19 Tuesday Sep 2017
Posted | September 19, 2017 2:32:36 | Economics
Hooray! The latest University of Michigan sentiment survey shows US Stock Market Bullishness Hit an All-Time High.
Poll: Did the Bell Just Ring?
Mike “Mish” Shedlock
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IF (big if); the Republican Congress repeals Obama care, cuts taxes across the board( including corp tax to near 15%), and address illegal immigration via a wall and cutting of funds to sanctuary cities, we will see a boom in the markets.
I’m doubtful they will do this. They desire more, a failure of the Trump presidency, than they do prosperity for the American people.
I believe they will fail at all three, we will see a Dem Congress and the markets will tank in mid-late 2018 as robe markets come to grips that single payer, higher taxes and more business /EPA regulations will be crammed down our throats.
Dow 12,000
So the Fed is going to let the state pensions blow up? That isn’t good for the politicians. We all know the ending but it’s only the first act. We’re still a decade from intermission.
Bad news has been ‘good news’ for stocks for years, why would that change now?
I don’t know why anybody would put any credence on anything U of M does these days:
“A group of University of Michigan students is calling on school officials to create a segregated safe space for African-Americans in the wake of Donald Trump’s election”.
http://theweek.com/speedreads/663729/university-michigan-students-demand-segregated-safe-space-africanamericans-after-trumps-victory
PS I am celebrating my grand son’s decision not to go there after being accepted… My son dropped out of their MBA program after his first semester, for good reason.
It’s definitely wrong… Madasallhell assured me last week that NO ONE has any confidence in the market…
But they DO have confidence in its corruption!
The market is up because there is no place left to go, AND the feed still holds over 4 trillion on it’s balance sheets and Japan and the EU have committed to adding hundreds of billions more to theirs.
There is confidence in the markets going up because there is no place else for them to go as long as governments continue to support them, but there is no confidence these markets are based upon anything else.
At this point there is only ONE underlying factor to our economy, the sustainment and growth of public and private debt. There is NO other “fundamental”.
Has anybody gotten any info on how the Fed’s balance sheet sale is going? I’m sure if it was going well we probably wouldn’t hear the end of it.
Someone I know went there and turned into a drug dealer.
Correction – UMass… same difference, he was there on ethnic privilege.
Well, if you go there for masters classes in finance, they will try and turn you into a Keynesian zombie.
Where is “there”? Michigan State?
I am beginning to believe it myself!
Mainly because there seems to be no rationale other than TPTB are making it their mission.
Funny thing is. From a strictly statistical point of view. 65% is low.
In the past 200 years, the market had 134 positive years and 55 negative years (the market was up 71% of the time)
Egad…That 71percent was a copy paste at 3:30am. Guess someone doesn’t believe in adding in flats to their calculation. Fortunately no one checks math. Appears to have been up 67% of the time.
No, there have been only 189 years, so 71% is correct. If 65% is the highest expectation ever, people are unbelievably pessimistic.
No, dude.
200 years of data:
134 positive (Market up 67% of the last 200 years)
55 negative (Market down 27.5% of the last 200 years)
11 flat (Market flat 5.5% of the last 200 years)
67+27.5+5.5 = 100%
Or please, pray tell, inform me what percent of the time over the last 200 years the market was flat. 0%?
All of the above predicated on data I did not personally check.
You’re probably looking at the same thing I did: http://basehitinvesting.com/the-stock-market-a-look-at-the-last-200-years/. The headline says 200 years but if you actually read the article the data is based on 189 years. “Some anecdotes I find interesting by observing the results 189 years between 1825 and 2013”
So yes, the market was flat 0% of the time pray tells you. You can probably count on 1 hand the number of DAYS the market was flat over that time.
Funny, how can the market be up 1/2 a year and flat 1/2 year when counting annually? It’s like saying I flipped a coin 1 time and it was heads 1/2 and tails 1/2.
yep, you are right, I didn’t read the article.
Over 189 or 200 years, even dead flat 0.00, I think would take more than a hand. I agree, I wasn’t sure what “flat” would be, but I would say anything within a point or two is pretty much what I would call flat. Dow up or down a few points (+/-5) today..If someone asked me, I’d say mkt was flat…
I don’t understand your coin flip question though. Unless it is about “0.00” flat.Then I agree.
