The end of the Obama Trump Great Bull Market

[noonereal]

On 10/8/2018 at 7:20 PM, DarterBlue said:

The end of the Obama Trump Great Bull Market

should Trump really be given a byline on the great bull market? 

The market is dead flat this year and it's well accepted that any market in the 1st year of a Presidency is really the result of the prior administrations work.

[GrecoRoman]

3 minutes ago, noonereal said:

should Trump really be given a byline on the great bull market? 

The market is dead flat this year and it's well accepted that any market in the 1st year of a Presidency is really the result of the prior administrations work.

This exactly.  Huge mistake of his to embrace what he was given. He should have called it was - an unprecedented  cheap money bubble fueled by stealing wealth from future generations through debt  monetization.  The string of Clinton - Bush - Obama - Trump has been horrendous....seems to get worse the further we go into the future.  Such a far cry from what we once were

[noonereal]

Prior to the October 1987 crash, 

"There were some warning signs of excesses that were similar to excesses at previous inflection points. Economic growth had slowed while inflation was rearing its head. The strong dollar was putting pressure on U.S. exports. The stock market and economy were diverging for the first time in the bull market, and as a result, valuations climbed to excessive levels, with the overall market's price-earnings ratio climbing above 20. Future estimates for earnings were trending lower, but stocks were unaffected."

Sound familiar? 

[DarterBlue]

6 minutes ago, GrecoRoman said:

This exactly.  Huge mistake of his to embrace what he was given. He should have called it was - an unprecedented  cheap money bubble fueled by stealing wealth from future generations through debt  monetization.  The string of Clinton - Bush - Obama - Trump has been horrendous....seems to get worse the further we go into the future.  Such a far cry from what we once were

He could not resist. DJT employs day trading tactics to his politics. It is one of the reasons he is forced to employ so many falsehoods, as he has to find ways to either justify earlier positions or to claim they were never his to begin with. 

[GrecoRoman]

1 minute ago, noonereal said:

Prior to the October 1987 crash, 

"There were some warning signs of excesses that were similar to excesses at previous inflection points. Economic growth had slowed while inflation was rearing its head. The strong dollar was putting pressure on U.S. exports. The stock market and economy were diverging for the first time in the bull market, and as a result, valuations climbed to excessive levels, with the overall market's price-earnings ratio climbing above 20. Future estimates for earnings were trending lower, but stocks were unaffected."

Sound familiar? 

Good one - it's eerily similar.  And this is missing the trade and budget deficits prevalent at the time which Trump is setting records on (not in a good way)  Of course, in 1987 we were still a creditor nation with only a 30% debt to gdp and a ton of savings - we're a basket case compared to that now

[GrecoRoman]

2 minutes ago, DarterBlue said:

He could not resist. DJT employs day trading tactics to his politics. It is one of the reasons he is forced to employ so many falsehoods, as he has to find ways to either justify earlier positions or to claim they were never his to begin with. 

Yea exactly,  But he actually said the market was a bubble and the unemployment rate was a fraud as a candidate then embraced them once they were his.  KInd of like when repiblicans are deficit hawks when dems are in then blow up bigger deficits when they're in (not that I support the dems lol but I'm not repub either)

[DarterBlue]

17 minutes ago, noonereal said:

should Trump really be given a byline on the great bull market? 

The market is dead flat this year and it's well accepted that any market in the 1st year of a Presidency is really the result of the prior administrations work.

Yes, for one of the best years, 2017, occurred under his watch. Presidents in general get way too much blame and praise for what happens on Wall Street. And Wall Street, though it is supposed to be a discounting, forward looking mechanism, often falls into the trap of employing the same day trading tactics that DJT does in his Presidency (see post above). Thus, policies that must be rationally seen as disastrous in the long run are often cheered on the street, while sounder policies from an economic standpoint are ignored, if not punished.  

