically informed investment discipline itself indistinguishable from blind, stubborn recklessness. While Obama does not *directly* have a say in what the FED does, he does have some impact. For one he appoints the chairman(or woman in this case) based on their policies. For two, if they are doing something he does not approve of, there are many ways to let them know that. Trump has already expressed he will want the current policy of low interest rates and QE to continue. Any president that sits back and lets this happen is responsible in part for the consequential crisis.

 

As Pauline Boss and Pema Chodron have both observed in different contexts, the only way to find peace in the face of ambiguity is the willingness to hold two diametrically opposed ideas in your mind at the same time:

First, regardless of short term speculation, the present yield seeking speculative extreme is likely to be seen in hindsight as one of the three most reckless financial bubbles in U.S. history, on par with the 1929 and 2000 extremes. The current market cycle is likely to be completed by a collapse where a wholly run of the mill outcome would be a decline of 40-60% in the S&P 500 Index. On the basis of valuation measures most tightly related to actual subsequent long term market returns, the S&P 500 is likely to be lower 12 years from now, compared with current levels, though dividend income may push the total return just over zero on that horizon. All of these outcomes are unavoidably baked in the cake as a consequence of current extremes. Despite this outlook, the uncomfortable possibility of further short term speculation still exists.

 

The current advance is remarkably long in the tooth. There is little basis for investment at these valuations - only speculation. This does not invalidate any of the points I have been making in recent months nor does it do anything to alter my outlook. Without a strong safety net, that speculation amounts to an attempt to gather pennies under a chainsaw. With the exception of the 2000 extreme, every secular bull market has died before reaching even the current level of valuations.

 

Despite the uninhibited imagery it evokes, “helicopter money” is nothing but a legislatively approved fiscal stimulus package, financed by issuing bonds that are purchased by the central bank. Every country already does it, but the size is limited to the willingness of a legislature to pursue deficit spending. Central banks, on their own, can’t “do” helicopter money without a spending package approved by the legislature. Well, at least the Federal Reserve can’t under current law. To some extent, Europe and Japan can do it by purchasing low quality bonds that subsequently default, but in that case, it’s a private bailout rather than an economic stimulus. See, those central banks have resorted to buying lower tier assets like asset backed securities and corporate debt. If any of that debt defaults, the central bank has given a de facto bailout, with public funds, to the bondholder who otherwise would have taken a loss. So almost by definition, low tier asset purchases by the ECB and Bank of Japan act as publicly funded subsidies for bondholders, rather than ordinary citizens. If the European and Japanese public had a better sense of this, they would tear down both central banks brick by brick.

 

As for the US, It’s the absence of productive real investment, which since 2000 has slumped to a small fraction of its historical growth rate, along with the encouragement of rank yield seeking speculation by the Fed, that has repeatedly injured the U.S. economy, and is likely to insult the economy with further crises before any durable lessons are learned.

Only a pessimist believes that investors are forever doomed to suffer these elevated valuations and dismal long term return prospects. Only those who are historically uninformed believe that valuations have no relationship to subsequent returns, or place their faith in scraps of analytical debris like the “Fed Model” without examining their poor correlation with actual subsequent market returns. It is an act of historically informed optimism to expect this market cycle, like all market cycles, to be completed. Every market cycle in history has drawn valuations to levels that have offered investors far higher return prospects than are available at present.

 

The only wrinkle in an otherwise spectacularly hostile investment environment is that speculators appear to be so possessed by collapsing global interest rates that the immediacy of a market loss may be deferred until this fresh round of yield-seeking exhausts itself. From Bloomberg the other week: “they’re out there scrounging through the dumpster looking for yield.” http://www.bloomberg.com/news/articles/2016-07-15/junk-rated-borrowers-reap-rewards-in-a-world-of-negative-yields

 

Again, the completion of every market cycle in history, even those associated with very low interest rates, has brought 10-12 year expected equity returns into or beyond the 8-10% range. Investors are overestimating the capacity for Fed easing to avert every market loss, recession, or credit default cycle. Unfortunately, that assumption doesn’t even hold up to the 2000-2002 and 2007-2009 collapses, both which were accompanied by persistent, aggressive, and ineffective easing by the Federal Reserve. Neither the likelihood of zero 10-12 year S&P 500 nominal total returns, nor negative real returns over that horizon, nor a 40-60% market loss over the completion of this cycle is dependent on any particular event. Once extremely high latent risks have built up in a system, held together by a network of fragile interactions, attempting to predict the specific grain of sand that will trigger the avalanche isn’t particularly useful. Put simply, stocks will collapse over the completion of the present market cycle, even given a zero interest rate environment, because the combination of frantic yield seeking speculation and weak prospects for economic growth has already established the most punitive and unattractive full cycle return/risk tradeoff for stocks since 1929.