Damn, now I wonder how often prior to decimalisation the Dow has been dead flat.
Won’t touch social media with your ten foot pole Mish so you can enter my vote as ‘don’t know’ if you wish.
Only 50% of Americans own stock. That 65% of Americans could have an opinion about stocks is laughable. 65% of 50% is 32%. University of Michigan professors are amusing clowns regardless.
Not sure where that statistic comes from. Not everyone owns stocks directly, some have exposure through mutual funds, others through annuities, pension plans, insurance. I suspect the true number is far far higher. Many Americans think they do not have stock exposure when in fact they do.
Federal Reserve
The latest numbers are for 2013
Percentage of Households with directly held stocks … 13.8% … page 291
Percentage of Households with stock holdings (include mutual funds, etc) … 48.8% … page 507
https://www.federalreserve.gov/econres/files/BulletinCharts.pdf
I’ll go with that. Found another statistic that roughly 15% of Americans are below the poverty level, so the question is how high could stock ownership actually get whether directly or indirectly. And if you are just above the poverty level, you’re probably not a candidate for a charles schwab account
Anyone else noticing an excess of people wittering on about start-ups and Angel Investing?
As washout coming.
California is awash in so called unicorns (billion dollar valuations on companies that don’t make money, and barely have a business plan).
Strip out those unrealized (and ultimately unrealizable) capital gains, and look at the underlying businesses. Its not pretty.
I’ve been harping on Amazon, because its arguably the biggest offender. Their “retail” business doesn’t make money. Their AWS service depends on advertising revenue that seems rooted in robot clicks (not humans)… although a new “business model” for AWS is running data centers for government agencies (agencies that are double billing taxpayers for an in-house data center PLUS the AWS data center).
Faceplant is even worse. Dubious advertising built on top of essentially AOL.
Uber is a taxi company that doesn’t pay for taxis (the cars) and doesn’t pay its drivers enough to compensate for wear and tear, nor does it pay the employer taxes on its employees (said drivers are not really independent contractors).
Then there are thousands of smaller dot-coms, with massive valuations for vaporware. The assumption is that one of the bigger dot-coms will acquire them — because stand alone the little dot-com has no future, and the acquisition company gets to report “growth”.
Its all one giant potemkin village
i just had a conversation with a woman nearing 60, who chided me for not being 100% invested in equities. The rationale was that the stock market always comes back and it never takes more than a few years. I find it incredible how the phrase “past performance is no indicator of future returns” doesn’t register, and more amazed how investors focus their expectations more on recent market performance than on the longer term track record of stocks in general. The older one gets and the more assets they have the less they should need to take chances and move more toward bonds and cash. But fewer and fewer people think this way.
My father in law is neck deep in equities. Constantly checking his portfolio throughout the day. CNBC nonstop.
But, hey what do I know, he’s been a genius the past few years.
The ONE CERTAINTY, he’ll ride it all the way down … just like last time.
What is powering this market? The way it has powering ahead, 65% is a low number. The boat is loaded with people thinking it is they are on a one way flight to moon. Cannot blame them also. They hv managed to do well till date. And they may well be right for one more decade.
The usual suspects. Central bank liquidity, stock buyback, and rise of passive investing (ETFs).
Debt and new money creation. It’s the only way to purchase what you cannot afford to buy. Consume today to be gladly paid back on Tuesday….which Tuesday, nobody knows.
Everything is premised upon a promise, a promise always in the future made by those with no means to make the promise come true. And we are shocked!
With the central bankers determined to not let the market go down (no other period in history has seen such CB intervention) I am not really sure what is going to take this market down. It has got to be something epic given that the CBs are going to buy anything that is not nailed down and print with gay abandon! Given this I might not call the top at 65%.
The end game is everything will be owned by CBs and billionaires. At that point, it won’t matter what the stock market does as hardly anyone will own stock.
The market isn’t high the value of the dollar has fallen
Exactly right.
