Maserati wrote:
Hopefully fiscal deficits run by Trump will result in more real economic growth than have those run by Obama, who had to resort to fudging the numbers to make it look anything like a success. I don't really think it can get much worse, so I would prefer Trump deficits to Obama deficits any day.
Congress controls the purse strings. Always has.
This Prez has ruled by executive order. Something new.
Ghost of Igloi wrote:
This Prez has ruled by executive order. Something new.
It's hardly something new. And the Prez still can't spend money unless it's been authorized by Congress.
Well Maser
I think most economists will dispute your claim that there hasn't been any real economic growth. You can't prove that assertion - it's just you putting your lens in front of the world and describing what you see.
As for stock prices and the direction of the market...I dunno. It's a very large and very complex system that has withstood bad times and good, and is at an all time high right now.
Of course there's been economic growth. Anyone who says otherwise is either blind, ignorant, or has some sort of agenda.
Some things...
agip, it's pretty easily provable, by a number of mechanisms. Make the historical calculation of GDP linear, and forget about changing components, adjustments, etc. Also, look at tax receipts. There are other ways.
By now you must know that there has been price inflation in many asset classes, and that that price inflation has been driven by banks, and that there are a great many excess reserves around. Trump's plan is to get those excess reserves into circulation, to put them to work--hence his constant use of the terms "growth-friendly" and "growth-oriented", and his suggested repeal of Dodd-Frank. His plan is to ameliorate business conditions, in order to increase the frequency of transactions and the velocity of money, as a path to growth.
Issues abound. For one thing, government is not a business, states are sovereign. While businesses are subject to government dictates and therefore answerable to government, a nation-state is sovereign, the US more so than many because it has significant control over a reserve currency. Being "under" another level of organization, as business is under government, means 3 big things: 1) you can't just do whatever you wish, and 2) you can fail, and the bigger system will distribute the pain, and 3) there are some things you can't externalize.
Much more so than a business, the sovereign US can do as it wishes, especially the incoming executive, with both the House and Senate being amenable, and with the now-accepted expansion of the executive order power. This is something Trump will have to adjust to. Businessmen are like weasels, always figuring out ways to squeeze through holes in the fabric of regulation--which is an entirely different mindset than that of a real leader of policy and implementation. (Trump is more clearly a "businessman" than a "statesman", as his first order is to make the holes in the fabric bigger for easier maneuvering by the business weasels.) While he will have to hold his head up and lead, no longer will he as easily be able to offload failure. He can try to put it off on "the establishment", but he has put himself out there as the reformer. I don't know that he quite understands the difference between being a businessman and a statesman, but I get the sense that he got his first taste of it when he talked to Obama.
Regarding #3, that there are some things you can't externalize, when somebody within your business structure sucks or doesn't agree with you or tries to sabotage your corporate initiatives, you can fire them, and even sue them afterward--but you cannot do this with a country. There are blocks of citizens within this body politic that will suck and not agree with him and actively try to sabotage his social initiatives, and he won't be able to just fire them, or get rid of them, or effectively externalize them. This type of thing is a big deal for those who have not developed the psychological mechanisms to deal with them. No doubt he does have some ability in this regard, I just think that he is very far toward the other end of the spectrum.
His electioneering suggests that he believes that the Dems have run roughshod over the country, and that they have gotten everything they have wanted. Knowing a few things as I do, this is untrue, and I'm sure that Obama told Trump as much yesterday. Also, having been involved with national security, I can tell you that Trump knows precisely SQUAT about US operations and assets around the globe, and that knowledge (a taste of which he probably got from Obama but not from his security briefings) may very well force him, in some measure, to understand that statecraft is not synonymous with business management.
In "unleashing the potential of excess reserves" in his attempt to "make the country great again", it must be remembered that every time the country has been made "great", it came with a price that was paid for afterward, and that is what has me at a crossroads. We hear about "kicking the can further down the road", and that is no doubt true--but what nobody knows is just how far that can can in fact be kicked. I could see the next 4 years going gangbusters, and all of the current problems just being amplified, or changed to suit future purposes: they will scrap Dodd-Frank and maybe Basel III capital requirements, but they will put something else in its place that looks more favorable on the books. Just the same as they will do with Obamacare--the optics will be much better. What I will need to see is fundamental change, in order to believe in anything past the 4-year time horizon.
But a lot can happen in 4 years. I could quite easily see the markets going to 25k within 5 years, and that's a ride I would want to be on, even though just shy of 19k is overpriced.
One of the bottom lines is that he will need terrific advisors, if he is to successfully promote real growth during his term. As with everything, it will require, above all else, "buy-in". Wall Street lap dogs are all too willing to comply, because they exist side-by-side with mom and pop chumps in the pool of equity owners, and can always direct the contaminants their way. Mom and pop are like "getters", soaking up the contaminants produced by the activities of the big boys, and the only way they can "get ahead" is by effective timing.
This election was no joke. Everything is a matter of perspective. There are very real issues, and I entirely doubt that the country and/or Trump and/or his future administration are actually willing to deal with them, in a fundamental sense. First of all they're not smart enough to know what they actually are, and second of all they're not courageous enough to articulate any sort of actually historic vision. They are still small people, voting their own current interest, as may quite possibly be the total fate of mankind...but if I can make some gains during this period and then convert them to something that actually matters, I will.
I haven't quite decided yet. DJIA 18.8k at the moment.
Did you have a point to make?