 

From the standpoint of the real economy, quantitative easing has no measurable economic impact. The global financial crisis ended the moment the Financial Accounting Standards Board abandoned mark to market accounting requirements for bank balance sheets in March 2009, and the trajectory of GDP and employment since then has been essentially no different than what could have been predicted from lagged values of wholly non monetary variables.

 

Nevertheless from a technical perspective, The bottom of the 2008-9 crash, and consequent rally, was due regardless of any Quantitative Easing, Obama action, or even the action taken by the Financial Accounting Standards Board. It was this rally, predicted fully by technical measures, that also helped get the real economy back on its feet(albeit shaky, to this day). However, the FED did cause this rally to extend beyond what one would have expected otherwise. Anybody who thinks Obama ended the crisis is nothing but a fool, and a tool in the game. The main effect of QE has been breathtaking distortion in the financial markets, as the Fed has replaced interest bearing bonds with trillions of dollars in zero interest currency and bank reserves that must be held by someone at every moment in time. These hot potatoes created such discomfort that investors abandoned any consideration of risk premiums or potential capital losses, in a desperate speculative reach for yield.

 

With their egos distended by delusions of grandeur, central bankers have become frantic to sustain the belief of investors that QE “works,” because only then can those beliefs be self fulfilling. That’s why Haruhiko Kuroda, the head of the Bank of Japan, openly stated in early June, “I trust that many of you are familiar with the story of Peter Pan, in which it says, ‘the moment you doubt whether you can fly, you cease forever to be able to do it.’” It’s also why the world was subjected last week to the narcissistic spectacle of 14 separate speeches from Federal Reserve members. A con game doesn’t work without confidence.

 

I believe in the end history is on my side. The bubble that has been created by Obama and his(and Hilary's and Trump's) friends at the Federal Reserve, WILL pop, but likely under the next president. It’s essential to recognize that yield seeking speculation doesn’t create wealth. It only creates the opportunity for wealth transfer - primarily away from speculators who buy those securities at extreme valuations, and toward the previous holders with the foresight to sell to those “greater fools.”

 

Simply put, the only thing QE really does is to distort the financial side of the economy, enabling and encouraging yield seeking speculation and massive sectoral imbalances that we observe as wealth disparities and bizarrely distorted securities markets. The Federal Reserve is not a source of prosperity. It is the single most dangerous and unregulated risk factor in the U.S. economy. We should have learned that during the yield seeking mortgage bubble and the collapse that followed. We have not, so we now face the equivalent prospect again.

 

Now please explain to me how you expect to not have wealth transfer, when you hurt savers by offering them low interest rates, and reward speculators and large company shareholders when speculation drives stock prices up. Any president that allows this kind of thing is doing nothing but kicking the can down the road.

So sit back, relax and enjoy the show. At some point down the road, you will appreciate having this insight and foresight while everyone else is scrambling trying to figure out what the hell just happened. What happened was Obama and the FED created the third bubble in 16 years, and once that bubble bursts, expect pain.

 

And another one shortly thereafter:

 

“You need to know very little to find the underlying signature of a complex phenomenon…. This is the gift of training and expertise – the ability to extract an enormous amount of meaningful information from the very thinnest slice of experience.”

Malcolm Gladwell, Blink

 

At the risk of sounding like a broken record, it bears repeating yet again that the Federal Reserve's actions, backed by president Obama, only create more wealth transfer and more wealth disparity in this country. This is why I cannot understand how people cannot see that supporting the people who support these actions is the complete opposite of what they want to accomplish by narrowing the gap beteen rich and poor. As I've explained in detail before - when you lower interest rates to zero, savers can't save anything. When you engage in QE, speculation runs amoc. This means, that at best the savers will get nothing for their money, and at worst they will end up joining in on the speculation and lose once the market crashes.

 

All the while, the professional speculators will make money during the bubble as well as during the crash(via shorting), all the while, big institutions like banks will make even more money during the bubble, and get bailed out during the crash. All the while, large company shareholders will make more money during the bubble, and sell with perfect timing to the "used-to-be savers" turned fools. I don't understand how you can't see this happening right infront of your eyes. Again, FED policy, backed by Obama, or for that matter Clinton or Trump, is creating an even bigger gap between rich and poor. How can one stand by and let that happen while talking about equality? And of course it was in Obama's interest to keep it that way because it gave the appearance that he saved the economy. Nobody wants a recession on their watch, but all he did was kick the can down the road.