–> “The market isn’t high the value of the dollar has fallen”
Half true…
Completely true for the companies that have profits and business models (maybe half the market +/- ?) A lower dollar makes these companies show bigger numbers, because the measuring ruler (the dollar) has shrunk.
Completely false for the other half of the market, which is vaporware that doesn’t break even. If history is any guide at least 75% of these unprofitable companies never will become profitable.
FAANG’s are the new Nifty 50. A few decent business ideas (that may or may not work based on execution), but most of it is glitter that lacks substance
Even if the bell was rung, it doesn’t necessarily mean that we are in for a large decline or an extended bear-market, does it? Because of the Yellen put (and puts from CBs all over the world), it might mean the markets essentially go sideways for say, the next dozen years.
Chop along at all time highs?
Put me down for volatility hasn’t gone away. The longer it is deferred, the more its presence will be felt when it arrives.
In 2006, when (imo in real time) I thought Real Estate crazy high and set for collapse, I asked 2 real estate agents – in different markets. both with 20+ years in the business – about the market. Got the same response.
“Oh, things are a little ahead of themselves. The market will plateau for a couple of years before onward and upwards as fundamentals catch up.”
I kept my mouth shut and just thought – Good Luck.
Yes, more or less chop along. Whenever market declines 10%, things go on yellow alert, when it goes to 15% or more, it becomes red alert and “do something now”. So, yes, it is possible for there to be down years. But there will be similar magnitude up years as well, thanks to the Fed.
I usually do LEAP buy-writes. I find it hard to buy protective puts because when the Fed is there, why should I?
The business cycle has not been repealed.
And you place too much faith in the powers of central banks.
Last go round when the Federal Reserve got a whiff of something not right (2007), they started to slash the federal funds rate (from > 5% down to 0%) … still markets fell … QE introduced late 2008 … STILL markets fell.
Investor sentiment will tank in a recession … that is what drives market.
Inventories / Sales recessionary. Would not take much to push US economy into a recession.
Equities will get decimated … again.
Not different this time.
I hear you but global CB coordination is a post-2008 phenomenon. If the markets are allowed to find their own level, then yes, the bottom is a long way to go. But in this new era, where the tail (stock) wags the dog (economy) or is widely perceived to be, the CBs will do whatever it takes to avoid it.
But if you want to be defensive, I’d do 1/3 in stocks/stock-ETFs (keep selling covered calls), 1/3 in precious metals (some metal and mostly gold stocks/stock-ETFs – again keep selling covered calls) and 1/3 in cash.
I’ll give you that CBs have gone “all in” … and have deferred a global recession.
Deferred … not revoked.
Just making the day of reckoning that much worse.
Forrest Rangers know you have to do controlled burns every now and then to prevent The Big One.
We’ll get The Big One … sooner or later.
Whirlaway, a put seller, who woulda guessed.
…and yes tony, one day….and when it happens, i bet fewer people log in to look at their account. Always wondered if fewer people log-in on down days. I just never look. Much easier.
It’s a funny thing that so much of our “knowledge” comes from people selling things. Who has the best glue? Ask a salesman because who else can you ask? The fact that so much of our economy has evolved into selling more than producing means that we are drowning in people selling their book. My own wife is a realtor, and even she is always Pollyanna about it…not so much to deluded me as to deluded herself. Ask a salesman how things are going and virtually all will respond positively. I saw it in 09 when many were losing their jobs and nary a hint of negativism.
We are in a hot air balloon remaining aloft by building a happy campfire from our furnishings. Everything is fine…..really, such a nice day for a campfire.
There is no interest in honesty from anyone, and those who dare will likely find themselves in the fire as well.
To get out of equities means taking your capital and going some place else with it. Pray tell, where exactly might that new place be?
Yes, you can cash out and join the trillions of dollars laying around in cash equivalent accounts all over the globe. We’ll be sure to check in on you periodically to assess how much has been eroded away by inflation.
During the dotcom bubble you could park cash in a MM fund and collect 3.75-4.50% and still everybody bought stocks. That was irrational exuberance. Today, the irrational behavior is from the CBS who continue with ZIRP while backstopping every asset class out there.
Ever wonder why a mouse ends up with his neck broke in a trap? Cheese. It’s simply irresistible.
