Des...I challenge you on two of these. SPX has tripled, but FED intervention/manipulation of unprecedented zero or near zero interest rates is the cause of this bubble...how else could a stock market make all time highs while having an economy that NEVER grows more than 2%? Earnings have also been manipulated, companies borrow money at low artificial rates and then buy back their stock.
Unemployment has dropped significantly, but what about the terrible labor participation rate...we have a ways to go...don't you think?
The economy sucks. It sucks balls. STIRs trade relative to growth.
A trading example. Traditional option arbitrage is a rates-trade. You short a box at 8.12% if LIBOR is trading at 8%. LIBOR at 0.50? The short box may be paying 0.52. There is no equity box trading at 8% in a 0.5% rate environment.
Rates are low bc the economy sucks. You have tech borrowing at 4% (capital mkts, priv placements) and organic tech growth of say, 10-12%. Again, it's simply a leverage play. Would you borrow at 4% if you could virtually guarantee that your personal trading would earn at least 12%?
Equity mkts trend on that leverage multiple.
STIRs and GDP are highly correlated. No, you're not going to have 5% STIRs with 2% growth. Some in the know would argue chicken or the egg. Regardless, QE has done nothing, systemically, to improve the economy or lending.
QE is criminal. I am on the record here railing against it. I probably have more that a dozen posts on this board w.r.t. the evils of QE/2/3...
https://www.elitetrader.com/et/threads/why-do-you-trade.294492/#post-4181678
I don't have the nominal monies spent on QE^n, but the gains in the domestic mkt caps have to be a 10, 20, 50 multiple of the Fed gravy train.
World capitalism has failed. No, I am not a socialist. The failure (labor part.) is a function of a mature global economy. Sure, there were a lot of decisions made to wreck it all, but all mature economies converge to service economies. The flight of corp capital is the last leverage play when productivity peaks in the face of global competition.
No awareness, so the only answer is Buchanan-like policies... which was critical to Trump's win. The problem is that the rest of the planet will not participate in this econ-Nationalism. We get shut out on imports from tariffs and nobody will be buying our shit out of retaliation. Not that we sell globally, anyway. Well, outside of pharma.
*** I have never been as short (deltas, long vola) as I am now. ***
.....