I think a better gauge of an economy, indeed judging the worth of a nation is not an arbitrary financial target hitting new highs, I believe that walking down a city street or driving down a country road and seeing happy, healthy people would be a measure of success for a nation, that doesn't seem to be the case. The reality of our country; city streets teaming with homeless and rural areas littered with boarded up stores and idle, unhappy, deprived folks. The DOW hits new highs, who cares, certainly not the millions without healthcare , millions who are food deprived or millions more who are scrambling for a job as a barista. I imagine they are highfiving in up scale bars in New York tonight, I hope they will give a thought to those less fortunate as they do. This nation up close and personal no longer looks like a success story.
4
A WEAK DOLLAR, losing value against the "basket" of 6 other currencies is undergoing an inflationary cycle. For imported goods, it takes 10% more dollars to buy what a dollar purchased on the sparsely attended Trump inauguration day. A date that will live on in infamy. Leave it to the Rattle Head, Bobble Head, Screws Loose Trumpenstein Monster to crow about the economic miracle of inflation that his failed administration has brought about in the US. When US voters start feeling the pinch in their purchasing power, their fury will be expressed at the ballot box in 11/2018. Can't come soon enough for me. Congress's failure to legislate anything at all, leave alone repealing and replacing Obamacare, enabling the desperately needed rebuilding of the crumbling infrastructure and reforming the tax code are goals that the failed GOP will not be able to budge on before 11/2018. Couldn't happen to nicer people. The GOP extremist splinter groups' civil war will continue to kill off the party politically. Only Trump would brag about snatching failure from the jaws of success, and truly believe his own puffery. Fortunately for the planet Earth, the Quack President Donald's Duck is roasted. His goose is cooked. Please pass the sauce from the gander.
4
The $ is down because Trump. The market's up because Obama.
This message was brought to you by CNN/NYT/MSNB/CBS/ABC/NBC/PBS/WaPo.
This message was brought to you by CNN/NYT/MSNB/CBS/ABC/NBC/PBS/WaPo.
3
Because it's a bubble about to burst.
1
What will it take to get rid of him?
I think a week of Dow losses in the 6 or 7 hundreds culminating in a closedown of the markets would do it.
What would bring this on?
Hard to say. Could be just about anything: more news about Russian collusion, the discovery of hitherto unknown videos taken in bedrooms and bathrooms of Trump hotels, proof positive of Mann Act violations, you name it, he’s been there.
How will we find this out?
He’ll tell us. Our best and maybe only hope is Twitter.
What do we do until this happens?
Enjoy the show.
We are in the process of obtaining a lesson in the civics of political and financial corruption, the likes of which none of us have ever received before.
I think a week of Dow losses in the 6 or 7 hundreds culminating in a closedown of the markets would do it.
What would bring this on?
Hard to say. Could be just about anything: more news about Russian collusion, the discovery of hitherto unknown videos taken in bedrooms and bathrooms of Trump hotels, proof positive of Mann Act violations, you name it, he’s been there.
How will we find this out?
He’ll tell us. Our best and maybe only hope is Twitter.
What do we do until this happens?
Enjoy the show.
We are in the process of obtaining a lesson in the civics of political and financial corruption, the likes of which none of us have ever received before.
4
"“Right now, the market thinks the future looks good..."
Is "the market" reading the same news that all of us are reading? Everything that led to a growing prosperity during the Obama administration (stimulus packages, for example) is being stripped away, and wealth is being concentrated in the hands of fewer and fewer. This isn't sustainable.
Is "the market" reading the same news that all of us are reading? Everything that led to a growing prosperity during the Obama administration (stimulus packages, for example) is being stripped away, and wealth is being concentrated in the hands of fewer and fewer. This isn't sustainable.
5
Animal spirits, or a bubble.
Keynes called it animal spirits, Greenspan called it irrational exuberance.
1
The market's surge means nothing until worker's wages rise. Until average working class Americans figure that out, and realize that all of the money is going from their pockets to the pockets of the wealthy, nothing is going to change. This bubble will burst, just as every other market bubble has burst. Small investors will get burned in the fall out. Hedge fund managers, and big investment bankers will make a killing. That is the new American economy.
5
Financial markets could be entering the final, crackup-boom phase of an aged bull market. Animal spirits and greater-fool strategies drive prices. In this phase share prices are determined by supply and demand for shares which can become somewhat disconnected from intrinsic values of underlying businesses.
That said, this phase is where the most money can be made.
That said, this phase is where the most money can be made.