Obama did nothing to save the economy, and worse, he planted the seeds for the next crisis.

 

The Fed is one of the biggest sources right now of wealth transfer and disparity creation, and any politician backing these same policies is equally responsible. So this ridiculous notion by some that Obama ended the recession and saved the economy could not be further from the truth. Or that any of his policies actually benefitted the middle or lower classes. The crisis would have ended when it did no matter who the president was at the time. Markets bottomed 2 months after Obama came into office, due to reasons I have already mentioned before. Part of it was completely technical/cyclical, and the rest I will repeat later in this post. You can't tell me in 2 months he performed miracles. If anything, if the right policies would have been in place we would have seen a much stronger recovery.

 

The true wealth of any nation is embodied in its accumulated stock of productive capital, infrastructure, unused resources and knowledge. The use of this productive capital to generate “value added” - goods and services that have a greater value than the inputs used to produce them - is how new income, productive capital and wealth emerge. The Federal Reserve’s deranged and wholly experimental attempt to create illusory paper “wealth” through speculative overvaluation - a policy backed and supported by all presidents in recent memory - is no substitute for thoughtful and historically informed economic policy.

 

Investors are currently paying extravagant multiples on earnings that are elevated cyclically, at a point where a misplaced focus on debt financed consumption and yield seeking speculation has ravaged US real investment and the accumulation of productive capital, setting the stage for persistently anemic economic growth. The situation will become far more promising after a steep retreat in valuations, particularly if policy makers ever become enlightened enough to shift their economic focus toward incentives for productive capital investment at the private level, expanded infrastructure at the public level, and the accumulation of knowledge, job training and education at the individual level. It is utterly mind numbing that US economic policy has gone off the rails to prioritize debt financed consumption over productive investment. This misguided focus will destroy the US economic future if we don’t diminish the FED and build up our productive capital stock.

 

This whole speculative mania will end tragically. Why does nobody want to learn from 2000-2002, or 2007-2009, or the collapse of every other mania in history? My sense is that it’s a mistake to assume that yield seeking hasn’t been fully exhausted across every class of securities. The notion that some “pocket” of value and opportunity remains untapped is largely based on a misunderstanding of yield relationships. An environment of continued low interest rates is almost necessarily an environment of dismal economic growth. There’s some potential for Treasury yields to decline a bit further in the event of an economic softening, but at this point, even that is more a speculation than an investment. 

 

For those who insist that there is always a bull market somewhere, I would suggest that the most likely bull market to emerge here will be in bear market assets. Fortunately, inevitable periods of investor panic, speculative collapse and improved valuation can shift market return/risk prospects substantially, which creates new opportunities for conventional assets. Long live impermanence.

 

Last word: Holding interest rates down too low, for too long, is exactly how FED induced yield seeking speculation created a bubble in mortgage debt and housing, and triggered the deepest financial collapse since the Great Depression. Now that the Fed has repeated this error, it has painted itself into a corner where even a timid quarter point interest rate hike is the subject of quivering indecision. Unfortunately, having pushed the system to a speculative extreme, a collapse is baked in the cake. The problem with speculative bubbles is that until the consequences arrive, idiocy can masquerade as genius, and vice versa. Those two have a remarkable way of reversing over the completion of a market cycle.

 

Borrowed:

The insistence of central banks on promoting yield-seeking speculation, a game that always ends in destruction, reminds me of the 1983 Cold War movie “War Games” where a teenage Matthew Broderick hacks into a Defense Department computer called WOPR, and launches a “global thermonuclear war” simulation that’s mistaken for the real thing. How much yield-seeking speculation do central banks have to provoke, and how much do future economic prospects have to be injured, before they stumble onto the same conclusion as WOPR: “A strange game. The only winning move is not to play.”

 

And even more on that here - 

 

 

Here

 

 

Here

Here

 

And here

And lastly here

 

(most of these are re-posts from Hussman).

 

The late Sir John Templeton once said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria." Investors are definitely euphoric now. 

 

Oh yeah and BTW I'm not part of the MDR I just don't believe in giving credit where credit is not due.

 

P.S. Here's a curiosity, the only two here to call this a bubble are Val and I...

 

 

[Póg mo 1,749]

12 hours ago, CaliCat said:

 

History disproves you. The 1930s depression was the result of the Liberal Classical theory of laissez-faire. Everyone expected the economy to rebound on its own, and the market to correct itself as it had until then. Only that it didn't, which gave us the 25% unemployment rate, and resulted in the 1946 Full Employment Act. Kennedy disproved you when he created NASA, increased government spending, ran a deficit and got the economy growing with very low inflation. Remember Nixon's scandalous "We're all Keynesians now."  However, history would also tell you the new formula failed horribly during the Nixon recession, and we found ourselves with high unemployment and inflation at once, neither of which would have been possible according to both Smith and Keynes. 

