I agree there is a demand side issue. I think there is a significant amount of valuation problems being created by the fed.
When the Fed is insane, the CAPM model is inflationary.
Look at the freakout when the fed signals it MAY raise interest rates. with no increase in earnings, raising the risk free rate raises the discount rate, which lowers stock prices. Which lowers finance managers bonuses, and we can't have that (sarcasm).
Inflation! Not for all of it, but for a percentage. Inflation as measured by the government is a number so cooked I can smell the burning in DC from my house in Massachusetts.
what's the chance that the dividend tax rate could be reduced to zero and capital gains on the sale of stock be taxed as income ?that would end the greater fool speculation that's going on and tie stock value more closely to earnings values. might even end the stock bubbles.
Employment to population ratio (down 4% since 2007) the employment level (down 2 million since 2007), and the number who've dropped out of the labor force (up 13 million since 2007) are what I look at.
I agree there is a demand side issue. I think there is a significant amount of valuation problems being created by the fed.
ReplyDeleteWhen the Fed is insane, the CAPM model is inflationary.
Look at the freakout when the fed signals it MAY raise interest rates. with no increase in earnings, raising the risk free rate raises the discount rate, which lowers stock prices. Which lowers finance managers bonuses, and we can't have that (sarcasm).
Inflation! Not for all of it, but for a percentage. Inflation as measured by the government is a number so cooked I can smell the burning in DC from my house in Massachusetts.
ReplyDeletewhat's the chance that the dividend tax rate could be reduced to zero and capital gains on the sale of stock be taxed as income ?that would end the greater fool speculation that's going on and tie stock value more closely to earnings values. might even end the stock bubbles.
ReplyDeleteThe DJI in gold instead of US Dollars.
ReplyDeleteThe DJI was around 42 ounces in 1999. Now its 12.25 ounces.
Thee Dow has been on a 35 year nose-dive since the 1980s.
Employment to population ratio (down 4% since 2007) the employment level (down 2 million since 2007), and the number who've dropped out of the labor force (up 13 million since 2007) are what I look at.
ReplyDeleteIn other words, "are people working?"