In 40 years of investing, this is a first for me. A litany of recriminations and anger when the market hits 35 new highs over a six month period. Personally, my portfolio will be most happy to thank anyone whom the wise readers of the New York Times wish to credit. Thank you, president (fill in the blank)!
1980 DOW at 963, thriving middle class. 2017 DOW at 22,000, shrinking middle class, families can't afford homes, healthcare or college. Wall Street drove Main Street into bankruptcy. Made trillions outsourcing jobs and industry. When that dried up they sold fraudulent home loans. Taxpayers paid trillions to rescue them. Today they manipulate stocks with a click of the mouse and control the Execeutive Banch. Profits over people and country.
6
You realize, of course, that the market's rise cannot continue indefinitely. Not gonna happen, never has, never will.
5
Ah, the euphoria of going up, up, up: be fearful when others are greedy. Period, exclamation point.
3
In the "Obama accomplishments" discussions, one of his major accomplishments is always the big stock market advance.
But with Trump's stock market advance, all I am seeing posted here is about how the Top 1% owns X% of the stock market, the Top 10% owns Y% of the market, and the bottom 50% owns Z% of the market. And that's not fair.
Obama stock market up - great. Trump stock market up - terrible. And I'm not surprised.
But with Trump's stock market advance, all I am seeing posted here is about how the Top 1% owns X% of the stock market, the Top 10% owns Y% of the market, and the bottom 50% owns Z% of the market. And that's not fair.
Obama stock market up - great. Trump stock market up - terrible. And I'm not surprised.
2
Obama inherited a disastrous situation, an economy in free-fall.
Trump inherited the fruits of the Obama administration's stable hand.
That's why.
Trump inherited the fruits of the Obama administration's stable hand.
That's why.
1
Simply ppl are dumping the dollar - lost confidence in fiduciary stability of the US w/Trump at the helm. Good for big corps, not so good for little ppl.
1
Great article, not like those crazy politico volumes, concise and very informative
1
Thank you to Dear Leader Don!!
With the Great Helmsman,
the dow has hit an unimagined high.
And unemployment has fallen from 40% during his campaign to under 5%.
The economy is growing at 4% as promised.
Manufacturing is returning to the Fatherland
and Carrier and Ford decided not ship jobs to China (just Mexico).
The Wall is well on its way to construction.
Health insurance is inexpensive and covers everything for how ever much it costs to provide coverage.
No bridges or tunnels have collapsed.
And the Great Showman has kept North Korea from developing a long range ICBM.
With Hillary still walking free
More promises to keep.
With the Great Helmsman,
the dow has hit an unimagined high.
And unemployment has fallen from 40% during his campaign to under 5%.
The economy is growing at 4% as promised.
Manufacturing is returning to the Fatherland
and Carrier and Ford decided not ship jobs to China (just Mexico).
The Wall is well on its way to construction.
Health insurance is inexpensive and covers everything for how ever much it costs to provide coverage.
No bridges or tunnels have collapsed.
And the Great Showman has kept North Korea from developing a long range ICBM.
With Hillary still walking free
More promises to keep.
"The retail investor has jumped in", in English that means people who shouldn't be gambling with what little money they have are seduced once more into thinking "it's different this time". Historically when the small investor has gotten in on the momentum play, which is possibly what is causing the market rise, it has been a signal to sell. There was an article in this months Economist concerning the rise of the market and pointing out that it had not been this expensive(P.E. ratios are very high) since 1929. That was the year of "The Crash" heralding the beginning of the Great Depression.
1
OK, so going to be my own harshest critic. If anything, low rates would result from greater savings -- a greater quantity of money sloshing around waiting to be loaned out at cheaper and cheaper rates. So there's that mistake. And... we've had slightly increasing real interest rates in the last couple years. (http://data.worldbank.org/indicator/FR.INR.RINR?end=2016&locations=U.... Increasing rates, according to a classical approach, would lead to a stronger dollar, which didn't happen. So, yeah. Thoughts?
Part of the answer is that while short term rates have risen, long term rates have remained flat. That's called a flattening of the yield curve. As long as long term rates remain at historic lows, money will flow to equities.
Long term rates have remained low because businesses would rather incur short term debt - as long as the difference in rates isn't significant. So there is greater demand for short to interim term debt, making it more expensive, but not relative to long term debt. Long term debt is riskier and usually pays a premium, but it isn't, so corporations are staying away.
At some point, something will give. Investors are overly interested in short term results (quarterly earnings) than the long run health of a company, bidding up stocks well above what they deserve.
Long term rates have remained low because businesses would rather incur short term debt - as long as the difference in rates isn't significant. So there is greater demand for short to interim term debt, making it more expensive, but not relative to long term debt. Long term debt is riskier and usually pays a premium, but it isn't, so corporations are staying away.
