Posted on 08/01/2014 7:10:26 AM PDT by SeekAndFind
After meandering higher for most of the year, the stock market is now sputtering.
That's triggering chatter about a minor "correction," which many people believe is long overdue.
And maybe that's what we're at the start of — a minor "correction." Or maybe this is just a blip and the brilliant and prudent Jeremy Grantham is right that we're on the cusp of a new bubble that will take the S&P 500 up another 10 percent to 15 percent over the next year to 2,250. (As a stockholder, I sure hope so!) Or maybe we'll get both—a minor "correction" and a new bubble spike. Or maybe we're just in the middle years of a fantastic bull market.
I don't know. (Neither does anyone else, by the way.) I'm also not predicting a crash.
One thing I do know, though, is that stocks are extremely expensive on every valid historical measure I know of. In the past, this level of overvaluation has presaged poor long-term returns. So I'm not expecting my retirement account to do well from this level over the next 7-10 years.
(Excerpt) Read more at slate.com ...
Yep. They have to control inflation to keep handout growth in check. They also have to keep interest rates near zero due to interest on the debt. If interest on debt were to double or triple it crowds out budget available for their entitlement spending. When interest rates and inflation both rise (inevitable) they are screwed.
Where did the 150T number come from?
It could go down or up or totally collapse or stay the same. But it has more to do with the Fed's money policy than anything else...
Stock Market is up because frankly people don’t know where else to invest anymore.
yep, cuz the fed keeps printing money and it keeps interest rates low...
Its the only way left to try and stop inflation from eating up your cash...
And even as there are stories about the big money getting out as Main Street finally gets sucked in, there continue to be opinion pieces encouraging the little guy to get in while the gettin's good....
bump
Outstanding post. Didn't the monetization occur after Deutsche Bank downgraded us? It was a brilliant move by the Lear Deader, if we can't expand Gov't because of our Fiscal House is not balanced, and we will verbally bludgeon the GOP if they try to go their, and we would have to pay a higher coupon because the world knows we are a higher risk, then heck with it! We will print to Fund the Welfare State ( he sort of controls the FED ), sell to the Fed from Treasury ( one pocket to the other ) and keep this game of Musical Chairs internal and not have to expose ourselves to the real world, and make believe like it is no big deal.
Seniors will take it on the Chin because of ZIRP, or they will have to flock to Divi type Stocks for Yield to play golf in retirement and he also gets the win-win of the Stock Market looking good but the real reason everyone is their is because even Bond Ladders at these Rates make no sense, their is no real Yield Curve anymore of a sane Maketplace.
Beck has noted ( and CFP types I know ) this will work good until inflation kicks in and the Deficit balloons and we have a wip-saw effect that no one get away from it and it's backlash...
A penny for your thoughts on my Analysis....
Notice it is the liberal publications that promote the idea of a stock market collapse. Obama would love to see an economic collapse. Just imagine what he could do after imposing marshall law.
Their, fixed it....
A couple places - The Dallas Fed president put it at $100T in 2008 before the crash and Fed “twist” (use Ixquick, not Google, to search “Storms on the horizon” - by Richard Fisher). There was another financial article in the last 2 years that added up all of the Fed and unfunded state debt that will go onto the Fed balance sheet that put it at $150T.
Notice it is the liberal publications that promote the idea of a stock market collapse. Obama would love to see an economic collapse. Just imagine what he could do after imposing marshall law.
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Obama will make us watch Australian TV shows?
What has been set up is very similar to the 1970s. Whereas we were finishing with Vietnam War then at a great cost relative to GDP, we are now dealing with the entitlement state while fighting a multi-front war. Whereas we had a stagnant economy with high inflation (stagflation) then we run that same risk today when inflation heats up and the economy stay soft or stagnant. Whereas we had limited availability to information then, we now have so much information it’s difficult to separate what is useful.
I think we are more likely to see a repeat of the 1970s than total economic shutdown. Remember the basics of economics... supply and demand. Money has to be somewhere. Where it goes it will drive asset values. Markets move not on the basis of economic growth but rather on the movement of capital. Economic growth invites capital investment, not the other way around.
Thank you for the penny.
I really don't see them being that brazen. What is a real possibility, though, is to declare that stocks are too risky for retirement assets and require a significant portion of all retirement accounts be in government issues. Bingo... a market for government debt.
Marshal Law is an English-language superhero comic book series created by Pat Mills and Kevin O’Neill.
Why give them ideas about how to control us? Pull that post immediately!
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