Financial topics

[aeden]

https://splashbroadcasting.com/michigan ... allot-box/

https://twitter.com/glarustrading/statu ... 4951376898
David Rosenberg@EconguyRosie
Sep 18 It's rather pathetic that we have portfolio managers out there whining that the Fed didn't do enough on Wednesday to bolster their long positions. As if a balance sheet at 20% of GDP and zero rates forever isn't enough for these whiners. Let alone multiples at two-decade highs.

[aeden]

https://zh-prod-1cc738ca-7d3b-4a72-b792 ... k=tjPbIrm4

[aeden]

Full case name: James Plyler, Superintendent, Tyler Independent School District, et al. v. John Doe, et al.
United States District Court for the Eastern District of Texas in September 1977
Plyler v. Doe, 457 U.S. 202, was a case in which the Supreme Court of the United States struck down both a state statute denying funding for education to undocumented immigrant children in the United States and a municipal school district's attempt to charge an annual $1,000 tuition fee for each student to compensate for lost state funding.

[Higgenbotham]

What could cause further multiple expansion justifying a price above 3500 would probably be that interest rates stay right where they are for 10 years (very low but not below zero), buybacks remain strong for another 10 years as companies borrow even more at low interest rates to buy back even more shares, and inflation stays between 1.5 and 2.5 percent for 10 years. For people to assume any of that will happen seems kind of nuts.

It's interesting that in this week's press conference, that's pretty much what Powell said. Interest rates will stay about where they are as far as the eye can see and inflation will hover just below 2% until at least 2023, then maybe go a little higher.

If he's going to insist that stocks aren't in a bubble and haven't been in a bubble since 2010, that's pretty much what he has to say and what he has to believe and what he has to get others to believe.

Jerome Powell: (05:55)
With regard to interest rates, we now indicate that we expect it will be appropriate to maintain the current zero two (should say to) one quarter percent target range for the federal funds rate until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment and inflation has arisen to 2% and is on track to moderately exceed 2% for some time.

Steve: (17:06)
Mr. Chairman, I wonder if you could help me understand how the projections of the committee line up with the goals of the committee. You’ve now altered the statement to aim for inflation above 2%. But when I look at the SEP, I don’t see the committee [inaudible 00:17:27] a single year in the next four years that you are ever above 2%. In fact, for each year you are below it until 2023 was the first time that you actually hit 2%. So are you confident? Is this just the committee is not confident that not only can it not hit its 2% goal, but now it can’t hit its goal of being above 2%?

Jerome Powell: (17:49)
Not at all. You also don’t see people by and large lifting off or raising interest rates above zero. I guess there are four exceptions out of a committee of 17 during the forecast period. So we don’t reach 2%, but we get very close to it in the forecast. We reach 2%, I guess the meeting is 2% at the end of 2023. So you know what the guidance says. It says that we expect that the current setting of our rates, we expect that it will be appropriate until such time as we reach 2% inflation, that we feel that labor market conditions are consistent with our assessment of maximum employment and that we’re on track to achieve moderate inflation, moderately above. So that’s the test. I don’t think there’s any conflict between those two because the way they’re set up, their projections don’t show the out years.

Jerome Powell: (18:40)
You ask about confidence. And I would say that this very strong, very powerful guidance shows both our confidence and our determination. It shows our confidence that we can reach this goal and our determination to do so.

Steve: (18:52)
I’m sorry. If I could just follow up without being simplistic about this, but why wouldn’t, if the committee was confident that it could reach its new goal of aiming for inflation about 2%, why wouldn’t one of those years at least show inflation being above 2% on the mediated forecast?

Jerome Powell: (19:11)
Because we think looking at everything we know about inflation dynamics in the United States and around the world over recent decades, we expect it will take some time. We expect that the economy will recover quickly now, but that that pace will slow as people go back to work and we’ll still have an area of the economy, a big area of the economy that struggles. There’ll be slack in the economy. The economy will be below maximum employment, below full demand. And that will tend to wear, to put downward pressure on inflation. So we think that once we get up closer to maximum employment, we think that inflation will come back generally. And I mean, that’s sort of what happened during the last long expansion. It’s a slow process, but there is a process there. Inflation does move up over time. We do expect that will continue today. And we expect that our guidance is powerful and will help that outcome. We think that effectively saying that policy will remain highly accommodative until the economy is very far along in its recovery should provide strong support for the economy and get us there sooner rather than later.

Steve: (20:20)
Thank you.

Michael McKee: (47:56)
If I could follow up in terms of the balance sheet, are you concerned that your actions are more likely to produce.

Michael McKee: (48:03)
… turn that your actions are more likely to produce asset price inflation than goods and services inflation. In other words, are you risking a bubble on Wall Street?

Jerome Powell: (48:13)
So, of course, we monitor financial conditions very carefully. These are not new questions; these were questions that were very much in the air a decade ago and more, when the Fed first started doing QE. And I would say, if you look at the long experience of the 10-year, 8-month expansion, the longest in our recorded history, it included an awful lot of quantitative easing and low rates for seven years. And I would say it was notable for the lack of the emergence of some sort of a financial bubble, a housing bubble or some kind of a bubble, the popping of which could threaten the expansion. That didn’t happen. And frankly, it hasn’t really happened around the world since then. That doesn’t mean that it won’t happen, and so, of course, it’s something that we monitor carefully.