At some point, something will give. Investors are overly interested in short term results (quarterly earnings) than the long run health of a company, bidding up stocks well above what they deserve.
1
The big investors will keep the market going up and up to make Trump and his fellow Republicans look good so they can get their big tax cuts and destruction of regulations they don't want. If the tax cuts don't pan out, they will take their profits quickly and make money as the market sinks. If the tax cuts are passed, they will ride it up more and then make money as it sinks. The fact is the market is rigged in favor of the big investors. If you aren't a big investor, my advice is put your 401K money in a safe place for awhile.
2
One explanation for the weak dollar:
Real interest rates have been low because national savings have been declining (from personal savings rate to government deficits). Low real interest rates increases net capital outflow, which in turn increases the supply of dollars in foreign-exchange markets.
One explanation of the high stock values: wealth inequality.
Real interest rates have been low because national savings have been declining (from personal savings rate to government deficits). Low real interest rates increases net capital outflow, which in turn increases the supply of dollars in foreign-exchange markets.
One explanation of the high stock values: wealth inequality.
3
People want logic to explain stock market ups and downs but it's rarely possible to figure out exactly what driving things while they are going on.
This may be a bubble or not,it's likely that the consequences of rock bottom interest rates for so many years are yet to be fully experienced.Trump or not.
Investors should try not buy and sell based on emotions or political considerations as these certainly can cloud ones judgement.
It's normal for booms and busts to occur regularly in the stock market,one should have a well thought out plan to deal with them.A professional advisor may be helpful.
This may be a bubble or not,it's likely that the consequences of rock bottom interest rates for so many years are yet to be fully experienced.Trump or not.
Investors should try not buy and sell based on emotions or political considerations as these certainly can cloud ones judgement.
It's normal for booms and busts to occur regularly in the stock market,one should have a well thought out plan to deal with them.A professional advisor may be helpful.
2
Wall Street players make money if it goes up and if it goes down. The value of the dollar is not so in demand as it was. Russia, India, China, the Saudi's I understand have made a deal to buy oil in other currencies beside the dollar. And our economy is hallowed out, while we wallow in an trap set by the those with their biggest investment in an outdated energy source..fossil fuels and little national hope to get on with getting up to date with other energy sources. Look who is Secretary of State and what his last job was. Look at the divesting going on by the banks of unburned fossil fuels, yet too risky to let go too much. Money is leaving oil, though. No doubt. As always, wars make money. Doesn't matter who is fighting them either. Someone will make money on them, thus they are very popular.
3
Money is leaving oil, and for good. There's far more oil in the ground than anyone imagined - the problem is that buyers are shrinking for oil, turning instead to gas-fired electricity, and of course solar. This is happening slowly - and I would be surprised if oil ever gets beyond $60/barrel again.
This will hurt the Saudis and the Russians the hardest, it will never save Venezuela, with the highest oil reserves in the world, and actually helps the US as we have always, until recently, been a net importer.
Everything changes, and the big will fall. Maybe Tillerson just took the best job he could get.......
This will hurt the Saudis and the Russians the hardest, it will never save Venezuela, with the highest oil reserves in the world, and actually helps the US as we have always, until recently, been a net importer.
Everything changes, and the big will fall. Maybe Tillerson just took the best job he could get.......
1
Stock-price indexes and currency exchange rates are inherently unstable, meaning that their changes are not dependably related to "fundamentals" or anything that you could use to predict them. Saying that they're driven by "animal spirits" is as good as any other (non-)explanation, although animal lovers might take exception.
3
Neither you, nor I nor bugs bunny is able to predict in what direction the market will move tomorrow morning or next year. As soon as you intellectually grasp this concept and, further, can articulate why you are investing in stocks, my advice is to stick to cash bank accounts. You're not an investor.
2
I shifted my meager 401K assets out of the market for the most part. I see a big drop in stocks coming, and even if doesn't happen, I'm doing okay and I don't have to lose sleep over the circus that's occurring at the White House.
5
Or, it's as simple as inflation expectations having ebbed in the last few months.
Let's not overthink it.
Let's not overthink it.
2
Anyone who believes that the Dow will never drop below 20,000, or even down to 16,000, 17,000 with the next 'crash' is not being realistic. The pro's make money as the market goes up, and as it goes down. Retail investors usually pick up the losses.
1
In the immortal words of William Shakespeare in "Hamlet" - "There is something rotten in the State of Denmark" - or in this case, the U.S. financial system.