 

You are correct that the economy would have healed in time, but the question is how long it would have taken for that to happen, and at what cost to our global standing and at the expense of how many millions of jobs lost?

 

Without the government's intervention the crisis would have lasted much longer than it did, but all the same it would have been illegal for Obama not to do anything, because of the 1946 statute. So, in the end, however much it makes the MDRs cringe, the Obama administration did manage to turn the economy around. I really truly hope Trump can continue on the same recovery path. 2017 will be a good year for the markets and the economy. I am very curious as to what the Fed will do with interest rates, and how it will all play out in 2018. Fortunately for the country, Yellen doesn't work for, nor reports to Trump. I doubt his ego will come out unscathed from an eventual confrontation. 

 

 

How can anyone take you seriously, if you can't write at least ten paragraphs of impenetrable gobbledygook? ?

[OriZ 3,165]

44 minutes ago, Póg mo said:

How can anyone take you seriously, if you can't write at least ten paragraphs of impenetrable gobbledygook? ?

If you have nothing constructive to add(which you never do) I suggest you keep your comments to yourself cause I have zero tolerance for nonsense where this topic is concerned.

Edited March 12, 2017 by OriZ

[Amica Nostra 4,803]

Employment numbers are fake , real unemployment is 40%. This was proven during the election.

[smilesammich 10,727]

2 hours ago, OriZ said:

Oi....I don't even know where to start, honestly. I bet you also believe Obama lowered gas prices, give me a break. How come it is always those who shout loudest that everyone is living in an alt. reality or that people don't learn from history, who are the ones that live in an alt reality and have not learned from history? Considering I've spent over 35,000 hours studying markets and their history, it does not disprove me and I have 39 pages of my own thread to prove it. I guess I can't blame you for what you consider to be history though, because the mess we're currently in, it's going to take historians decades(if ever) to realize the true reasons for it, but it's going to be much easier to just blame Trump for a while. So how exactly is Obama and the FED creating a bubble a good thing? Being a part of the biggest bubble in history(tied only with the dot.com bubble but even then, many measures are more extreme today) does not make him a hero in my eyes. I said it before and I will again Obama planted the seeds for this crisis.

 

Now, it's going to be Trump's fault as well, because of his protectionist policies, and because he's shooting himself in the foot. Even before the elections, I wrote that the next president needs to just sit on their hands and let things crash to restore some sanity. Then, he would have been able to correctly share the blame with the previous president as it would have not been far away from the end of their(Obama's) term. However, not only has Trump encouraged an extension of the bubble since sitting in office, but he is even taking credit for it publicly, thus setting himself up for being blamed for everything to happen later on. Dumb move, but I know the truth and have shared it many times including this post which was after the elections:

 

 

 

 

 

I fully expect about $13 trillion to be wiped out of the US Equity Market alone by the end of the decade. Now, if there was historical evidence to demonstrate that activist FED policy had a significant and reliable impact on the real economy, and didn’t result in ultimately violent side effects, I would argue that a Fed hike here and now might be a “policy error.” In reality, however, not only does the FED not set interest rates(they are actually set by the markets but more on that later) decades of economic evidence demonstrate that activist monetary interventions(deviations from straightforward rules of thumb like the Taylor Rule) have unreliable, weak and lagging effects on the real economy.

 

Nothing was learned from the global financial crisis, when the Fed holds interest rates down for so long that investors begin reaching for yield by speculating in the financial markets and making low quality loans, the entire financial system becomes dangerously prone to future crises. If the Fed's mandate is really to support long run employment and price stability, the first priority of Congress should be to rein in this cycle of activist FED intervention; to end the FED's ability to promote yield seeking speculation and malinvestment that only produces inevitable crises and weakens long run U.S. economic prospects.

 

The fact is that a third quarter point hike comes too late to avert the consequences of years of speculation, and while the hike itself will have little economic effect, the timing is ironic because a recession is already likely. The main effect of a rate hike will be to add volatility to an already speculative and now increasingly risk-averse market. The Fed’s real policy error, as it was during the housing bubble, was to hold interest rates so low for so long in the first place, encouraging years of yield seeking speculation and malinvestment by doing so.

