It being a certainty is wrong, but there is a huge differential between the growth of total market value and the lackluster fundamentals, GDP growth, and jobs numbers.
To put another way, there's a lot of "potential energy" being built up in the markets right now. That doesn't necessarily mean they'll pop like a bubble - but there's really no precedent for them to continue rising.
It could be true that the market can continue to grow well past 15% above fundamentals for the indefinite future. But the more it goes up, the more improbable it becomes.
If you've flipped heads three times in a row, you're right that I would look foolish saying the next one can't be heads. But at the same time you cannot keep flipping heads forever.
true on all accounts but comment like OP made is ridiculous. to say “for sure XYZ will happen to the market by this date” is childish/funny/insane. to say “eventually” there will be a correction is similar cause of course there will be. so all this talk about bubble and other shit is just nonsense all around
Reminder that economist have predicted 9 of the past 7 recessions.
General handwavy statements like "there's a bubble" aren't worth paying attention to. Ones with specific timelines attached to it (like the one above, or the article we're commenting on), are worth listening to a bit more, but unless they have the funds to back it up (like Michael Burry has put down here), it's still hot air.
Palantir has a market cap of $400B+ and Nvidia is $5T. This short translates to 0.225% and 0.00374%. This mostly translates to a thesis that the stocks would “probably” go down a bit than a bet that predicts recession.
It seems like the economy is on a “K” shaped flywheel. How much worse can the economy get for the regular worker before the systems just pops? We’ve put so much speculation into an AI/tech salvation that seems premature, especially when you look at ROI vs depreciation timelines.
I’m not sure what timeline to place on that but there has to be a floor for how bad it can get for the regular man.
Shit is just expensive. Young people can’t buy houses, good jobs are drying up, and inflation isn’t stopping.
I'm sure the Fed chart is accurately measuring what it's measuring but when I was a kid in Southern California it was normal to buy a house and raise kids on a single teacher or construction worker salary. That has become nearly impossible over the past couple decades. Many others have seen similar changes in their own areas and I don't think they're being crazy when they say it has gotten much harder to finance a normal household on a normal salary.
I don't know what the disconnect is with that chart and people's observations. Is that chart controlling for number of incomes and hours worked? If a household income increases by 20% because the members are working a combined 80% more hours that's not great. Category differences in inflation might be another factor. Sure TVs and other niceties are a lot cheaper, but essentials like housing and medical care eat up a huge portion of most budgets.
Slightly overestimates. Alternatives like Truflation show it lower.
You may be thinking of Shadowstats, which is run by a crank who just takes the official numbers and adds a number he made up to them.
I don't know why cranks always think inflation is secretly higher. Deflation is a lot worse than inflation, so if you're a doomer, believing in deflation would be more effective.
The idea that CPI sucks is far from a conspiracy theory... not sure why you're trying to color it like that.
The problem is that the error integrates over time, which IMHO is why graphs like that seem to suggest our standard of living is higher than ever... when a conversation with anyone at a local bus stop will tell you the exact opposite.
It's almost impossible for the standard of living to not be higher than ever. That becomes true if you assign any value at all to new medical discoveries. Like, people have been cured of type 1 diabetes in the last year.
That chart for sure includes higher portion of double income households (because now more women are in the workforce than in the 80s). This reconciles your view with the Fed graph
Households can have more than two incomes - roommates, children who work, grandparents etc.
In practice, household sizes have gone down over time as more people live on their own, which means the income graph is lower than it otherwise would be.
As for dual income families, they're mostly a good thing that happens when women can afford to pay for childcare. That is, that book The Two-Income Trap was mostly false. This is part of the topic of Claudia Goldin's economics Nobel, the other part being that the gender wage gap is caused by motherhood interrupting women's careers.
>> Reminder that economist have predicted 9 of the past 7 recessions
Historically I think the reality has been the opposite of that, economists have been extremely reluctant to make predictions of an oncoming recession. This was certainly true during the great recession when economists were denying that a recession was coming even after one had actually started. That is to say, economists could not even predict the present.
There are a few economists who are predictably gloomy ("permabears", I suppose Nouriel Roubini would qualify) and I guess now there is political pressure to predict a recession anytime the other political party is in power, but from my perspective, if mainstream economists are predicting a recession, that likely means the recession is almost over.
Intervening as if there were a recession inminent when it is not also has harms (the exact same as the harms when recession interventions are maintained too long or employed too intensely, in terms of inflation, etc.), so I wouldn't agree that your central bank is bad if you happened to have guessed right once, but only if you have a demonstrably accurate objective method.
It actually appears that the alternative harms aren't as bad; that is, recessions aren't caused by prior expansions and we don't get one by "deserving" them.
Is there a way to predict when central banks aren't "good enough" then?
Point is, for a 100% positive case rate, I have to tolerate a 22% false positive rate. What exactly is the complaint here? Was this line of logic meant to make people who make these predictions look stupid or foolish somehow? To me, it mostly fails to.
He has no idea, I'm guessing it's wishful thinking, likely from a political partisan, or someone with a lot of dry powder trying to enter the stock market after a correction.
Political volatility and the dirty nasty hustle on the Trump/republicans' part that will precede the mid-terms. Combined with the general state of bizarre market bonanza of the past few months. It's a powder keg just waiting for a match.
