The largest industry of the US is the military now isn’t it? All the government spending cuts have been diverted to new budgets to facilitate more spending - as are all the research and development grants for AI, space expansion, satellite communications etc. The past year has seen military threats to Gaza, Greenland, Canada, Venezuela, Cuba, Iran, and if I was being cynical- Vatican City, all NATO countries and China (and anyone else seen as a potential target). In order for the US to be competitive in industry, either the product has to be desired (great doing business with you Israel and Ukraine), or the dollar has to be devalued to an amount lower than other competing currencies. Every US business, person and resource is being sucked into a black hole of funding their military machine - out of (deliberately provoking) crisis comes opportunity.
I am absolutely NOT well-versed in economics and market issues. But I know a little and managed to retire in modest comfort. What I am most troubled by is how, when there is bad national news (usually something instigated by this administration, either directly or through the more shadowy channels), the market indices ease off cautiously but when the threat seems to be abating the market races back to the same or higher level. It's as if the drops are a token acknowledgement of issues but not at all proportional to the significance of the underlying issue. Then the rise, often premature and timed on the hope of improvement but on anything concrete, goes back to its former path as if nothing happened. Considering how much the market us overvalued as a whole, and especially in light of the overly-dominant AI and its peripheral sectors, I can't help but think there's a whole lotta pain coming in investors' futures (pun intended).
If someone with expertise can explain this phenomenon, even if it is just so say "sorry, but yes, you kinda nailed it," I woukd appreciate hearing your thoughts.
The piece focuses on elevated valuations, which is fair. But it largely takes earnings as given, and that may be the bigger issue.
Because of the Kalecki profit equation, today’s large budget deficits are directly supporting corporate profits and keeping margins unusually high. In that sense, the denominator in most valuation metrics is flattered by fiscal conditions that may not be sustainable, making the market look less expensive than it really is.
At the same time, broader measures like the Market Cap-to-GDP ratio suggest that valuations are already at extreme levels, even with these elevated earnings.
If history is any guide, starting valuations are strongly and negatively correlated with subsequent 10- to 12-year returns. Low valuations tend to be followed by high returns, and high valuations by low returns.
So the risk is not just that valuations are high, but that valuations are high and the earnings supporting them may not be sustainable. If margins normalise as fiscal support weakens, both profits and multiples could come under pressure simultaneously.
There's a "new" phenomenon compared to 2000 and 2008. The S&P 500, that is the big 7, are being bailed out before a crash can happen. Or in other words; Our tax dollars (and the colossal media propaganda) injected into AI digital concentration camp centers, prop up these stock prices.
Artificial intelligence along with artificial stock markets, privatize gains and socialize debt.
Btw., regarding crude oil, for those who think we're self sufficient; Think again and consider the consequences.
I’m just guessing but believe that we, the American people will rue the day AI was illicitly scammed on the American people. I’ve already experienced where an offer for “ 19.95 shipping was offered over the internet” and was NOT ACCEPTED and yet was added to the bank statement as if we had an agreement. This is pure theft. Also believe it targets the elderly.
Yes, the buying and selling and contracting of the 'magnificent 7' from each other won't help them if Ai has been over promised.
But it's still very different from the dotcom bubble, because these big tech companies have billions and billions in cash. They may be in for a big fall, but they won't go to zero like so many dotcoms did.
Don't worry about the ag stocks. They are down because the idiots keep pouring $ into Mag 7.
Once they figure out that food isn't grown in the back seat of a GrubHub delivery car, they will need to sell those Mag 7 to buy hyper-inflated food....
The bond market is indicating the war will be over soon. I personally think if Iran surrenders then they will be carved up like Syria and Libya. This should be existential for them. However, they have been abandoned by China & Russia.
The market's calm reaction to such extreme geopolitical shocks is telling. When oil spikes past $100 and a critical chokepoint closes, the S&P 500 barely flinching suggests either remarkable confidence in a quick resolution — or the beginnings of a dangerous disconnect between fundamentals and prices. History shows these situations rarely stay contained for long.
Am not a money guy. Like to think of myself as a big picture common sense kind of fellow. I am now wondering aside from typical price suppression and manipulation if our markets aren’t just flat out rigged.
Eventually. Like many who presently experience personal hardship are not on the six clock news. Its real drive down Cambie st Vancouver dwntwn. Or anywhere in the lower mainland for that matter. Tents people living on side streets in their trailers, vans or in the parks. Never thought that would happen and yet, there it is.