 

Some would argue that much like Obama, the Federal Reserve “saved” us from the global financial crisis. I couldn’t disagree more. My view is that the financial crisis was caused because the Fed overly depressed interest rates in the early 2000’s, encouraging investors to reach for yield in mortgage securities. In response, poorly regulated financial institutions and other institutions having inadequate capital requirements, created a huge mountain of new, low grade mortgages in the frenzy to create more “product.” The easy lending created a housing bubble, but someone had to hold the mortgages when they went belly-up, and those holders were banks, insurance companies, hedge funds, and individuals. As the mortgages went into foreclosure, banks had to mark the value of those mortgages to market value on their books, to the point where the value of their assets was less than the value of their liabilities: insolvency.

 

The crisis actually ended - precisely - in March 2009. How? The Financial Accounting Standards Board changed rule FAS 157 and overturned the mark-to-market requirement, instead allowing financial institutions "significant judgement" in the way they valued their assets: often called mark-to-model (or as some of us call it, mark-to-unicorn). That has given financial institutions time to build up their capital and clean up their balance sheets, for the time being. The FED’s policy of buying up government backed mortgage securities (Fannie Mae, Freddie Mac) can certainly be credited for stabilizing the housing market in the depths of the crisis, but don’t think for a second that years of zero-interest rate policy nor Obama's economic policies is what produced the recent recovery.

 

The FED is in a rather unpleasant situation of its own making. A U.S. economic recession is already likely, regardless of what the FED does. A 1/4 point rate hike isn’t likely to have any material effect on the real economy, but given the already elevated level of risk-aversion, a rate hike could be viewed as aggravating that risk. Undoubtedly, any further market deterioration would easily be blamed on the Fed’s “policy error.”  Yield-seeking speculation, intentionally encouraged by the Federal Reserve, is perhaps the single most destructive force in the U.S. economy, and in the lives of the American people.

 

As repeatedly noted before, Valuations, trend uniformity, and yield pressures are now uniformly unfavorable, and the market faces extreme risk in this environment. There are also other risks. Historically, consensus economic forecasts have never correctly warned of an oncoming recession. Market action is profoundly more informative, particularly interest rate and credit spreads. Based on the most reliable set of leading indicators, a recession is increasingly likely.

Once technicals, valuations, and market internals start showing a shift towards more positive and risk-seeking willingness, I will be the first to turn bullish, and warn that a bottom is near much as I was in 2003 and 2009, before Obama was even sworn in. Right now we have a long way to go.

 

Regarding the Great Depression, here is a good read - https://mises.org/library/great-depression

I'm sorry but the Full Employment Act had nothing to do with it as the market had already bottomed in 1932, and then made a secondary bottom in 1942. It also tracked valuations precisely as it should have, but more on that here.

 

 

Kennedy got the economy growing?  Again I suggest you look here.

 

 

The chickens are going to come home to roost. I don't mean to burst your bubble(no pun) but Obama did not save the economy, and anyone who believes that is a fool where that is concerned. Via valuations you knew the market was overvalued in 2007(and it is much moreso today) and with valuations you also knew at the end of 2008 that the market was becoming undervalued, and with technical analysis you also knew the market is close to bottoming. Again, I wrote a long piece here about valuations and their impact and the influence or lack thereof of presidents. 

 

Regarding the FED, it doesn't lead, it follows. That's how I was able to precisely predict the two times that they did hike(and those times and only them, unlike the "experts" who thought they were going to about 15 times in the last several years) because that's what T-Bills were saying. At this point for next week I think it's a 50-50% chance, still not certain about it. If T-Bills stabilize above 0.75% then they will, but if they don't then I doubt it. At the end of the day it doesn't matter what they do nor would it matter what Trump does, a recession and a 50% run-of-the-mill market crash is already baked in the cake, and it should be completed by the end of the decade. I see the chance that Trump doesn't deal with a recession to be right around 0.5%. You can truly hope Trump can do well all you want, but the truth is it's not as up to him as he, or his supporters or his detractors believe. If he does by some miracle manage to avoid one, he would be the first president in recorded history to do so under the same conditions and circumstances as we currently witness. 

 

And I quote myself from July 2016:

 

The downturn was cyclical and so was the upturn that followed. What has transpired since, is that reckless FED encouraged speculation has been allowed in the market with Obama standing by. A president that I could get behind is one who would stop the madness, which neither Trump, Obama or Clinton seem to be willing or able to do. The very weak recovery that we have seen and the fact we are not yet already in another crisis have no positive correlation with Obama's policies while in office. Under normal circumstances, we would have already seen another recession. And we will, in due time, but these are no normal circumstances. No doubt, whoever the sitting pres is at the time will be blamed for it, but the truth is the seeds were planted during Obama's term and you read it here first.

