All stock market losses are now socialized in America. The Fed recently announced they would start buying individual stocks to prevent a crash. It’s seems literally impossible to lose money on stocks until the entire government collapses. As long as Trump is in power, the party is going to continue. The money printing frenzy is now a race to the bottom. All ponzi schemes eventually collapse, and so will the US.
By every indication, current stock prices have pretty much “priced in” an almost perfect recovery, whether it is from a genuine increase in economic activity or from more stimulus via the US government. So if the market is anticipating a base case scenario, what can possible drive it any higher? If profits magically recover as quickly as the market seems to hope, or if the government injects more stimulus, the market is pretty much priced for that seeing that it is almost at a record high. So what is the incentive to buy in now? Are you buying in with the anticipation that the recovery will go well, because then the stock market will go up even higher in response, and just permanently maintain this disconnect between price and earnings?
This is the lunacy of the house of cards that sustains itself solely by money created out of thin air. The stock market no longer has any correlation to the real economy. Wait until the unemployment benefits dry up at the of July. History always repeats itself.
Wall Street was once the vehicle to invest in great companies that were the bedrock of the American economy – it is now a casino. A fantasy land dominated by a few monopolies, like companies that don’t even employ a lot of people. And are actually changing American society and politics, in some cases for the worse.
It has been a fake market since 2008. One has to be very very careful now when it comes to the stock market – perhaps selling some shares to buy gold is not a bad idea. Not losing money is more important than missing out.
Six stocks are now worth over 7 trillion dollars, which is 25% of the entire share market value, and bigger than all of stocks in Europe. What could possible go wrong … ?
NASDAQ is now bigger than the entire world’s market caps. And let’s not forget the 40 million unemployed, and over 200 million unemployed globally. The US is looking to end of this year with around 30 trillion in debt, and that’s with a collectable tax base of just around 3.2 trillion. Corporate debt is around 17 trillion. Personal debts are over 20 trillion.
The Fed has already blown about 4 trillion trying to keep billionaires from having any losses. Its high time for the Fed to let them eat each other. As it is, the tax payers are eating their losses and getting zero from their gains.
Nothing is normal in these markets, despite the market’s impressive performance. The markets are trading at a multiple that represents a peak. What is going on is nothing short of market manipulation. The US debt is off the scale, and consumer spending is now coming to a halt – the fundamentals are out of the window. And instead of the debt being issued to fund infrastructure projects and enhance productivity, it went to buy back stock.
Be careful when you boast about the strong job market that existed before the pandemic. We are finding out that the nonessential part of the economy had to shut down, but who knew until it was shut down that the nonessential part of the US economy was 80% of the GDP. Now there are people who are unemployed but are making more money, and are not doing any work. Yes, jobs like Uber are not helping anyone I am sad to say. The US needs to start making things again – they need to start manufacturing. And they need to ship their products to the world, using US shipping, and not foreign flag renegade operators.
Covid-19 is now being used as a cover for the bigger, fundamental problems. There is a famous saying on Wall Street, “Do not fight the Fed, and the trend is your friend.”
Right now, the stock market is running on pure speculation. Earnings reports are generally down, and stocks were already pricey at this point even before. The economy is shrinking. And the national debt is growing and growing.
Why is it called “stimulus’ when it is free money for the fat cat CEOs and executives who bankrupted their own companies, but a “hand out” when it is a couple of hundred backs to the workers. Everything is being arranged for the rich to get richer, and masses to get the shaft. There simply seems to be no rule of law at the top anymore. We have to stop pretending that there is some intelligence behind it all – there isn’t. It is simply about greed and power.
The Fed money is mostly going to stock buy-backs because it is a short term quick fix. Corporate executives calculate that this is the best way to keep their major shareholders happy, with rising share prices, and dividends, thus ensuring their own inflated compensation packages.
What is going to happen when 10 of millions of people stop paying their rents, their mortgages, their car loans, etc. The banks will get bailed out again. When the stimulus payments end in August and the moratorium on evictions is then lifted, there is going to be intense unrest. The community spirit is fast eroding to everyone for himself. A civil war is coming to America. Believing we live in democracy just because we can vote … what a sham.
There will be no V shape recovery. Yes, some stocks may go up and some may go up and down a bit, but ultimately, it is all going to come crashing down. The biggest problem is the debt. The 2008/2009 subprime crises was all about debt, and what did they do – they printed a ton of money. Debt is the problem now again. Most people have no savings. So what have they done – made loans available to anyone and everyone. Governments have learned nothing. We are just delaying the inevitable. Our Minsky moment is coming. And it will all be blamed on the corona virus, but the truth is, greed is the real disease.
There can be no recovery until the debt is either paid off or forgiven. Debt is slavery.