You guys really can't stand Trump that much? The market will go down at some point, you all and Peter Schiff can pretend you "called it." Tell Doug we are still waiting on that "greater depression."
America is exceptional! I love being an American and this great country. We are winning the war in Iran. The world is going to be much better after all said and done. I am fully on the optimist train. It works a lot better!
Good luck with Project 25, Israel’s driving war with Iran and an absolute steamrolling of the US Constitution. And yeah, I can’t stand convicted felons who also work for Russia and who pick fights with a Pope from Chicago. Your guy looked great in his white robe and red sash…I see where you worship. Sip some whine…
Used to really like him. Turns out I have a real hang with a guy who kisses ass to people running a genocide. Not sure why he can’t push back on his Israeli masters but I can’t find any acceptable reason for it.
Better case to be made that Israel is doing our bidding in the Cold War we are fighting with China and Russia. Did you happen to notice that we are now in charge of Chinas oil deliveries from the Straight of Hormuz? Did you happen to notice we are also now in control of Venezuela’s oil exports to China and Russia? Seeing a pattern yet?
Lol NO we are NOT. I am a 3X DT voter and please listen to me when I say stop listening to him and his media/influencers.
Do you remember how badly the left gaslighted us during Biden’s senility, election fraud, covid?
Welp, they’re doing it again but this time from the right.
Israel has completely bought off our Congress. They also have dual citizens in and around our entire government hierarchy. So if you are not a dual citizen, not married to one, chances are you been bought off by one.
Odd, as I was reading the article, I assumed Doug Casey had written the script.
Was this another author who asked Ai to "re-write my content in Doug Casey's intonation".
My apologies for asking. The content was good. Very good. I just get confused with what is real and what is fake, these days.
The largest industry of the US is the military now isn’t it? All the government spending cuts have been diverted to new budgets to facilitate more spending - as are all the research and development grants for AI, space expansion, satellite communications etc. The past year has seen military threats to Gaza, Greenland, Canada, Venezuela, Cuba, Iran, and if I was being cynical- Vatican City, all NATO countries and China (and anyone else seen as a potential target). In order for the US to be competitive in industry, either the product has to be desired (great doing business with you Israel and Ukraine), or the dollar has to be devalued to an amount lower than other competing currencies. Every US business, person and resource is being sucked into a black hole of funding their military machine - out of (deliberately provoking) crisis comes opportunity.
I am absolutely NOT well-versed in economics and market issues. But I know a little and managed to retire in modest comfort. What I am most troubled by is how, when there is bad national news (usually something instigated by this administration, either directly or through the more shadowy channels), the market indices ease off cautiously but when the threat seems to be abating the market races back to the same or higher level. It's as if the drops are a token acknowledgement of issues but not at all proportional to the significance of the underlying issue. Then the rise, often premature and timed on the hope of improvement but on anything concrete, goes back to its former path as if nothing happened. Considering how much the market us overvalued as a whole, and especially in light of the overly-dominant AI and its peripheral sectors, I can't help but think there's a whole lotta pain coming in investors' futures (pun intended).
If someone with expertise can explain this phenomenon, even if it is just so say "sorry, but yes, you kinda nailed it," I woukd appreciate hearing your thoughts.
The piece focuses on elevated valuations, which is fair. But it largely takes earnings as given, and that may be the bigger issue.
Because of the Kalecki profit equation, today’s large budget deficits are directly supporting corporate profits and keeping margins unusually high. In that sense, the denominator in most valuation metrics is flattered by fiscal conditions that may not be sustainable, making the market look less expensive than it really is.
At the same time, broader measures like the Market Cap-to-GDP ratio suggest that valuations are already at extreme levels, even with these elevated earnings.
If history is any guide, starting valuations are strongly and negatively correlated with subsequent 10- to 12-year returns. Low valuations tend to be followed by high returns, and high valuations by low returns.
So the risk is not just that valuations are high, but that valuations are high and the earnings supporting them may not be sustainable. If margins normalise as fiscal support weakens, both profits and multiples could come under pressure simultaneously.
There's a "new" phenomenon compared to 2000 and 2008. The S&P 500, that is the big 7, are being bailed out before a crash can happen. Or in other words; Our tax dollars (and the colossal media propaganda) injected into AI digital concentration camp centers, prop up these stock prices.
Artificial intelligence along with artificial stock markets, privatize gains and socialize debt.
