Record Stock Market High - How to Spin?

[iluvatar5150]

I blame "Bidenomics". In as much as "Bidenomics" spends more borrowed money increasing the federal debt on unproven technologies.

Right... while ignoring the Trumpenomics that cut taxes in the growing economy prior to the pandemic and pumped as much stimulus into the pandemic economy as Bidenomics did.

Aggregate demand was not a problem. The market corrects imbalances in demand. (See below.)

Aggregate supply wasn't much of a problem, either. Rather, supply was constrained at certain chokepoints in certain industries, which caused outsizes problems. Most of the inflation, as I recall, was driven by used cars, food, and energy.

A recession corrects imbalances in the economy. It's painful. Companies that are producing goods for which there is insufficient demand layoff their employees and, if bankrupted, have their assets removed. Both employees and assets are made available to investors/entrepreneurs that produce products that people do want.

That's an anachronistic view of things reminiscent of the 1990's when it was considered acceptable to work solely off of high-altitude views of aggregate numbers. What the rest of us have realized in the last 30 years is that buried in those aggregate numbers are actual people, some of whom suffer serious hardships in the wake of these recessions. Yes, these employees may be "made available to investors," but the reality is that that can take years or even decades to happen. The "Rust Belt" is a whole region of the country "made available to investors" who largely never materialized.

 

[Tuur]

What does the "it" above refer to?

Rise in stock prices.

 

[o_mlly]

Right... while ignoring the Trumpenomics that cut taxes in the growing economy prior to the pandemic and pumped as much stimulus into the pandemic economy as Bidenomics did.

Never heard of "Trumpenomics". Sounds like a word that those who suffer from "Trump Derangement Syndrome" would invent.

The effects of the temporary TCJA are not fully known as yet. The act was designed to simplify and reduce taxes allowing Americans to keep more of their hard-earned money, not to maximize revenue for the Treasury. That happened. However, if the federal government continues to run record deficits year after year then no tax cut will ever cure the root problem. The act was, and is, a political football. The upcoming congressional debates to make the cuts permanent will make good theater.

Aggregate supply wasn't much of a problem, either. Rather, supply was constrained at certain chokepoints in certain industries, which caused outsizes problems. Most of the inflation, as I recall, was driven by used cars, food, and energy.

? Did you forget the price of lumber for homebuilders? Or the shortage of imported microchips for cars and other appliances? The cost of energy effects nearly every manufactured or transported good in the economy.

That's an anachronistic view of things reminiscent of the 1990's when it was considered acceptable to work solely off of high-altitude views of aggregate numbers. What the rest of us have realized in the last 30 years is that buried in those aggregate numbers are actual people, some of whom suffer serious hardships in the wake of these recessions. Yes, these employees may be "made available to investors," but the reality is that that can take years or even decades to happen. The "Rust Belt" is a whole region of the country "made available to investors" who largely never materialized.

Nonsense. Macroeconomics is as important today as it was historically in investigating cause and effect in national economies. The emotional argument that recessions cause some pain for a few is not helpful. Of course it does. Exogenous and technological events as well as consumer shifts in demand will require that an economy redeploy its limited resources. From typewriters to computers, Kodak and Polaroid film to digital cameras, CRT TV's to flat screen led TV's, etc. the replacement and obsolescence of old technologies will be pain for some and opportunity for others. Overall, consumers benefit.

 

[o_mlly]

Rise in stock prices.

Thank you. Generally, if investors believe that economic conditions are good for future earnings growth then the P in the P/E ratio will increase as will the ratio. I think that that is the general consensus today and explains at least in part the rising P in the P/E ratio.

 

[Laodicean60]

However, what happened to the purchasing power

Purchasing power has gone down due to the printing of money. The more paper in the system the less its worth.

Again, it was both supply and demand problems

True, In hindsight the lockdowns created a supply disruption all over the world. China especially because they held the lockdown policy longer than everyone else and they are the world's manufacturer
The stimulus checks allowed us to spend more than usual at least for me it was a bonus and with tight supply inflation went through the roof..