1
From what I have read, 53 percent of Americans have no money in the stock market, including retirement accounts. 62 percent of all US wealth owned by top 5 percent.
8
You can't have infinite expansion with finite resources.
8
The p/e ratio is about 35% HIGHER THAN historical average. This tells you stocks are overvalued and that alternative investments aren't competitive. Currency flight is worrisome because of default risks, but banks balance sheets are healthier certainly than 2006. We are stuck with equities as the default investment choice until the trillions in low interest bearing mortgage backed securities are liquidated. It will take a political crisis to destroy what safety net exists but we have the right guys in power to make that happen.
11
If 2008 didn't close the 'casino' down (or punish it in any meaningful way) nothing will; certainly not the current Daddy Warbucks running the show. Investors eyes have been rolling with $ signs like Scrooge McDuck ever since the kleptocrats came to power.
7
Regardless of the politics of all this, and the growth in the world economy, I am not sure how investors can look the P/E ratios and think that stocks are a good buy. The fundamentals just aren't there.
6
Meanwhile back at the swamp draining there is Sachs of Gold everywhere..
12
Market continuing on a record high pace, which started with Real President Obama, and despite the crooked amateur Trump. Beautiful.
3
Since interest rates have cratered for oh, I don't know, TEN YEARS, cash naturally flowed into stock markets, inflating values. Panicky idiots, not wanting to be left behind, bought in at the inflated prices, FURTHER inflating them. The only question is what the event will be that will start the sell-off. Trillions of non-existent dollars will "disappear" as the markets find their true level. Then we'll have to once again listen to the moaning of the greedheads as they blame everything except their own stupidity for the vaporisation of their assets.
13
the country is in the hands of half-wits and thieves.
9
if you had a pile of cash in a currency that now can buy more US dollars, then look at what now appear to be bargains on Wall Street, wouldn't you consider moving your funds to the USA? Consider that a lot of capital has taken root in the US, that maybe represents unjust enrichment, and your own government might move on you at any time, how about, if you can get away with it, buying USD right now? Time to pounce.
1
The Dow hit 22000 at an odd moment Tuesday, between 5 and 6 p.m. when comparatively few people are trading, and immediately retreated. This bears some investigation?
4
Those Scaramucci brokers are going to town with their poster boy as president! From what I've studied, the rich now get the most out of the Big Casino. To heck with the dollar value for the average citizen, especially if you have an immense amount of dollars. Duh!
3
Viewed as a commodity in a portfolio system, the dollar is subject to fads and fashion and the price pressure of derivatives on future performance. Oil and gold behave in a similar fashion when the hedgers place their bets on future value. All we can say is that the dollar is down because its commodity value dictates its position. Of course this is great for foreign capital looking to purchase real estate and other secure storehouses of value that the US has to offer. For those of us down in the bottom tranche (ie cash), we know too well the $150-$200 food bill every week that only a few years ago was $50 (not real inflation, my (bleep).
4
Things my father taught me:
1) Never confuse brains with a bull market.
2) A bull market may not help the small investor. When I told him that a rising time lifts all boats, he asked how the current administration had convinced me that I was in one of the boat.s
1) Never confuse brains with a bull market.
2) A bull market may not help the small investor. When I told him that a rising time lifts all boats, he asked how the current administration had convinced me that I was in one of the boat.s
10
Before we give credit to Trump for anything, he'll need to demonstrate the ability to formulate policy, understand the basics of economics and show that he is capable of reading complicated briefing material. Until he does, we'll just have to be glad that he inherited a very strong economy from Barack Obama. But "animal spirits"? If that counts as an explanation why don't we just say Trump pumped up the economy with a good dose of phlogiston.
3
but didnt the dow double while Obama was president? dont remember trump mentioning that!
4
The August 1 date on this article cannot be correct. The article mentions developments on August 2nd.
1
The forces that got the Dow to 22,000 have diluted the dollar. How else to compensate for this wealth barometer than cheapening the dollar to prevent even more absurd lofty levels. The dollar is far from reality. Isn't the pattern to attract every last dime for whatever reason, earnings, fed, China, and then it crashes, and everybody capitulates to make room for big players to pick up the pieces-cheap.
1
This is further proof that wall Street has nothing to do with Main Street.
3
Maybe the dollar is falling cause we owe 21 trillion and counting ... and unfunded liabilities into the future are some astronomical number.
Orange, NJ
Orange, NJ
7
Capitalism thrives on lies, exploitation and corruption.
How could Trump not be rocket fuel for the American economy?
How could Trump not be rocket fuel for the American economy?
5
Fear when others are greedy...