 

In an experiment that will ultimately have disastrous consequences, the FED's policy of quantitative easing intentionally encouraged yield seeking speculation in this cycle far beyond the point where the market, and as a consequence the economy(and not the other way around) would react harshly in the past. In other cycles across history, patient adherence to a value conscious, historically informed investment discipline was rewarded, if occasionally after some delay. In the advancing portion of this cycle, Ben Bernanke’s blind, stubborn recklessness made patient adherence to a value conscious, historically informed investment discipline itself indistinguishable from blind, stubborn recklessness. While Obama does not *directly* have a say in what the FED does, he does have some impact. For one he appoints the chairman(or woman in this case) based on their policies. For two, if they are doing something he does not approve of, there are many ways to let them know that. Trump has already expressed he will want the current policy of low interest rates and QE to continue. Any president that sits back and lets this happen is responsible in part for the consequential crisis.

 

As Pauline Boss and Pema Chodron have both observed in different contexts, the only way to find peace in the face of ambiguity is the willingness to hold two diametrically opposed ideas in your mind at the same time:

First, regardless of short term speculation, the present yield seeking speculative extreme is likely to be seen in hindsight as one of the three most reckless financial bubbles in U.S. history, on par with the 1929 and 2000 extremes. The current market cycle is likely to be completed by a collapse where a wholly run of the mill outcome would be a decline of 40-60% in the S&P 500 Index. On the basis of valuation measures most tightly related to actual subsequent long term market returns, the S&P 500 is likely to be lower 12 years from now, compared with current levels, though dividend income may push the total return just over zero on that horizon. All of these outcomes are unavoidably baked in the cake as a consequence of current extremes. Despite this outlook, the uncomfortable possibility of further short term speculation still exists.

 

The current advance is remarkably long in the tooth. There is little basis for investment at these valuations - only speculation. This does not invalidate any of the points I have been making in recent months nor does it do anything to alter my outlook. Without a strong safety net, that speculation amounts to an attempt to gather pennies under a chainsaw. With the exception of the 2000 extreme, every secular bull market has died before reaching even the current level of valuations.

 

Despite the uninhibited imagery it evokes, “helicopter money” is nothing but a legislatively approved fiscal stimulus package, financed by issuing bonds that are purchased by the central bank. Every country already does it, but the size is limited to the willingness of a legislature to pursue deficit spending. Central banks, on their own, can’t “do” helicopter money without a spending package approved by the legislature. Well, at least the Federal Reserve can’t under current law. To some extent, Europe and Japan can do it by purchasing low quality bonds that subsequently default, but in that case, it’s a private bailout rather than an economic stimulus. See, those central banks have resorted to buying lower tier assets like asset backed securities and corporate debt. If any of that debt defaults, the central bank has given a de facto bailout, with public funds, to the bondholder who otherwise would have taken a loss. So almost by definition, low tier asset purchases by the ECB and Bank of Japan act as publicly funded subsidies for bondholders, rather than ordinary citizens. If the European and Japanese public had a better sense of this, they would tear down both central banks brick by brick.

 

As for the US, It’s the absence of productive real investment, which since 2000 has slumped to a small fraction of its historical growth rate, along with the encouragement of rank yield seeking speculation by the Fed, that has repeatedly injured the U.S. economy, and is likely to insult the economy with further crises before any durable lessons are learned.

Only a pessimist believes that investors are forever doomed to suffer these elevated valuations and dismal long term return prospects. Only those who are historically uninformed believe that valuations have no relationship to subsequent returns, or place their faith in scraps of analytical debris like the “Fed Model” without examining their poor correlation with actual subsequent market returns. It is an act of historically informed optimism to expect this market cycle, like all market cycles, to be completed. Every market cycle in history has drawn valuations to levels that have offered investors far higher return prospects than are available at present.

 

The only wrinkle in an otherwise spectacularly hostile investment environment is that speculators appear to be so possessed by collapsing global interest rates that the immediacy of a market loss may be deferred until this fresh round of yield-seeking exhausts itself. From Bloomberg the other week: “they’re out there scrounging through the dumpster looking for yield.” http://www.bloomberg.com/news/articles/2016-07-15/junk-rated-borrowers-reap-rewards-in-a-world-of-negative-yields

 

Again, the completion of every market cycle in history, even those associated with very low interest rates, has brought 10-12 year expected equity returns into or beyond the 8-10% range. Investors are overestimating the capacity for Fed easing to avert every market loss, recession, or credit default cycle. Unfortunately, that assumption doesn’t even hold up to the 2000-2002 and 2007-2009 collapses, both which were accompanied by persistent, aggressive, and ineffective easing by the Federal Reserve. Neither the likelihood of zero 10-12 year S&P 500 nominal total returns, nor negative real returns over that horizon, nor a 40-60% market loss over the completion of this cycle is dependent on any particular event. Once extremely high latent risks have built up in a system, held together by a network of fragile interactions, attempting to predict the specific grain of sand that will trigger the avalanche isn’t particularly useful. Put simply, stocks will collapse over the completion of the present market cycle, even given a zero interest rate environment, because the combination of frantic yield seeking speculation and weak prospects for economic growth has already established the most punitive and unattractive full cycle return/risk tradeoff for stocks since 1929.

