Quote:
Originally Posted by rafiki
Mmm don't agree. "We" (people) called top for a half a decade, but the economic signals showed growth for anyone who wasn't a perma bear. During my 1.5 years being bearish just for the sake of being bearish, I think I just read enough articles and convinced myself. But with a more balanced view of things today, if Trump's measures don't lead to much growth here, there's not much left to prop it up.
What's left is the main thing that's already been propping it up: Liquidity via the Fed. Good news is good news (economic recovery = more profits!), bad news is good news (no hikes, more printing!).
Quote:
Originally Posted by ToothSayer
I'm with you on the lol, but the economy has actually been recovering for almost a decade, as have corporate profits.
Buying stocks on rising corporate profits in a recovering economy is a rational activity.
Unlike the past 9 years, which has been predicated on (normal) economic recovery - something which was both reasonable and never diverged from the data - this latest Trump bull is based on Trump's policies of tax cuts and deregulation spurring the economy to new highs in a new era of growth. The idea is sound, but whether it will be implemented is as shaky as hell. Hence why we dropped 1.5% two weeks ago on a mild scare of a Trump impeachment via Comey obstruction of justice. Guess what's going to be in the news a lot next week, with Comey testifying on Thursday.
As for the plan and the stimulus, it might be implemented, but it's well in the future, but the body of data accumulating now doesn't support such a rosy outlook for the near term. Between the fed beige book and jobs data recently, we just don't have the economic growth to sustain these valuations.
I'm with you on it looking toppy at times, but I don't see a minor political scandal derailing a bull market that is predicated on liquidity. If something takes it down, it will probably be a crisis starting in China or Europe.
I wouldn't call it a "normal" economic recovery. It's a mild nominal recovery due to massive QE and suppressed interest rates. The fact that a bunch of part-time and/or service jobs have been created in the process obscures the declining labor force participation rate, etc. Lower rates allow companies to borrow money for next to nothing and buy shares back. It's a manipulated, distorted market and has been for quite some time. I just don't see a unique near-term impetus for a substantial correction, although it certainly could happen any time.