[GrecoRoman]

6 minutes ago, noonereal said:

Prior to the October 1987 crash, 

"There were some warning signs of excesses that were similar to excesses at previous inflection points. Economic growth had slowed while inflation was rearing its head. The strong dollar was putting pressure on U.S. exports. The stock market and economy were diverging for the first time in the bull market, and as a result, valuations climbed to excessive levels, with the overall market's price-earnings ratio climbing above 20. Future estimates for earnings were trending lower, but stocks were unaffected."

Sound familiar? 

And 1987 was actually the year that gave us the PPT https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets  who has been able (through the Fed) to provide the markets with the ultimate put creating the false sense in US markets that :"the market always comes back"  The market can always come back to extent that politicians are willing to mortgage our childrens future by endlessly borrowing new money into the system.  

KInd of ironic that a supposed free market guy (Reagan) signed into existence an agency who openly admits their construct is to prop us markets. This is when the wealth gap and wall st really picked up steam as a percentage of gdp which clinton then took to the next level by repealing Glass Steagal.  Wall St and banking were just a sidebar utility in our economy for so long now they are foundtion smh cant work.  

[DarterBlue]

32 minutes ago, GrecoRoman said:

Well in my opinion the mistake was lowering rates to begin with but that's a whole separate discussion. They should raise rates way above the inflation rate as we need to encourage savings and discourage debt.  This of course would cause a terrible market and real estate crash but it would simply be bringing the prices of those things more in line with actual economic production and median wages which would heal us over the long term. (short term pain for long term gain)  Personally, I dont think they'll be able to get rates more than 50bps higher without starting the crash.  The wildcard here is do they invert the yield curve with the next couple hikes  or do the cause yields to spike pushing the 10 year north of 3.5% which I know we cant handle - either way it will be a deflationary or inflationary crash but one is happening within Trump's term.   My bet - they'll back away from further rate hikes and should be able to prop the market up as a result but the dollar will tank. (I think this is already being set up by Trump putting presure on them.  Most people won't even know what is happening or why - they'll think things are still ok because the market is going back up and will think prices are so high because we have a "booming economy"

You know, I though that when Powell was first appointed to chair the Fed. However, my beliefs have evolved. I think he actually does not want to be blamed for the mother of all asset bubbles, especially since he did not create it to begin with. Hence, my short positions in the QQQ and SPY Puts. Of course, I may be totally wrong as people with the character of a Paul Volcker seldom head important institutions such as the Fed anymore. 

In any event, it should be very interesting to see what happens over the next six to twelve months. 

[DarterBlue]

5 minutes ago, GrecoRoman said:

And 1987 was actually the year that gave us the PPT https://en.wikipedia.org/wiki/Working_Group_on_Financial_Markets  who has been able (through the Fed) to provide the markets with the ultimate put creating the false sense in US markets that :"the market always comes back"  The market can always come back to extent that politicians are willing to mortgage our childrens future by endlessly borrowing new money into the system.  

KInd of ironic that a supposed free market guy (Reagan) signed into existence an agency who openly admits their construct is to prop us markets. This is when the wealth gap and wall st really picked up steam as a percentage of gdp which clinton then took to the next level by repealing Glass Steagal.  Wall St and banking were just a sidebar utility in our economy for so long now they are foundtion smh cant work.  

Ah, yes, capitalism never works in practice the way it is expressed in theory. We all love free markets unless they disadvantage us. The government propping up the stock market can work for a long time, till it don't work no more. The case of Japan which saw its bull market highs in December 1989 comes to mind. Nearly thirty years later, it has never ascended to its 1989 highs again. That should be a bright red light to all the buy and holders, but most such individuals are ignorant of market history and, in any event, would say that's Japan and not the USA. 

History is replete with the follies of man, and I fear we are heading paths that will lead to a very bad ending. At some stage, no amount of government engineering can paper over the collective follies of decades. 