The best trap ever is money for nothing which is EXACTLY what the markets are offering…..while implying little risk. Does anyone even question why these markets exist? I used to have oil people calling me offering outrageous returns on investment, and I kept asking….if it’s such a sure thing, why don’t they simply borrow the money and keep the profits for themselves. Click!
Back in 99, I banked at Bank1 and they had cornered me with their investing specialists to buy mutual funds that were earning 17%. They were SO positive in these secure returns that I offered to share in these gratuitous rewards 59/50 if they would simply loan me the speculative funds. They were SHOCKED at this suggestion, matter of fact informing me that they could NEVER invest in something of such high risk. This thin veneer of shit conceals nothing. Financial people are NOT interested in gambling with their money, only ours, which SHOULD tell us all we need to know. Our money is used to ensure that their bets are always the sure thing. Isn’t it amazing how they bounced back almost immediately while the rest of us still wait.
“Does anyone even question why these markets exist?”
Capital formation and transfer of ownership. Everything else is secondary.
I think that chart is just a measure of how much Americans are invested in the market.
Another concern, the total sensitivity to CB words.
Euro falls due to rumours of split on future of QE.
GBP rises because Carney and another dove hint at 1/4 pt rise in rates.
This excess sensitivity suggests the market is nervous and stretched and anxious over a 1/4 pt here or there.
I don’t think it healthy.
If the ECB raises / lowers interest rates by a 1/4 point… if the ECB raises / lowers rates by a full percent… if the ECB raises / lowers rates by 10 percentage points….
How would any of those moves impact the complete lack of leadership in Europe? Would a 1 point change up/down make Angela Merkel pay attention to Germany instead of Brussels? Would that 1 point change make the unelected bureaucrats in Brussels competent?
Lets be brutally honest and ask if a 1 point change in funding levels would even impact Juncker’s supply of brandy?
“Another concern, the total sensitivity to CB words.”
Nothing new! It has been all about CBs since 2012 Draghi. Will the CBs be taken to the cleaners when this crashes or will they again come out smelling of roses like now?
I might even settle for shipping them all (the Fed, ECB, BoJ and BoE) to Singapore and having them caned.
There was one option missing and that was for stocks to be flat or have a modest downtick or uptick but not quite bear or bull. The facts are that our economy is in transition again with the destruction of retail by amazon. We also have huge unfunded liabilities. Medicare and Medicaid and Social Security and Disability and Disaster Relief (plus many more). Local, State and Federal Pensions are also underfunded. Reducing immigration is a strategy for creating a labor shortage enticing many of these people back to work which is a less painful way than cutting them off or bailing out the agency. Lowering immigration cuts the dependencies so the programs look more solvent. This works for some agencies but not all.
I don’t see a collapse or a depression I don’t see industry returning unless Trump removes trade subsidies to China and other countries that don’t deserve them. I’m hoping he does. Yes I think there will be war with North Korea but not until after Japan adjusts their constitution to be able to handle an offensive nuclear aggressor like NK. Japan will then be more of an equal defense partner in Asia. War may come to NK but Russia, China, Japan, SK wont let it last long. I venture to say the US will put forward a massive attack in an attempt to spare SK. The attack will drag in the other major powers who will demand cease of hostility and it will be over. The rest will be handled thru diplomacy.
Japan has done it. Central banks can keep a dead market walking and even sometimes running indefinitely, or at least until we simply give up.
THESE MARKETS WILL NEVER, EVER GO DOWN because if they do, 90% of the world is in dire circumstances due to all the policy mistakes the world’s central bankers have made.
Sure sure
What is that old saying? …. When the last bear throws in the towel …
The market can never go down as long as the Central Banks can keep the plates spinning in their money printing magic act. They have no choice but to keep the whole thing going until it completely collapses. When it does and it will, not only the stock markets but the entire financial system will have collapsed. This will probably take a decade or so.
Waiting for the black swan. It’s a matter of the public losing confidence in the known illusion. It’s fragile. See something where real and pervasive shortages occur and our “money” proves worthless.,and what is REAL becomes painfully obvious.
Ask Venezuela..