Btw., regarding crude oil, for those who think we're self sufficient; Think again and consider the consequences.
IA = 700 in 12 out ? must be a government operation
100%
We will all pay when it becomes "too big to fail"
I’m just guessing but believe that we, the American people will rue the day AI was illicitly scammed on the American people. I’ve already experienced where an offer for “ 19.95 shipping was offered over the internet” and was NOT ACCEPTED and yet was added to the bank statement as if we had an agreement. This is pure theft. Also believe it targets the elderly.
"this market is not 2000. The valuation looks similar on paper. Underneath, the structure is far more fragile."
Not necessarily. In 2000, the hype was for IPOs/.coms with no earnings. Today, we see plenty of earnings - at least, so far.
Be careful about "plenty of earnings".
A significant portion is just paper trading across the Tech Bros.
Similar BS that killed Enron and many other Ponzi schemes.
Yes, the buying and selling and contracting of the 'magnificent 7' from each other won't help them if Ai has been over promised.
But it's still very different from the dotcom bubble, because these big tech companies have billions and billions in cash. They may be in for a big fall, but they won't go to zero like so many dotcoms did.
And Mosaic & Nutrien are lower now than before the war
Don't worry about the ag stocks. They are down because the idiots keep pouring $ into Mag 7.
Once they figure out that food isn't grown in the back seat of a GrubHub delivery car, they will need to sell those Mag 7 to buy hyper-inflated food....
The bond market is indicating the war will be over soon. I personally think if Iran surrenders then they will be carved up like Syria and Libya. This should be existential for them. However, they have been abandoned by China & Russia.
Another thing I notice about the S&P 500 is: Since the AI bet is the largest portion, what is the smallest sector of the S&P 500?
Energy.
The market's calm reaction to such extreme geopolitical shocks is telling. When oil spikes past $100 and a critical chokepoint closes, the S&P 500 barely flinching suggests either remarkable confidence in a quick resolution — or the beginnings of a dangerous disconnect between fundamentals and prices. History shows these situations rarely stay contained for long.
Am not a money guy. Like to think of myself as a big picture common sense kind of fellow. I am now wondering aside from typical price suppression and manipulation if our markets aren’t just flat out rigged.
Hell, everything else seems to be.
Try reading Matthew Piepenburg and Tom Lott's "Rigged to Fail". It's easy to read and
straight forward. Worth many times what you pay for it. Look up Matthew Piepenburg
on You tube for a primer on economics. Factual blunt and eye opening the book will
confirm in spades your "common sense".
Thanks, will do.
Eventually. Like many who presently experience personal hardship are not on the six clock news. Its real drive down Cambie st Vancouver dwntwn. Or anywhere in the lower mainland for that matter. Tents people living on side streets in their trailers, vans or in the parks. Never thought that would happen and yet, there it is.
This was a scary reality check.
You guys really can't stand Trump that much? The market will go down at some point, you all and Peter Schiff can pretend you "called it." Tell Doug we are still waiting on that "greater depression."
America is exceptional! I love being an American and this great country. We are winning the war in Iran. The world is going to be much better after all said and done. I am fully on the optimist train. It works a lot better!
Hey Josh
Good luck with Project 25, Israel’s driving war with Iran and an absolute steamrolling of the US Constitution. And yeah, I can’t stand convicted felons who also work for Russia and who pick fights with a Pope from Chicago. Your guy looked great in his white robe and red sash…I see where you worship. Sip some whine…
Used to really like him. Turns out I have a real hang with a guy who kisses ass to people running a genocide. Not sure why he can’t push back on his Israeli masters but I can’t find any acceptable reason for it.
Better case to be made that Israel is doing our bidding in the Cold War we are fighting with China and Russia. Did you happen to notice that we are now in charge of Chinas oil deliveries from the Straight of Hormuz? Did you happen to notice we are also now in control of Venezuela’s oil exports to China and Russia? Seeing a pattern yet?
Lol NO we are NOT. I am a 3X DT voter and please listen to me when I say stop listening to him and his media/influencers.
Do you remember how badly the left gaslighted us during Biden’s senility, election fraud, covid?
Welp, they’re doing it again but this time from the right.
Israel has completely bought off our Congress. They also have dual citizens in and around our entire government hierarchy. So if you are not a dual citizen, not married to one, chances are you been bought off by one.
These are no longer assumptions….is truth.
I'll be optimistic when the Strait opens.