[GrecoRoman]

3 minutes ago, DarterBlue said:

You know, I though that when Powell was first appointed to chair the Fed. However, my beliefs have evolved. I think he actually does not want to be blamed for the mother of all asset bubbles, especially since he did not create it to begin with. Hence, my short positions in the QQQ and SPY Puts. Of course, I may be totally wrong as people with the character of a Paul Volcker seldom head important institutions such as the Fed anymore. 

In any event, it should be very interesting to see what happens over the next six to twelve months. 

Great point about Volcker - last good one we had.  

I think Trump bashing Powell is all in concert with the Fed.  I think the Fed's worst nightmare is the market figuring out they cant normalize without the markets crashing.  If they reverse course now them and Trump know people are dumb enough to think it was because of Trumps pressure which would only show the Fed is not independent which they know most people in the financial world already know. 

[BigDrop]

1 minute ago, DarterBlue said:

Ah, yes, capitalism never works in practice the way it is expressed in theory. We all love free markets unless they disadvantage us. The government propping up the stock market can work for a long time, till it don't work no more. The case of Japan which saw its bull market highs in December 1989 comes to mind. Nearly thirty years later, it has never ascended to its 1989 highs again. That should be a bright red light to all the buy and holders, but most such individuals are ignorant of market history and, in any event, would say that's Japan and not the USA. 

History is replete with the follies of man, and I fear we are heading paths that will lead to a very bad ending. At some stage, no amount of government engineering can paper over the collective follies of decades. 

Your comment about the Japanese market is well taken.  And Cisco, GE and a whole lot of other foundational companies.  

[GrecoRoman]

1 minute ago, BigDrop said:

Your comment about the Japanese market is well taken.  And Cisco, GE and a whole lot of other foundational companies.  

Yea its a good point although Japan is a huge creditor nation as is China so the internal financial engineering doesnt have near the consequences it will for us in being a larger debtor nation than all other debtor nations combined.   Of course, as long as global trade and oil are settled dollars we'll be ok but thats coming to an end fast.  All we have left is forward military projection to scare the s*** out of anyone who tries to get away from the dollar

[DarterBlue]

4 minutes ago, BigDrop said:

Your comment about the Japanese market is well taken.  And Cisco, GE and a whole lot of other foundational companies.  

This happens to individual companies all the time. The poster child of this is RCA which attained its all time high two months before the 1929 crash and as of when it was taken over in 1986 never again surmounted that pinnacle. To national stock markets, it happens far less often. That is why having some level of diversification is desirable if you hold individual stocks for the long term. However, to my way of thinking, the number necessary to obtain decent diversification is way less than typically advertised. Provided you make your picks from several, industries that are not directly related, I feel that a decent (probably sufficient) level of diversification can be obtained owning as few as ten stocks. 

Regarding overall markets, if you are within ten years of retirement, at the very least a buy and hold approach must be modified, if not abandoned. If you consider it carefully, ten years is not an awfully long time and a bad bear market close to retirement can do irreparable damage. 

[NYHSFAN33]

13 minutes ago, DarterBlue said:

Ah, yes, capitalism never works in practice the way it is expressed in theory. We all love free markets unless they disadvantage us. The government propping up the stock market can work for a long time, till it don't work no more. The case of Japan which saw its bull market highs in December 1989 comes to mind. Nearly thirty years later, it has never ascended to its 1989 highs again. That should be a bright red light to all the buy and holders, but most such individuals are ignorant of market history and, in any event, would say that's Japan and not the USA. 

History is replete with the follies of man, and I fear we are heading paths that will lead to a very bad ending. At some stage, no amount of government engineering can paper over the collective follies of decades. 

Good points.  Your Economic theory is on point.  However, (and feel free to correct me if I am wrong in any way) practically, there is not much other rational application than “proping up” the notion that the market will only bounce back.  Short of everyone stashing their retirement savings and kids college funds under their mattress, there are really no other alternatives than investing (401k, 403b, 529plans, mixed mutual, bond, and stock funds, etc).  Without a certain level of confidence the majority of the population would not really be able to financially plan, correct?