Ghost of Igloi wrote:
Wrong
GoId wrote:A relief rally is on the table...
http://www.marketwatch.com/story/five-reasons-stocks-will-rally-after-the-us-presidential-election-2016-11-03
Yes, you were...again.
4th Quarter 2016 Index PerformanceNASDAQ -1.94%S&P 500 -0.04%DOW +2.73%MSCI EAFE -2.93%MSCI ACWI -1.16%MSCI EM -5.95%US AG Bond -2.64%Perception and reality are not the same.Igy
GoId wrote:
Ghost of Igloi wrote:Wrong
Yes, you were...again.
Briefly, if you entertain speculation, this election dislocation might be a good time to do it for a period not longer than 3 years.
*****************************
I still see investment vehicles, assets, etc. as essentially paired.
You own mutual funds in a 401k, at some point you convert them to USD. You own USD, you convert it to something else by purchasing that other thing with the USD, be it stocks, bonds, RE, commodities, metals, etc.
Currency is great because not only can you readily convert it to anything else, that "anything else" doesn't just include other investment vehicles--it includes consumables and essentials like food, water, electricity, etc.
Unless we develop another kind of widely-accepted currency, whatever you hold and do not wish to die with will have to be converted to USD at some point, assuming you are in the USA and that you don't just barter. At this point it is reasonable to consider therefore how things that you are likely to unload in the short-to-medium term are performing against the USD. Some things are expensive, other things are cheap.
You can opt to trade for something expensive like US stocks, which represent the speculative end of the spectrum--buying something expensive, and hoping that you can sell it to somebody for an even higher price. At the other end of the spectrum are those things that are entirely non-speculative, like food. Everything is on this spectrum.
Gold spot is now 1227.20, and falling. It is getting cheaper, in USD. Whatever happened to "buy low, sell high"? At some point it became "buy high and hope to sell higher". While there is a good argument to be made that US equities are currently overpriced, there is also a somewhat reasonable argument to be made that gold is currently underpriced.
Both of these arguments have their problems, of course. Opinions about the appropriate pricing of gold often resort to simply looking at how much money is out there, and dividing it by the mass of physical gold that exists, so that every time the money supply is increased, the "value" of gold rises concomitantly. The basis of this assumption is that the money supply and the amount of physical gold need to be correlated because of the possibility of a return to some gold standard...or even the oft-repeated mantra that "gold IS money".
Is any such basis worth believing? IMO yes, to an extent: that "gold IS money". More precisely, I would say that "most people have historically thought, and continue to think that, and will continue to think that, gold is money".
Like I said in the previous post, it's all about buy-in, and this is a concept that has had huge buy-in historically, that continues even today. Look at what happens around the world when currencies and exchange thereof are tampered with, like in Europe and now in India.
I don't know if gold is properly thought of as being cheap at the moment, nor do I necessarily trust that reliable exchanges will exist if and when one ever wishes to sell it, I'm just thinking out loud.
Buy low, sell high. I have done well by it. It would take a huge social buy-in to get me to invest in US equities at the moment, and then I would only do it in a limited way, with a very defined time horizon, leaving profits on the table as I usually do.
I'm not yet seeing that buy-in. The dust needs to settle, and important things like capex will need to improve before I get on board. YMMV
Ghost of Igloi wrote:
4th Quarter 2016 Index Performance
NASDAQ -1.94%
S&P 500 -0.04%
DOW +2.73%
MSCI EAFE -2.93%
MSCI ACWI -1.16%
MSCI EM -5.95%
US AG Bond -2.64%
Perception and reality are not the same.
Igy
GoId wrote:Yes, you were...again.
Get yourself a calendar. The 4th quarter began before the election.
Look at what is happening to silver, an industrial metal: it is now down to 17.55.
Compare that to copper, another industrial metal, which is soaring.
Clearly the price of silver reflects more than just its industrial value, it reflects its value as a store of value. Movement similar to copper is what you would expect otherwise.
So these old ideas about the value of gold and silver still obtain.
Gold,
OK. The article was published on 11/3. The MSCI All country World Index closed that day at $57.03 today it is at $57.65. There is your rally 1.08%. We'll see how long it lasts.
Igy
Ghost of Igloi wrote:
Gold,
OK. The article was published on 11/3. The MSCI All country World Index closed that day at $57.03 today it is at $57.65. There is your rally 1.08%. We'll see how long it lasts.
Igy
The publication date is irrelevant. Did you read the article before commenting on it?
Gold,
MSCI ACWI was at $58.28 the day of the election. You lose.
Igy
I will be signing off for at least a month again.
If any of you happen around the Stade Louis II in the next moth, come say hi to the beefy guy in the weight room. I hope to get in some workouts between business.
Exciting times, nice to see the stalwarts still holding down this thread!
Ghost of Igloi wrote:
Gold,
MSCI ACWI was at $58.28 the day of the election. You lose.
Igy
I'm not sure if you're ignorant or being purposely obtuse. In case of the former, let me clarify for you: the author correctly predicted a rally in the US (not the world) following the election (not Election Day).
will take a look at your post later maser.
Just wanted to point out the crazy behavior in small caps - they are screaming higher, far far more than the big caps.
Since the close on election day:
Large: +1.0%
Mid: +1.2%
Small: +4.3%
Amazing rally.
My guess is that people are betting that int'l trade will diminish, hurting the multinationals. but small US only companies won't be affected as much.
But that's just a guess - probably something elsse going on. I own a bunch of small and microcaps and they are just flying. probably a short squeeze is starting in many of them.
More pain for the hedge funds i suspect.