 

From the standpoint of the real economy, quantitative easing has no measurable economic impact. The global financial crisis ended the moment the Financial Accounting Standards Board abandoned mark to market accounting requirements for bank balance sheets in March 2009, and the trajectory of GDP and employment since then has been essentially no different than what could have been predicted from lagged values of wholly non monetary variables.

 

Nevertheless from a technical perspective, The bottom of the 2008-9 crash, and consequent rally, was due regardless of any Quantitative Easing, Obama action, or even the action taken by the Financial Accounting Standards Board. It was this rally, predicted fully by technical measures, that also helped get the real economy back on its feet(albeit shaky, to this day). However, the FED did cause this rally to extend beyond what one would have expected otherwise. Anybody who thinks Obama ended the crisis is nothing but a fool, and a tool in the game. The main effect of QE has been breathtaking distortion in the financial markets, as the Fed has replaced interest bearing bonds with trillions of dollars in zero interest currency and bank reserves that must be held by someone at every moment in time. These hot potatoes created such discomfort that investors abandoned any consideration of risk premiums or potential capital losses, in a desperate speculative reach for yield.

 

With their egos distended by delusions of grandeur, central bankers have become frantic to sustain the belief of investors that QE “works,” because only then can those beliefs be self fulfilling. That’s why Haruhiko Kuroda, the head of the Bank of Japan, openly stated in early June, “I trust that many of you are familiar with the story of Peter Pan, in which it says, ‘the moment you doubt whether you can fly, you cease forever to be able to do it.’” It’s also why the world was subjected last week to the narcissistic spectacle of 14 separate speeches from Federal Reserve members. A con game doesn’t work without confidence.

 

I believe in the end history is on my side. The bubble that has been created by Obama and his(and Hilary's and Trump's) friends at the Federal Reserve, WILL pop, but likely under the next president. It’s essential to recognize that yield seeking speculation doesn’t create wealth. It only creates the opportunity for wealth transfer - primarily away from speculators who buy those securities at extreme valuations, and toward the previous holders with the foresight to sell to those “greater fools.”

 

Simply put, the only thing QE really does is to distort the financial side of the economy, enabling and encouraging yield seeking speculation and massive sectoral imbalances that we observe as wealth disparities and bizarrely distorted securities markets. The Federal Reserve is not a source of prosperity. It is the single most dangerous and unregulated risk factor in the U.S. economy. We should have learned that during the yield seeking mortgage bubble and the collapse that followed. We have not, so we now face the equivalent prospect again.

 

Now please explain to me how you expect to not have wealth transfer, when you hurt savers by offering them low interest rates, and reward speculators and large company shareholders when speculation drives stock prices up. Any president that allows this kind of thing is doing nothing but kicking the can down the road.

So sit back, relax and enjoy the show. At some point down the road, you will appreciate having this insight and foresight while everyone else is scrambling trying to figure out what the hell just happened. What happened was Obama and the FED created the third bubble in 16 years, and once that bubble bursts, expect pain.

 

And another one shortly thereafter:

 

“You need to know very little to find the underlying signature of a complex phenomenon…. This is the gift of training and expertise – the ability to extract an enormous amount of meaningful information from the very thinnest slice of experience.”

Malcolm Gladwell, Blink

 

At the risk of sounding like a broken record, it bears repeating yet again that the Federal Reserve's actions, backed by president Obama, only create more wealth transfer and more wealth disparity in this country. This is why I cannot understand how people cannot see that supporting the people who support these actions is the complete opposite of what they want to accomplish by narrowing the gap beteen rich and poor. As I've explained in detail before - when you lower interest rates to zero, savers can't save anything. When you engage in QE, speculation runs amoc. This means, that at best the savers will get nothing for their money, and at worst they will end up joining in on the speculation and lose once the market crashes.

 

All the while, the professional speculators will make money during the bubble as well as during the crash(via shorting), all the while, big institutions like banks will make even more money during the bubble, and get bailed out during the crash. All the while, large company shareholders will make more money during the bubble, and sell with perfect timing to the "used-to-be savers" turned fools. I don't understand how you can't see this happening right infront of your eyes. Again, FED policy, backed by Obama, or for that matter Clinton or Trump, is creating an even bigger gap between rich and poor. How can one stand by and let that happen while talking about equality? And of course it was in Obama's interest to keep it that way because it gave the appearance that he saved the economy. Nobody wants a recession on their watch, but all he did was kick the can down the road.

