Hello everybody,
Stocks up, houses up, treasuries up, gold up... What is that? A toxic mix or a blessing? No need to think anymore, just buy anything and you'll be fine?
Meanwhile, Trump's team is thinking how to sustain that bullish run by pumping more money: they are going to promise voters that a portion of their income will be freed from taxation if invested into stocks. President Trump sees the rising stock market largely as an indicator, or even THE indicator, of the strength of the general economy.
Which may or may not be the case, actually. But what is important this time around is that people investing their money instead of spending it on consumption are effectively sterilizing it, lowering the velocity of money circulation and therefore keeping inflation at bay. Which in turn enables the Fed and the government to pump more money into the economy.
When this bubble will burst - no one knows. Technically (as the "technical analysis" of the charts shows), it should burst right now. The investor survey conducted by the Boston Consulting Group in Nov and Dec 2019, found that, on average, respondents' outlook is similar to what it was just before the market correction in late 2018. Nearly two-thirds of respondents have a bearish or very bearish view of the likely performance levels of equity markets over the next three years. Among all respondents, 73% believe that markets are overvalued, an uptick from 67% in the 2018 survey. Still the steroids and anabolics injected in the economy may for some time delay the inevitable. It is better to be prepared, though.
Good luck,
ELP team
Stocks up, houses up, treasuries up, gold up... What is that? A toxic mix or a blessing? No need to think anymore, just buy anything and you'll be fine?
Meanwhile, Trump's team is thinking how to sustain that bullish run by pumping more money: they are going to promise voters that a portion of their income will be freed from taxation if invested into stocks. President Trump sees the rising stock market largely as an indicator, or even THE indicator, of the strength of the general economy.
Which may or may not be the case, actually. But what is important this time around is that people investing their money instead of spending it on consumption are effectively sterilizing it, lowering the velocity of money circulation and therefore keeping inflation at bay. Which in turn enables the Fed and the government to pump more money into the economy.
When this bubble will burst - no one knows. Technically (as the "technical analysis" of the charts shows), it should burst right now. The investor survey conducted by the Boston Consulting Group in Nov and Dec 2019, found that, on average, respondents' outlook is similar to what it was just before the market correction in late 2018. Nearly two-thirds of respondents have a bearish or very bearish view of the likely performance levels of equity markets over the next three years. Among all respondents, 73% believe that markets are overvalued, an uptick from 67% in the 2018 survey. Still the steroids and anabolics injected in the economy may for some time delay the inevitable. It is better to be prepared, though.
Good luck,
ELP team
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