[ohio]

52 minutes ago, GrecoRoman said:

Yea just think - the Feds mandate has always been price "stability" yet in 2012 after 3 rounds of QE they adopted a 2% inflation target.  I always thought stable meant "remaining the same" which would make sense > Stable or falling prices raise living standards and are the signs of a productive economy.  Well now "stable" somehow means rising by 2%?!?  Obviously they're trying to get us comfortable with inflation and sell it as a good thing because they need it for asset prices and to repay gov't debt.  Problem is this worsens the wealth divide because inflation can''t stay parked in asset prices it trickles to consumer prices so those without assets who are dependent on wages/ fixed income are screwed. 

Question for you.  How much higher can the FED go or should go next year? Any guesstimate will do

Well in my opinion the mistake was lowering rates to begin with but that's a whole separate discussion. They should raise rates way above the inflation rate as we need to encourage savings and discourage debt.  This of course would cause a terrible market and real estate crash but it would simply be bringing the prices of those things more in line with actual economic production and median wages which would heal us over the long term. (short term pain for long term gain)  Personally, I dont think they'll be able to get rates more than 50bps higher without starting the crash.  The wildcard here is do they invert the yield curve with the next couple hikes  or do the cause yields to spike pushing the 10 year north of 3.5% which I know we cant handle - either way it will be a deflationary or inflationary crash but one is happening within Trump's term.   My bet - they'll back away from further rate hikes and should be able to prop the market up as a result but the dollar will tank. (I think this is already being set up by Trump putting presure on them.  Most people won't even know what is happening or why - they'll think things are still ok because the market is going back up and will think prices are so high because we have a "booming economy"

Sounds like manipulation at its finest. If the market does crash irregardless, I wonder if they will start to lower rates again even if inflation rises.

The Federal Interest on debt payment is about 7%, so I'm assuming that further interest hikes would increase the debt interest over 7%.  That would be another reason to keep interest rates low.

[DarterBlue]

1 minute ago, NYHSFAN33 said:

Good points.  Your Economic theory is on point.  However, (and feel free to correct me if I am wrong in any way) practically, there is not much other rational application than “proping up” the notion that the market will only bounce back.  Short of everyone stashing their retirement savings and kids college funds under their mattress, there are really no other alternatives than investing (401k, 403b, 529plans, mixed mutual, bond, and stock funds, etc).  Without a certain level of confidence the majority of the population would not really be able to financially plan, correct?

Correct. And in a healthy economy, with sound economic policies, saving and investing in debt and equity instruments are the right thing to do. Unfortunately, to my way of thinking, and I may be being overly pessimistic, we have not followed sound principles over the last 30+ years. And this is regardless of the occupant of the White House or which party has controlled congress. It is as if our leaders have become drunk on the notion that we can follow the paths of the Italy's and Greece's of the world and not eventually pay the piper. 

I believe, and from reading his posts, it seems that to at least a degree, GrecoRoman  believes that we have gone so far down our current path that there is no painless way to extricate ourselves from it. If we are right, then doing the normally sound thing (retirement plans, etc.), may not provide the level of security one would normally expect. 

[GrecoRoman]

5 minutes ago, ohio said:

Sounds like manipulation at its finest. If the market does crash irregardless, I wonder if they will start to lower rates again even if inflation rises.

The Federal Interest on debt payment is about 7%, so I'm assuming that further interest hikes would increase the debt interest over 7%.  That would be another reason to keep interest rates low.

I wonder if they will start to lower rates again even if inflation rises.

yes, not enough people will recognize it - politicians just blame rising prices on "greedy corporations" even though corporate margins would be shrinking because we'll be in stagflation (just think the 70's - I think that is exactly where we're headed but this time we don't have Kissinger to bail us out of the inflation with another petrodollar agreement)

[noonereal]

10 hours ago, DarterBlue said:

Yes, for one of the best years, 2017, occurred under his watch. Presidents in general get way too much blame and praise for what happens on Wall Street. And Wall Street, though it is supposed to be a discounting, forward looking mechanism, often falls into the trap of employing the same day trading tactics that DJT does in his Presidency (see post above). Thus, policies that must be rationally seen as disastrous in the long run are often cheered on the street, while sounder policies from an economic standpoint are ignored, if not punished.  

what about what they taught me in college, how  a president has very little impact on the first year and it's really the out going President's market. 

