Barely above year ago levels. Anyway survivorship bias and the fact most of the crowd most of the time is bullish pushes markets higher and higher over time. This in spite of the damage occasionally done by the clueless right/left or a party of one named tRump.
Peter Navarro, top economic adviser on China, fabricated economic source alter ego
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If you're willing to run deficits up half a billion dollars a year in a already booming economy with a massive tax cut you can certainly achieve that. Remind me, when did you stop caring about deficits again?Then why is the S&P right at record highs? Consumer confidence at record highs. Unemployment at record lows. Sounds like a lot of damage.
Ok, so still higher than a year ago. That survivorship bias was not enough to lift the market in 2008. The previous quote was: "This guy has done more damage to the US economy than the financial crisis of '08."
What statement did I make that led you to conclude that I no longer care about deficits. Wait, why am I holding gold again...
You're not turning into an Austrian economist are you? So then why is the Bloomberg dollar index near all time highs? ...I agree with you that no one seems to care about the debt and the tax cuts have had a stimulative response...no doubt. However, so have pro-growth (trade wars aside) business-friendly policies, permanent low interest rates, permanently-accomodative Fed, and corporate buybacks enabled by repatriation.
I run a business, I'm not sure what these "pro growth business friendly policies" are aside from the tax cuts which will come back to bite us without a doubt. All I've seen is a lot of smoke, some action that hurts everyone, then a supposed "save" that puts us right back to where we were before he broke it...NAFTA is a prime example of that that I experienced first hand. Caused billions in biz dev losses to American companies due to the uncertainty and at the end of the day functionally changed nothing.
I actually think all the policies you mentioned, put in place and kept in place at the height of an economic cycle, are pure lunacy and the economic equivalent of throwing gasoline on a fire. When you're at the height of a bubble, pumping it up even more just means the inevitable correction will be that much more painful. Heck, even the goat herders who wrote Genesis understand that you stock up in the rich years for the 7 lean years, exploding the deficit at the height of a boom is just idiocy.
In serious answer to your question on the dollar index, I honestly don't know. I lost a bit of money back in the 2010 timeframe when I was sure that QE was going to cause inflation and invested based on that, and here we sit in 2019 with QE whatever number we're on and very mild inflation. I'll admit that's a mystery I probably won't know the answer to until 10-25 years from now, but the effect has certainly spanned very different administrations and congresses so I'm not sure they are having much influence one way or the other on it.
I agree with you on that. We had almost a decade of QE since the last financial crisis and ZIRP policy for about 7 or 8 years after. Europe, Japan, and other parts of the world went NIRP and I think there's something like $15-17T worth of negative yielding govt bonds out there last time I checked. And look what happened last year at this time when the Fed tried to "normalize" rates. They couldn't. Now the S&P is at record highs and expecting another Fed rate cut in a week or two. We never got close to normalizing rates. I could go on and on...but long term, this isn't good.
As far as the pro-growth policies, at least Trump is not advocating implementing China-first policies as many of the Dem candidates are currently doing about breaking up the banks and tech firms. The only entity that benefits from those policies would be China. Unlike Bernie, he's also not talking about killing health care companies like UNH, CVS, and ANTM...and whether you like it or not, he's not out to kill fossil fuels. I'm serious that if we woke up tomorrow and the future of the Dem party, AOC, suddenly became president for the next 4 years, the market would not open. If it did, it would be down at least 40% within a week or two. So by "pro-growth", I guess I could have rephrased that as not intent on destroying major sectors of the market.
I also agree that the corporate tax cuts are probably only temporary. Removing them would be priority #1 if Warren gets into office. So then whatever the markets gained due to that would simply be reversed...except for lost revenue of course.
I've heard the dollar is strong simply due to supply and demand. There's a strong demand for dollars around the world. I think it's also due to the fact that US treasuries are the best safe yield around. So that alone creates a need for dollars. There's more to it than that and I need to read up on it. I also thought QE would lead to inflation around 2009 / 2010, but surprisingly it did not. I suspect that the reason it did not is the same reason why many don't seem very concerned about government debt. I suspect it's one of those things that doesn't matter until it does. As long as not too many people panic, everything will be fine.
I'd broadly agree with you. I might point out that AOC wouldn't exist if Romney or Kasich or even Pence or Cruz was President, and certainly none of what you listed as potential democratic policies would have happened if Clinton was President, except maybe a move away from reliance on fossil fuels which I see as purely positive from an economic and national security perspective (where are we "bringing home" those troops in Syria to again, the country where 15 of the 19 9/11 attackers came from to protect oil facilities? Wouldn't it be nice if we were as reluctant to put our folks in harms for for them as for say, South Sudan because they didn't have the power of oil over us?). They're a reflexive reaction to the excess of Trump and just one more reason he's bad for the country. Republican's refusal to stand up to him is even more shameful since that specifically has led to the possibility of the AOC wing of the democratic party taking over all 3 branches of government in a year. At some point they need to put country over party or their party will cease to be a realistic counterweight which I think is bad.
There's a school of thought that MMT will resolve the deficit problem somehow. It's unclear to me as deficits have downstream consequences, dollar valuations etc. What are your thoughts re: MMT?If you're willing to run deficits up half a billion dollars a year in a already booming economy with a massive tax cut you can certainly achieve that. Remind me, when did you stop caring about deficits again?
Since you asked! MMT in general is predicated on the idea that "Countries that borrow in their own currency......" I think the biggest problem is that phrase, "borrow in their own currency". Clearly MMT doesn't work for Argentina or Venezuela or Zimbabwe, of course because no-one is willing to lend to them in Pesos, Bolivars, or Zimbabwean dollars and the MMT folks are the first to agree with that. Yet in 1950 Venezuela had the 4th highest GDP per capita in the world and I'm guessing at the time could borrow at will in their own currency. Sometime between then and now they lost that ability, which basically kicked them out of all the magical things MMT allowed and they fell rather hard and fast, probably harder and faster than their neighbors who never got to use that MMT magic. So my vastly oversimplified thoughts on MMT are that as long as "Countries that borrow in their own currency...." holds for your country you probably do get a lot of that MMT magic. But the magic comes at the price that every time you use it you come closer to not being a "country that can borrow in their own currency" and once you fall off that cliff it really hurts. Kind of like not putting the Lord of the Rings ring on too many times if you can help it, but the temptation to do so is oh so great!