 

[Laodicean60]

Nonsense. Macroeconomics is as important today as it was historically in investigating cause and effect in national economies. The emotional argument that recessions cause some pain for a few is not helpful.

I've heard that recessions are part of the economic cycle a rebalancing if you will. In a healthy economy, inflation tends to rise because people are chasing goods and services. The reason why recessions are painful the stupid Federal Reserve uses the Philips curve (unemployment) to slow down demand. I feel this is unacceptable that Americans should suffer because of bad monetary policy. When they raise interest rates it makes doing business harder and with less business comes layoffs.

My idea is when inflation goes over a set percentage the government can impose an inflation tax on sales of goods and services but not so much on necessities to slow demand. Plus the extra taxes generated could be used to pay down debt. But for me to allow this to happen I would have to trust the fiscal responsibility of the government and I don't. Also, it would have to be AI driven without human manipulation.

 

[iluvatar5150]

? Did you forget the price of lumber for homebuilders? Or the shortage of imported microchips for cars and other appliances?

Those would be the "certain chokepoints" I mentioned.

Nonsense. Macroeconomics is as important today as it was historically in investigating cause and effect in national economies. The emotional argument that recessions cause some pain for a few is not helpful. Of course it does.

Then why do you ignore it? When given the option between giving everybody in the country $5 off their next tv and keeping an American factory open and a whole town of people employed, why is it that $5 off a tv is the preferred option? Yes, "consumers benefit," but to what end? Economic efficiency? Why ought that be the end instead of merely a means to an end?

But even if we accept economic efficiency as a worthwhile end goal, I'm skeptical that your macro theories account for all of the costs associated with decades of regional decline.

 

[Tuur]

Thank you. Generally, if investors believe that economic conditions are good for future earnings growth then the P in the P/E ratio will increase as will the ratio. I think that that is the general consensus today and explains at least in part the rising P in the P/E ratio.

I'm hesitant here not by who's in the WH, but because I nearly got caught in a bubble. It was during the ostrich and emu craze. That was supposed to be the next big thing, and it wasn't hard to find someone raising them. So I looked into it and noticed a curious thing: the local market seemed to be selling to start ups, not to meat processors. That was a huge red flag, so I backed off. Sure enough, the local market collapsed and now you can't find the birds locally.

That's coming to mind because my main consideration, and apparently that of investors, was the ostrich and emu market and not the economy as a whole. Investors were optimistic only about that market. I suspect much of that was driven by what piqued my interest: seeing increasing investment in ostriches and emus, the assumption being that if there wasn't something to it, so many wouldn't be getting into it. Discovering that the market was to other start-ups wasn't hard to see, but apparently local investors didn't notice it, or thought they could get out before the bubble popped.

Is this happening now? Don't know. But what could be driving the market may simply be that prices are going up, like people investing in ostriches and emus because it looked like everyone else was doing it.

 

[o_mlly]

Those would be the "certain chokepoints" I mentioned.




Then why do you ignore it? When given the option between giving everybody in the country $5 off their next tv and keeping an American factory open and a whole town of people employed, why is it that $5 off a tv is the preferred option? Yes, "consumers benefit," but to what end? Economic efficiency? Why ought that be the end instead of merely a means to an end?

But even if we accept economic efficiency as a worthwhile end goal, I'm skeptical that your macro theories account for all of the costs associated with decades of regional decline.

Sorry, but your posts are not making sense to me. Have a good day.

 

[o_mlly]

Is this happening now? Don't know. But what could be driving the market may simply be that prices are going up, like people investing in ostriches and emus because it looked like everyone else was doing it.

Investors are certainly not omniscient. But people have to park their Biden check money somewhere.

 

[JustOneWay]

Investors are certainly not omniscient. But people have to park their Biden check money somewhere.

I put my Biden check money in the same account as my Trump check money. Didn't you?

 

[o_mlly]

I put my Biden check money in the same account as my Trump check money. Didn't you?

Good for you! My wife took mine to buy food.