Weakening Earnings, Slowing Manufacturing, No Trade Deal = Record Equities

[SASKFARMER]

So transfer profit out of shares held in Tax-Free and leave in Cash in that account. Then take all investments in stocks and let sit in savings (in Credit union because all your deposit is covered).

[TASFarms]

So transfer profit out of shares held in Tax-Free and leave in Cash in that account. Then take all investments in stocks and let sit in savings (in Credit union because all your deposit is covered).

How does the govt bail in policy work for tax free savings. They keep sliding that bail in policy in the budget

[SASKFARMER]

I'm sure when we get like Greece was a few years back they will take money out of every one account nothing will be sacred except liberals with Cayman bank accounts.
hahahaha

[biglentil]

The Fed can't tighten everyone knows it, their back is against the wall. The mainstreet economy is already on death's door. Went on a roadtrip down the I15 stopped at empty shopping malls and stayed at 3 star hotels with pool, hot tub and free breakfast the whole way down for $40 a night. Parking lots virtually empty and reeking of desperation. Which room would you like? Take your pick .

They won't let the repo market seize up, thats what caused the 2008 crisis. Especially with the geopolitical rhetoric in high gear do you honestly think they will allow the mighty US to look weak? Everyone relax, the can will be kicked down the road for some time.

[tweety]

PIGS debt is all yielding less than 1.5%.

Dow P/E of 19:1

S&P 500 P/E of 20.5:1

Nasdaq of 31.5:1

...

Nothing to see here 🤷

Same as what it has been. Spike in 2007 to 65

https://www.multpl.com/s-p-500-pe-ratio https://www.multpl.com/s-p-500-pe-ratio

[errolanderson]

Since the Fed started up the printing presses last September, the FANG tech stocks soared 60 percent of their annual 2019 gains. The Fed is flooding the market with liquidity.

Yet, U.S. unemployment claims have risen for the past 12 weeks. The consumer spending spree continues to hold up the ship, but consumer debt load continues to rock higher (record breaking). Meanwhile, manufacturing is in a serious slowdown from too high USD and tariff backdraft (IMO). And gov’t spending, good grief . . . .

Believe repo loan crisis initiated the liquidity flood, but it appears to be a desperate attempt by the Fed to stoke inflation. Deflation is a death wish for central bank policy. Central bankers have no answer for this.

Gold is attempting to rally on geo-political jitters, but in my view precious metals still remain in an overall longterm bear market. Realize this is contrary to internet chatter. But there is risk of heavy setbacks in this space (IMO). Deflation is alive and well, despite central bank desperation policy attempting to run ahead of the debt crisis and sweep this crisis under the rug . . . . This has failed miserably.

I am posting this information as a ‘real concern’ for business. Debt no longer generates growth. When debt is no longer an asset and becomes a liability, this is a serious problem. As a Morgan Stanley VP stated recently, “Everything in the financial system is broken”
An unstoppable changing of the guard ahead . . . .

[SASKFARMER]

So if it all comes crashing down then what?

Trudeau will confiscate all our Cash. Except for whats in the Safe. USA dollars vs Canadian.

People with a high debt load?

Personal Debt load?

What will Millennials do? Cry?

Boomers will lose all their savings?

[TechAnalyst]

Same as what it has been. Spike in 2007 to 65

https://www.multpl.com/s-p-500-pe-ratio https://www.multpl.com/s-p-500-pe-ratio

I hate to be a wet blanket (or take away the security blanket) but this is actually one of the warnings signs I mentioned.

The P/E ratio is price divided by earnings obviously. If you look at the monthly data table in the link above, the spikes were actually caused by a collapse in earnings estimates during the Great Recession of '08/'09 and the fallout from the dot com bubble burst in '02. The price did not collapse as fast as the earnings, thus the spike in the ratio.

The only time in recent history that the value has been meaningfully above the current estimate of 24.47 was in the final blow off top of the Dot Com bubble in 1999. All other higher readings were caused by declining earnings.

The Great Recession started following a reading of 22.35 in December of '07. Interestingly the price topped out in October of that year. The bottom of the 54% decline in equity values occurred in March of '09. Because earnings estimates collapsed more aggressively, the P/E ratio put in a top of 123.32 in June of that year.

As you can see, there should be nothing real reassuring about this analysis.

Sorry, that's a bit deep for a Sunday AM.

[biglentil]

Since the Fed started up the printing presses last September, the FANG tech stocks soared 60 percent of their annual 2019 gains. The Fed is flooding the market with liquidity.

Yet, U.S. unemployment claims have risen for the past 12 weeks. The consumer spending spree continues to hold up the ship, but consumer debt load continues to rock higher (record breaking). Meanwhile, manufacturing is in a serious slowdown from too high USD and tariff backdraft (IMO). And gov’t spending, good grief . . . .

Believe repo loan crisis initiated the liquidity flood, but it appears to be a desperate attempt by the Fed to stoke inflation. Deflation is a death wish for central bank policy. Central bankers have no answer for this.

Gold is attempting to rally on geo-political jitters, but in my view precious metals still remain in an overall longterm bear market. Realize this is contrary to internet chatter. But there is risk of heavy setbacks in this space (IMO). Deflation is alive and well, despite central bank desperation policy attempting to run ahead of the debt crisis and sweep this crisis under the rug . . . . This has failed miserably.

I am posting this information as a ‘real concern’ for business. Debt no longer generates growth. When debt is no longer an asset and becomes a liability, this is a serious problem. As a Morgan Stanley VP stated recently, “Everything in the financial system is broken”
An unstoppable changing of the guard ahead . . . .

Gold was 1170 few years ago when you called it a poor investment now its 1550 and near an all time high in Cad dollars. Yet you still think it is in a bear market? Errol we need to all be on the look out for confirmation bias.

[AlbertaFarmer5]

Believe repo loan crisis initiated the liquidity flood, but it appears to be a desperate attempt by the Fed to stoke inflation. Deflation is a death wish for central bank policy. Central bankers have no answer for this.

I keep hearing various versions of this, that central banks are helpless against deflation.
Can someone explain the logic behind that?

As far as I can tell, they have very few tools to stop runaway inflation, once confidence in the government and currency has been lost, as evidenced by the myriad examples of collapse due to hyperinflation throughout recorded history.

But flooding the market with stimulus of various sorts or devaluing currency to combat deflation has been the go to tool for as long as there have been currencies. The long term results are never good, but the dreaded debt deflation spiral just doesn't seem to materialize.

[TechAnalyst]

For what it's worth, I agree with Errol about the risks that lie ahead for equity markets but I disagree on the outcomes.

I believe the resulting increase in liquidity (printing money) will push commodity values higher, especially precious metals. Following the last recession, gold almost tripled in value within three years and silver went from under $9/oz in '08 to almost $50 by May '11.

Given their low values currently and their declining stocks (within the US), Ag commodities should benefit as well (IMO).

Interest rates would be stuck near zero under this scenario and real estate (Ag land in particular) would continue to be supported in a quest for return on investment.

Let's hope I'm right.

[AlbertaFarmer5]

The Fed can't tighten everyone knows it, their back is against the wall...

. This has been my position as well.
But, as you say, everyone already knows that. And conventional wisdom states that what everyone knows, isn't worth knowing. So if all the market participants are already positioned for this, doesn't that make it harder to actually do it?