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Tue Jul 16, 2019, 10:15 AM

Are the equity markets chasing the dragon?

Seems like the market is in constant need of a stimulus in order to show a return, zero (or near zero interest rates), corporate tax cuts, stock buy backs, etc. When these massive stimuli go away, the markets seems to dawdle or even decline.

IOW, it's always chasing the next high.

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Reply Are the equity markets chasing the dragon? (Original post)
Yavin4 Jul 2019 OP
Calculating Jul 2019 #1
watoos Jul 2019 #2
Yavin4 Jul 2019 #3

Response to Yavin4 (Original post)

Tue Jul 16, 2019, 10:31 AM

1. It's because the market is basically a hyper inflated bubble right now

Have you seen how quickly stock prices rose over a short period of time? I'm not talking tech stocks/growth stocks either. Even well known industrial stocks like Boeing/Walmart/etc literally went up by 50-100% over a short period of time back in the 2016-2018 period. Why the heck would a stock like Boeing rise that quickly? Did the world suddenly need twice as many airplanes over a year or two? No, it was caused by Trumps corporate tax cuts. The problem is that's not a sustainable way to grow the stock market. All across the market stocks are at unsustainable highs. PE ratios are out of control and at historical highs. Trendy bubble stocks like BYND/SHOP/CMG/NFLX are all trading at ridiculous levels.

As a result of all this, we have a very overinflated market which needs CONSTANT help from the government/fed or it starts to deflate. Such a correction back to around DOW 20K would actually be healthy for the market in the long term, but that would be bad for Trump's reelection so he's having the fed do whatever it takes to keep this bubble from popping.

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Response to Yavin4 (Original post)

Tue Jul 16, 2019, 11:23 AM

2. Trump artificially inflated the market,

 

1.5 trillion in tax cuts, repatriation of offshore money for pennies on the dollar, the money was used to buy back stocks and raise CEO salaries, Trump also gutted regulations, when his tariffs hurt soy bean farmers he simply wrote them checks for billions of dollars.

Yes, he is pushing the Fed to lower interest rates to drop the dollar to encourage exports. The market is artificially stimulated at the expense of our record deficit which is over 1 trillion dollars a year and at the expense of our debt.

When was the last time the M$M mentioned our record deficit/debt?

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Response to watoos (Reply #2)

Tue Jul 16, 2019, 02:18 PM

3. "When was the last time the M$M mentioned our record deficit/debt?"

Debt/deficits only matter when a Democrat is president. All other times, it perfectly fine.

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