Jerome Powell: (49:02)
After the financial crisis, we started a new whole division of the Fed to focus on financial stability. We look at it from every perspective. The FOMC gets briefed on a quarterly basis. At the board here, we talk about it more or less on an ongoing basis. So, it is something we monitor, but I don’t know that the connection between asset purchases and financial stability is a particularly tight one, but again we won’t be just assuming that; we’ll be checking carefully as we go. And by the way, the kinds of tools that we would use to address those sorts of things are not really monetary policy; it would be more tools that strengthen the financial system.

https://www.rev.com/blog/transcripts/je ... ptember-16

[Higgenbotham]

1. S&P as reported earnings stalled out at about $34 per quarter starting in the first quarter of 2018.
2. First quarter 2020 as reported earnings were about $12 and with most companies reporting the second quarter will be about $18.
3. According to Fed Chairman Powell, "We expect that the economy will recover quickly now, but that that pace will slow as people go back to work and we’ll still have an area of the economy, a big area of the economy that struggles. There’ll be slack in the economy." It appears the Fed believes that slack will last into 2023 and, presumably, it will take about that long for earnings to recover to $34, provided the economy stays steady as she goes with low interest rates and inflation edging up toward 2%.

Even given that very optimistic scenario, it seems really a stretch to me to think that the fair value for the S&P 500 is 3300.

Anybody who has studied stock market PEs versus the inflation rate knows that it's sort of a normal distribution (to the extent that it can be given the range of inflation we're talking about) with the highest PEs centered on an inflation rate of 2%. That's why I really think the Fed wants an average inflation rate of 2% - so they can maximize stock market PEs and keep the bubble going as best they can (while denying that it's a bubble).



https://www.advisorperspectives.com/dsh ... ugust-2020

It's incredible to me that the record Crestmont PE over the entire time period that the US stock market has been in existence was within the past month in the midst of a probable economic depression worse than the great depression. I have no idea what's going on.

[aeden]

We figure since 1978 on a local sense the PE was blown out.
Actually the Smithsonian accord on a drill down but it would confuse the
plantation.
Bird is only allowed to Tweet so good enough on parlance speak.
We lied, we cheated, we stole but yea we know whats up.
The Deep State feels the more problems, the less they will be pinged.
The American populace is therefore totally damned and they know it since they have
a delusional ability to maintain one thing alone.
Anyways happy new year to the Juice Pack and Elam.
Corn Pop for Supreme Court.

https://twitter.com/i/status/1306770583473000455 It gets special since birds did it in demshevik pharmakia molek speak also.

So theta decay and extrinsic value

I will wait https://www.youtube.com/watch?v=OOu07mxfmJk
search.php?keywords=https%3A%2F%2Fwww.y ... sf=msgonly

1789 French Revolution.....too early to say its effect on civilization. China.
Bad juice boxes for all. https://www.youtube.com/watch?v=Tce2KQKB1mI

[aeden]

Remember things work both ways- recruit a sane democrat...

On June 28, almost two months after Donald Trump had clinched the Republican nomination, Rothschild forwarded an email chain between herself and Brooks to Clinton campaign manager John Podesta and former Walmart executive Leslie Dach. As noted by Politico, Dach was in charge of bringing disaffected Republicans into the Clinton camp.

Rothschild told Podesta and Dach that Brooks was “helping me with many Republicans.” The email chain between Rothschild and Brooks shows Rothschild pushing Brooks over how best to “engage you with Hillary” and Brooks replying that he would be “delighted to talk with Hillary or her campaign people.”

Not tired of winning are we since we only asked to not pay for the eugenics projects in the projects. No a peep from the then while the
three trained Marxist distance our Citizens, Neighbors, and Friends.

[Higgenbotham]

If I understand correctly, the Crestmont PE doesn't factor in growth or interest rates. Perhaps it doesn't need to in normal times, and these could still be considered normal times in the sense that presently low interest rates go hand in hand with low growth and higher interest rates imply higher growth, so the effects of these 2 variables mostly cancel out.

Some are pointing to record PEG (price to earnings to growth) at present, much higher than the previous peak in the year 2000, but pointing to that alone doesn't account for low interest rates.

It seems likely to me that the economy will at some point encounter even lower growth (or contraction) accompanied by higher interest rates. The stock market doesn't seem prepared for that possibility. Regarding interest rates, there was a sudden, unexpected spike in repo rates in September, 2019, then corporates went no bid in March, 2020. To think that can't happen in treasuries at some point in the next 3 years is probably wishful thinking.

The entire slack in the US Federal budget was blown in response to a virus that has a kill rate of far less than 1%, leaving nothing left for a real emergency. Once the head rush from this spending is over, I think if they spend any more money without a market crash the path of least resistance for long dated treasury rates could finally be higher. That will be very negative for the stock market, not just a bit negative, in my opinion.

[aeden]

Well they say inflation was 1.5 percent from the drill down of that analysis.
Rosenberg absolutely eviscerated that notion straight up on asset managers.
Not all people eat digital for breakfast. I have done OK avoiding tech point blank
from beta views who actually make products. This is about the politics of envy
from mental patients who cannot fathom other views. Some have conveyed clearly
the tiny bubbles under attack. Actually the level of hate we see from a percentage
of the base is honest to God possession from a classical definition and we are not even discussing
the sixty one percent from the informal economy traumatized from the swamp cult useful idiots.

[Higgenbotham]

A few have noted that China is buying a massive amount of commodities. There have been 2 explanations for this.

1. China, in response to the way the US spent money as result of the coronavirus, is getting rid of treasuries and dollars any way they can.
2. China is preparing for war.

The US has been mishandling its finances for years. Moody's downgraded US debt all the way back in 2011.