By MN Gordon
Divine Powers
The Dow’s march onward and upward toward 30,000 continues without a pause. New all-time highs are notched practically every day. Despite Thursday’s 31-point pullback, the Dow is up over 15.5 percent year-to-date. What a remarkable time to be alive.
The DJIA keeps surging… but it is running on fumes (US money supply growth is disappearing rapidly). The president loves this and has decided to “own” the market by gushing about its record run. During his campaign he professed to worry about the “giant bubble”. We happen to think that it is probably best for a president not to talk about the stock market at all, but the Donald evidently couldn’t resist. One thing that continues to be quite satisfying is this quote by Paul Krugman on election night, when stock market futures plunged after it became clear that the Donald would beat Hillary: “It really does now look like President Donald J. Trump, and markets are plunging. […] I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.” Krugman’s predictions are often devastatingly wrong, but rarely this fast. [PT] – click to enlarge.
President Donald Trump is pumped! As Commander in Chief, he believes he possesses divine powers. He can will the stock market higher – and he knows it. For example, early Wednesday morning he blasted out the following Tweet:
“Stock Market has increased by 5.2 Trillion dollars since the election on November 8th, a 25% increase.”
Four minutes later, he sent out another Tweet:
“…if Congress gives us the massive tax cuts (and reform) I am asking for, those numbers will grow by leaps and bounds.”
Who knows? Maybe President Trump is right. These days even bad reforms – and just about everything else – are good for stocks. And what’s good for stocks is good for everything.
For instance, according to President Trump stock market gains reduce the national debt. He even said so this week. President Trump’s logic for how higher stock prices reduce the national debt was unclear. But it certainly sounds good to say. More importantly, it sounds bullish.
Smart and Savvy Investors
On the other hand, obvious risks and hazards no longer matter. Not the prospect of nuclear war with North Korea will stop this bull market. Not the gold backed yuan oil exchange agreements being developed between Beijing, Moscow, and Tehran, and the implications for the petrodollar’s reserve currency status. Not weak jobs numbers.
So, too, runaway government debt, consumer debt, and corporate debt haven’t fazed the stock market’s trajectory. Because everyone loves debt. Especially bankers. They want more debt so they can buy more stocks.
Nosebleed level valuations don’t matter either. Because, if you haven’t heard, high valuations are no longer high; they’re permanent. Likewise, the beginning of the Fed’s great unwind of its $4.5 trillion balance sheet has hardly elicited a flinch.
The margin-adjusted version of the Shiller P/E ratio (a.k.a. CAPE or PE-10) via …read more
Source:: Acting Man
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