Posted on 03/26/2017 4:06:17 AM PDT by entropy12
The Atlanta Fed GDPNow Model inched up to 1.0% from 0.9% on Friday. Nothing much mattered since a week ago.
The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2017 is 1.0 percent on March 24, up from 0.9 percent on March 16. The forecast for first-quarter real nonresidential equipment investment growth increased from 7.3 percent to 7.8 percent after this morning's durable manufacturing report from the U.S. Census Bureau. The forecast of the contribution of inventory investment to first-quarter growth increased from –0.87 percentage points to –0.77 percentage points after last Friday's industrial production release from the Federal Reserve Board.
(Excerpt) Read more at safehaven.com ...
Madness. Complete madness.
I wish I had a casino where I could keep people playing with fake money, despite the fact they were broke or in debt to the house.
Going to take a little while to get the “Big MO” back, but at least the negatives are already noticeably much smaller.
By summer’s end, the numbers will be looking better than they have in perhaps ten years or more. And there is still a lot more steam being generated.
This is just a hypothesis-—ni disproof, but no proof—but in your casino model, what if the real value backing your stack of chips was so phenomenally big that each chip grew in real value as you played?
Too big a discussion for a thread, but old valuations are like the discredited Phillips Curve.
Madness. Complete madness.
I wish I had a casino where I could keep people playing with fake money, despite the fact they were broke or in debt to the house.
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You should short the market then. You could make a small fortune if you’re right.
Many investors short the market as a form of portfolio insurance.
We are getting the “real” numbers now that a Republican is President. Hang on tight.
Brilliant. That's exactly how you sabotage an economy.
old valuations are like the discredited Phillips Curve
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Valuation is a very big and complex topic. But, one measure of valuation that we can all understand is the P/E of the market (S&P 500), which is currently around 24X. Other indices are also elevated.
http://www.wsj.com/mdc/public/page/2_3021-peyield.html
If you invert the P/E you get the market’s (or a stock’s) earnings yield, which gives you the return in percentage terms. Right now, that return is about 4% which is a very low return for putting money at risk in the market.
The point is, “old valuations” still mean something. We’ve heard the “valuations don’t matter” mantra many times before. You ignore them at your own peril.
Brilliant. That’s exactly how you sabotage an economy.
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+1
Right on target.
Not really talking stock valuations. More like money.
I don't make this stuff up about how the Fed would collapse an economy under President Trump. While I work for a Financial Services firm that had deep roots with the Obama Crime Family and the Obama Administration and would benefit greatly from interest rate hikes, there is quite a bit of nervousness about the speed and size of interest rate hikes and their effect on the economy.
I'm not the only one who thinks a malicious Fed Reserve wouldn't think twice about exacting what they perceive to be "revenge" on President Trump as they don't really care about you and I out here in Real America where one has to work to eat.
Best thing we could do once the revolution starts is to hang each and every one of the Fed Reserve by their necks just as soon as we're done with the corrupt politicians, judges and liberal lamestream media.
Just my own humble opinion of course as I head out this morning to add to my ammo rope stocks. ;-)
A good existential question, and I agree, much bigger and deeper than for this thread.
So, what is "value" in today's economy, stock markets, companies, and our fiat currencies? And what are the based upon?
Too much to even debate.
But think about this:
- If you ask someone what is the difference between a casino gambler, and a stock market investor, what will (or should) they say?
The difference is that in stocks, you are buying part of a company. Correct?
Throwing aside the fact that stocks have been on a meteoric rise these past few years (multiple QEs, ZIRP, etc), what are the values of our companies?
Take Uber. It is "valued" at about 70 Billion dollars. Think about that. A ride sharing phone app is worth 70 Billion?
And that is just one case. It is multiplied over, and over, and over again.
Joseph Kennedy got our of the stock market just prior to the 1929 crash. He was an insider trader, of course (and later FDR made him SEC Chairman, ironic). But Kennedy has a famous quote that says he knew it was time to get out of the markets when his shoe shine boy was giving him stock tips.
I love Donald Trump. But even Trump said a little over 5 months ago that the market was a huge, fat bubble.
If you want to freepmail me an e-mail, I’ll send you a piece I wrote called the “New Age of Economic Theory.” Again, just a theory, but not even some very smart economists I know can really punch holes in it.
ZIRP in action! I have been in the stock market since 1963. I have never experienced ZIRP (Zero Interest Rate Policy) before. With ZIRP, your cash loses to inflation EVERYWHERE (CD’s, MM funds, bonds) except the stock market. And momentum gains more momentum. It will come to a screeching halt but do not bet on when.
What it boils down to is this...the free market economy can not be managed to keep expanding. That is what FED has attempted to do for 8 years. Economy must be allowed exposures to mild recessions to clean out the dead wood. It is like the old Fram filter commercial, pay me now a little bit, or pay me lot more later.
FED should have kept rates at low end of normal, instead they tried ZIRP, which has caused enormous distortions in financial and real assets.
“I wish I had a casino where I could keep people playing with fake money, despite the fact they were broke or in debt to the house. “
We already tried that. It was called Using Your House as an ATM during the bubble.
Turned out that the home equity part was more fake than the newly incurred debt part.
Can’t decide who the bigger suckers were in that circus, the borrowers or the lenders. Maybe the innocent American taxpayers who were on the sidelines.
But if you guess wrong, there is no limit to what you can lose. That’s the danger of what would essentially be a naked short.
Interest rates have been phenomenally low for years. It’s preposterous to claim that a Fed Funds rate that just hit 1% is going to “sabotage the economy”. Good grief. Do you have any idea what the Fed Funds rate was all through the Reagan administration? It never even got down to 5%.
If anything the Fed has been extremely late in bringing rates up. If they don’t raise them they will have no ability to kick start the economy the next time it heads into recession.
what is the difference between a casino gambler, and a stock market investor,
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The Casino has a maximum bet
The Market doesn’t.
QE and ZIRP put money into the bond market. The Fed doesn’t buy equities.
“what are the values of our companies?”
Whatever investors are willing to pay for them. Some use Graham and Dodd. Some follow the Tulip Bulb model. That’s what makes markets.
But if you guess wrong, there is no limit to what you can lose.
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Just buy SPY puts. Risk is limited to the premium paid. If there is a big market selloff this would be a highly profitable/protective strategy.
My view is that Trump’s business friendly policies could drive the market up higher, despite already elevated valuations. I will consider buying some puts as portfolio insurance after the market breaks the 21K level.
Good luck in your investing pursuits.
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