Posted on 10/27/2018 6:17:21 PM PDT by SeekAndFind
As of right now, there are two different views of the economy: The stock market view, which for now is bearish, and the GDP view, which is bullish. Which one is right? And which one will the Federal Reserve believe?
Stocks have been in a tailspin since early October. The Wilshire 5000 Total Market Index, which includes more than 3,700 stocks, has fallen by nearly 10% since the start of October — a net loss of $3 trillion in market value. It's a big hit for the economy to sustain.
OK, but what about GDP? The nation's output of goods and services rose at a yearly 3.5% rate in the third quarter, beating expectations for 3.3% growth by most Wall Street economists, after rising 4.2% in the second quarter. More than three fourths of the GDP growth came from one sector: personal consumption. That's being driven by a 4.1% jump in personal disposable income, fueled by this year's bonuses, raises and fatter paychecks following the Trump tax cuts.
No Inflation
Even better, the GDP price deflator — the broadest measure of inflation — rose at an annual rate of just 1.6% in the third quarter. So from an economic standpoint, we have the best of all possible worlds: Fast growth and low inflation.
The message couldn't be more mixed. The market and economy appear to be in a tug of war over the future. The outlook is further clouded by the fact that no one knows how the midterm elections will turn out, or what President Donald Trump will do on tariffs, tax cuts and more deregulation.
Even so, consumer confidence as measured by the IBD/TIPP Economic Optimism Index has been moving up in recent months. So the downturn on Wall Street hasn't yet affected the mood on Main Street.
(Excerpt) Read more at investors.com ...
It’s really hard to take when the downturn means your 401 goes down 32,000 and when it starts going up, it is only 2 or 3 thousand at a time.
That is hard to reconcile. I hope it is all natural, but if there is something being done to cause this, there will be hell to pay.
The stock market is way overpriced and we have the Fed returning interest rates towards normalcy - there is a long way to go still.
There’s a report today
If that is the case it really is a federal crime
The market is afraid of a dem controlled house. The market has been based on Trumponomics and a supporting cast in the Congress. If the dems were to get the house, it would be a massive food fight for at least the next two years.
Watch the market snap back after the Red Tsunami.
Don't trust short term stock prices as an indicator of prosperity.
The DJIA for the last century.
If wages are trending upward, Christmas will be taken to the bank, literally in interest paid on loans, lines of credit and credit cards to pay for imported bobbles and pearls. Amazon hates Trump and they will have a record breaking Christmas earning’s come January.
LOL. Post of the day
on the news i recall it was presented as a seasonal thing, every october
I tend to be an optimist, and think most every selloff is simply a short term thing that "soon will pass". So, I usually blow it, and am stuck with missing most peaks.
However, this year (for the first time), I chose to take the October doldrums to heart, and took my mandated 401K distribution on October 2, the day of the peak. I guess you loose some, you win one.
The DOW is just reflective upon the concerns of investors due to mid-term elections. They know that if the Democrats win back Congress then the changes made to improve the economy will be erased and reverted back to when Obama was President.
I heard it on the radio, FBN. Can’t find any source.
You do know the president will veto anything that the Donks propose, if it ever even gets through the Senate. Plus there is the EO and the ability to shut down the Government if you don’t get your way.
You must have read my post in a hurry. I did not say stocks are undervalued. It was just the exact opposite.
The problem with DOW is that the 30 stocks are changing all the time. The list of 30 when I began trading stocks in 1963 is completely different than now.
And it is not a simple average price of 30 stocks! There are different factors assigned to each of the 30 stocks in computing the DJI number.
If you keep throwing out poorly performing companies and adding currently better performing companies, DOW Jones Industrial (DJI) average looks better than reality.
That is true, but investors are nervous Nellie’s who take the most drastic outlook and over react.
Thanks for followup!
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