Obama did nothing to save the economy, and worse, he planted the seeds for the next crisis.

 

The Fed is one of the biggest sources right now of wealth transfer and disparity creation, and any politician backing these same policies is equally responsible. So this ridiculous notion by some that Obama ended the recession and saved the economy could not be further from the truth. Or that any of his policies actually benefitted the middle or lower classes. The crisis would have ended when it did no matter who the president was at the time. Markets bottomed 2 months after Obama came into office, due to reasons I have already mentioned before. Part of it was completely technical/cyclical, and the rest I will repeat later in this post. You can't tell me in 2 months he performed miracles. If anything, if the right policies would have been in place we would have seen a much stronger recovery.

 

The true wealth of any nation is embodied in its accumulated stock of productive capital, infrastructure, unused resources and knowledge. The use of this productive capital to generate “value added” - goods and services that have a greater value than the inputs used to produce them - is how new income, productive capital and wealth emerge. The Federal Reserve’s deranged and wholly experimental attempt to create illusory paper “wealth” through speculative overvaluation - a policy backed and supported by all presidents in recent memory - is no substitute for thoughtful and historically informed economic policy.

 

Investors are currently paying extravagant multiples on earnings that are elevated cyclically, at a point where a misplaced focus on debt financed consumption and yield seeking speculation has ravaged US real investment and the accumulation of productive capital, setting the stage for persistently anemic economic growth. The situation will become far more promising after a steep retreat in valuations, particularly if policy makers ever become enlightened enough to shift their economic focus toward incentives for productive capital investment at the private level, expanded infrastructure at the public level, and the accumulation of knowledge, job training and education at the individual level. It is utterly mind numbing that US economic policy has gone off the rails to prioritize debt financed consumption over productive investment. This misguided focus will destroy the US economic future if we don’t diminish the FED and build up our productive capital stock.

 

This whole speculative mania will end tragically. Why does nobody want to learn from 2000-2002, or 2007-2009, or the collapse of every other mania in history? My sense is that it’s a mistake to assume that yield seeking hasn’t been fully exhausted across every class of securities. The notion that some “pocket” of value and opportunity remains untapped is largely based on a misunderstanding of yield relationships. An environment of continued low interest rates is almost necessarily an environment of dismal economic growth. There’s some potential for Treasury yields to decline a bit further in the event of an economic softening, but at this point, even that is more a speculation than an investment. 

 

For those who insist that there is always a bull market somewhere, I would suggest that the most likely bull market to emerge here will be in bear market assets. Fortunately, inevitable periods of investor panic, speculative collapse and improved valuation can shift market return/risk prospects substantially, which creates new opportunities for conventional assets. Long live impermanence.

 

Last word: Holding interest rates down too low, for too long, is exactly how FED induced yield seeking speculation created a bubble in mortgage debt and housing, and triggered the deepest financial collapse since the Great Depression. Now that the Fed has repeated this error, it has painted itself into a corner where even a timid quarter point interest rate hike is the subject of quivering indecision. Unfortunately, having pushed the system to a speculative extreme, a collapse is baked in the cake. The problem with speculative bubbles is that until the consequences arrive, idiocy can masquerade as genius, and vice versa. Those two have a remarkable way of reversing over the completion of a market cycle.

 

Borrowed:

The insistence of central banks on promoting yield-seeking speculation, a game that always ends in destruction, reminds me of the 1983 Cold War movie “War Games” where a teenage Matthew Broderick hacks into a Defense Department computer called WOPR, and launches a “global thermonuclear war” simulation that’s mistaken for the real thing. How much yield-seeking speculation do central banks have to provoke, and how much do future economic prospects have to be injured, before they stumble onto the same conclusion as WOPR: “A strange game. The only winning move is not to play.”

 

And even more on that here - 

 

 

Here

 

 

Here

Here

 

And here

And lastly here

 

(most of these are re-posts from Hussman).

 

The late Sir John Templeton once said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria." Investors are definitely euphoric now. 

 

Oh yeah and BTW I'm not part of the MDR I just don't believe in giving credit where credit is not due.

 

P.S. Here's a curiosity, the only two here to call this a bubble are Val and I...

 

 

dude, just. wow. i actually hope you cut and pasted the majority of that.

i blame the bubble on trump's arrival and impending doom. and remembering 2008. but i definitely don't deny the current economy's due credit to obama and his admin. and 8 years of relative sanity.