It was the tax cuts that were to spur the market and they did not take place till this year. They had zero impact on 2017. (no impact on this year either BTW) They will cause the same impact down the road that Ray-gun's did in 1987. 😉

OK, I know what you are saying, and I agree. The market soared in 2017 because people invested on speculation that Trump would create an environment of enhanced investor profit without corresponding underlying business growth. They bought into the market to grab the cash that was slated to pay our bills. Now what?  

[DarterBlue]

18 minutes ago, noonereal said:

what about what they taught me in college, how  a president has very little impact on the first year and it's really the out going President's market. 

It was the tax cuts that were to spur the market and they did not take place till this year. They had zero impact on 2017. (no impact on this year either BTW) They will cause the same impact down the road that Ray-gun's did in 1987. 😉

OK, I know what you are saying, and I agree. The market soared in 2017 because people invested on speculation that Trump would create an environment of enhanced investor profit without corresponding underlying business growth. They bought into the market to grab the cash that was slated to pay our bills. Now what?  

Anticipation of the corporate tax cuts helped stocks significantly in 2017.

Now what? I think the game, for now, is over. Hence, my owing 32 Put Options, 16 each on the S&P 500 and NASDAQ 100. I have been wrong about this before, most notably in late January and February of this year. But, that said, I think I am on the right side of this trade. 

[noonereal]

1 minute ago, DarterBlue said:

Anticipation of the corporate tax cuts helped stocks significantly in 2017.

 

That is what I said. 

The rise was not from expanded profits from toil but by anticipation of a profit increase by politician. Not a healthy way to increase profits hence corrections and collapses always follow. 

[DarterBlue]

3 minutes ago, noonereal said:

That is what I said. 

The rise was not from expanded profits from toil but by anticipation of a profit increase by politician. Not a healthy way to increase profits hence corrections and collapses always follow. 

Exactly. But you still have to give Trump credit for extending the bull market for a year and eight months. Now the last eight months of it were a very volatile, choppy affair, but the market still worked its way higher. 

Hopefully, for me, not the country, the gig is up and we are heading much lower. I went short not out of spite for DJT and the current politics of the country, but because I think it's a significant money making opportunity. 

[noonereal]

19 minutes ago, DarterBlue said:

Exactly. But you still have to give Trump credit for extending the bull market for a year and eight months. Now the last eight months of it were a very volatile, choppy affair, but the market still worked its way higher. 

Hopefully, for me, not the country, the gig is up and we are heading much lower. I went short not out of spite for DJT and the current politics of the country, but because I think it's a significant money making opportunity. 

year and 8 months???? Where are these 8 months?????

We are flat this entire year, 10 months. 

[DarterBlue]

5 minutes ago, noonereal said:

year and 8 months???? Where are these 8 months?????

We are flat this entire year, 10 months. 

The DOW, NASDAQ, S&P and Russell all recorded all time highs in August and September. As such, as of the end of August the Russell and NASDAQ were at their peak points for the bull cycle. The S&P and DOW made theirs in September (for the DOW, actually October 2). So, technically, this bull market did not see its end till late summer/early fall. 

The thing is that Wall Street does not always respond to economic conditions they way you would expect rational markets to, at least in the short run. Thus, what may be bad for the overall economy may be good for Wall Street and vice versa. So, the corporate tax cuts, though bad to my way of thinking, particularly this late in the economic cycle were good for Wall Street in the short term. 

Another example would be Republicans retaining both the House and Senate, which would probably be good for Wall Street in the short run. But as Keynes once said, "In the long run we are all dead." So, go figure. 

[noonereal]

LOL, oh come on. The DOW climbed back to where it had been in January. That equally FLAT.