The market is not the economy, and the economy is not the market (whenever I type that phrase out it comes into my head in Joe Calhoun’s voice), but fundamental analysis does matter for each of these markets. The probability that things work out like 1994/95 are slim given the backdrop of growth (really anti-growth, ongoing non-linear contraction)…..If the markets and economy were on the cusp of revisiting 1995 we should have seen something by now that would suggest it. Anything. Instead, as hard as it is to believe, 2017 has been disappointing in almost every way imaginable on economy as well as the baseline characteristics driving it (money). Stocks may be overvalued to the same degree as in 1995, but that’s really the only similarity between then and now. There are many more shared characteristics with the dot-coms, and that’s without considering the no-growth paradigm that persists today.
The Consumer Price Index for September already rose 2.2% year-over-year, up from 1.9% in August, and 1.7% in July. The relief from dropping energy prices has faded. Now energy prices are rising. But the inflation story doesn’t just play in the realm of goods. Prices for services have been rising too, with the CPI for services without energy rising 2.6%. And at the moment, globally, there isn’t a whole lot in sight to push inflation in the US down. But there are a lot of indications emerging, such as the PPI data above, that inflation is in the process of heating up. Bond market, are you awake? Nope, lulled to sleep.
…..Meanwhile in the U.S., the Fed says it will make hay while the sun shines by reducing its assets (and the world’s monetary footprint). Slowly at first. But by this time next year, the bonds on the Fed’s balance sheet are supposed to be declining at a $600 billion annual rate. So, let’s see…Mr. Xi is tightening up. Mr. Draghi is tightening up. Ms. Yellen is tightening up. They are reversing the policy that a generation of investors, businesses, and households has taken for granted. From “buy,” they are moving to “sell”… from loose to tight… from “Party Now!” to “Party Later!”
It is always tempting. The Syrian war is coming to an end, and the losses to those who bet on the losing side – suddenly in the glare of the end-game – become an acute and public embarrassment. The temptation is to brush the losses aside and with a show of bravado make one last bet: the masculine “hero” risks his home and its contents on a last spin of the wheel……Not only in romances, but in life, too. Saudi Crown Prince Mohammed bin Salman (MbS) has wagered all on black, with his “friends” – President Trump’s son-in-law Jared Kushner, Abu Dhabi Crown Prince Mohammed bin Zayed (MbZ) and Trump himself daring MbS on.
Between the FAANG quintet and China’s rivaling BAT companies, gains in the world’s top technology shares are nearing a whopping $1.7 trillion in market value this year. That’s more than Canada’s entire economy, and exceeds the worth of Germany’s biggest 30 companies put together. The eight tech giants — Facebook Inc., Amazon Inc., Apple Inc., Netflix Inc. and Google parent Alphabet Inc., as well as their Asian peers Baidu Inc., Alibaba Group Holding Ltd. and Tencent Holdings Ltd. — have amassed as much money in 2017 as Pacific Investment Management Co., one of the world’s biggest fund managers, has done in about 46 years.
Politically, it’s a super-medieval operation, an absolute monarchy tied to a severe religious order with the law floating precariously between the two, and old-fashioned customs such as the public beheading of criminals (for misdeeds such as “adultery,” “atheism,” and “sorcery”). The Saud clan has controlled the throne all these years, and its grip on power is slipping as the country itself slips into the prospective next era of its history, minus the endless gusher of oil that has made its existence possible — hence, a true existential crisis without the usual pseudo-intellectual bullshit. How are they going to support the thirty or forty million people who will still be there when the oil exports dribble down? Most of the work done in the country is performed by foreign “guests.” The indigenous folk don’t even remember how to milk a camel, let alone run routine maintenance on a desalinization plant.
For many years, I have been counseling individuals to disregard mainstream analysts, Wall Street recommendations, and even MorningStar ratings, due to the inherent conflict of interest between the firms and their particular clientele. Here is the point: YOU, are NOT Wall Street’s client. YOU are the CONSUMER of the products sold FOR Wall Street’s clients….Major brokerage firms are big business. I mean REALLY big business. As in $1.5 Trillion a year in revenue big. The table below shows the annual revenue of 32 of the largest financial firms in the S&P 500.
On the other side of the spectrum, John Hussman, the president of the Hussman Investment Trust and a former economics professor, thinks that the investment community is unwisely ignoring the most stretched valuations in history on the heels of a nearly 300% bull market run. Ever the outspoken bear, Hussman says investors are being willfully ignorant, which has stocks at risk of a drop that could reach 63% and send the market spiraling into a full decade of negative returns.
And that gap between rich and poor is only going to get worse, Hoxie said. The wealthiest 25 individuals in the U.S., including Microsoft MSFT, +0.07% co-founder Bill Gates, Amazon AMZN, +0.34% CEO Jeff Bezos and Facebook FB, +0.17% CEO Mark Zuckerberg, own $1 trillion in combined assets. These 25 — a group equivalent to the active roster of a major league baseball team — hold more wealth than the bottom 56% of the U.S. population.
The EU no longer practices representative Democracy today. Diktats come down from unelected technocrats in Brussels. They are wholly-owned by stateless rent-seeking oligarchs (i.e. George Soros). Everyone in and around the EU is expected to obey or face tanks in the streets (Spain) or endless legal entanglements from captured international courts (Poland).