2
How about recognizing that the international purchasing power of stock market holdings is staying constant? It only looks like (ignoring taxes) that you've accumulated more wealth unless you only purchase goods made in America with only American materials. This is great?
Despite what's being said about the four-point.whatever unemployment rate, there are still plenty who have fallen through the cracks, unaccounted for. Those who have portfolios and/or IRA's who have been forced to live off of them, because of everything from specific job availability, to ageism, have to be concerned, if the economy tanks again.
I, for one, am someone who not only fell through the cracks, I'm well past the "age of discretion," and if we have another recession like the last one, I'll have to live in a refrigerator box on some beach.
I, for one, am someone who not only fell through the cracks, I'm well past the "age of discretion," and if we have another recession like the last one, I'll have to live in a refrigerator box on some beach.
2
President Trump is nurturing the same economic outcomes that he ran against. The market continues to rise so that the haves have even more. Those angry unemployed workers still do not have jobs and with the retail shutdowns coming down the road that is likely to increase.
2
The NYT neglects to mention the most important reason stocks are soaring right now. The bottoming unemployment rate indicates that we are nearing the peak of this 8 year business cycle. The market always behaves the same as each economic cycle becomes long in the tooth; valuations become more and more extended as investors , with their notoriously short memories, succumb to the belief that this time high stock prices are justified.
Enjoy the party for now, but history tells us that a 30-40% correction, wiping out the past 3 years of gains, is the likely outcome of today's exuberance.
Enjoy the party for now, but history tells us that a 30-40% correction, wiping out the past 3 years of gains, is the likely outcome of today's exuberance.
11
Could it be because only the rich are getting richer? After all, the poor and middle class can't afford to. Once the middle class can no longer afford to buy things, the bottom will drop out of the Dow. Just like it did at the end of George W. Bush's reign of error. If Trump remains in office until the end of his term the Dow will be under 7000.
7
Most employed people contribute to a 401k. If you have been doing so for many years, the rise of the S&P 500 and other stock indexes has been a boon for our retirement savings. It's not just the super wealthy, but all of us who contribute to their 401ks who are benefiting.
6
And it will be all of you except the super wealthy who will watch your assets deflate during the inevitable sell-off.
5
"Animal spirits"? Allen Greenspan called it "Irrational exuberance" in the years leading up to the Great Recession of 2008... and he did nothing to reign it in!
4
It was supposed to regulate itself, and he testified (mockingly?) that he was "shocked" that it didn't. He was just as shocked as that police chief in "Casablanca" about gambling in Rick's casino (while having participated himself). In this case, it's the Big Casino.
1
Hmm,
It seems to me that if the dollar has dropped 10%, and the company's real value is unchanged, then the company shares must rise accordingly. It's Economics 101.
It seems to me that if the dollar has dropped 10%, and the company's real value is unchanged, then the company shares must rise accordingly. It's Economics 101.
9
Because the stock market is Vegas and the dollar is reality?
14
The REALITY is that it costs $20 today to buy what $1 bought when the Federal Reserve was founded. The Fed is the reason why the dollar is down.
No one worry, the Fed is backstopping the stock market. If it starts to go down they will covertly buy index funds to maintain the market.....of course till it all comes down and then another empire develops....think Greek, Roman, Persian, Egyptian, Ottoman...take your pick.....it is not different this time we just always think it is. However, it may not be in our or your kids lifetime.
6
I doubt the Fed is backstopping the stock market.
They propped up the mortgage bond market by buying those securities but there is nothing to suggest they are intervening in the stock market by buying equities.
The Fed is now unwinding those MBS purchases.
They propped up the mortgage bond market by buying those securities but there is nothing to suggest they are intervening in the stock market by buying equities.
The Fed is now unwinding those MBS purchases.
2
Can you imagine what the Dow would do if this backstopping became public? It would be a mad house of purchasing like Albania's ponzi after Communism fell. But rest assured that is something they do........think Bank of Japan.
Investors that don't create anything are getting more profits. The average worker is struggling everywhere to get by. Real estate in "upwardly mobile" cities is climbing while "affordable" housing everywhere is disappearing. So the economic divide is increasing. This is good news? We live in a fantasy world in a country run by a reality star. The real issues addressing the country's future are being ignored.
37
The dollar is declining because the World is dominating the USA. Considering the idea of New Products ready to hit the Market, but not yet on the Market... the dollar's decline is a first sign of noticeable change. When the New Products land on the Market, the dollar will rise again. But, the World will still take a more significant place in terms of World Leadership. Such as the World Court dominating the Supreme Court. Just to make sure Individual Human Rights are enforced reasonably.
1
As the dollar drops, so does DJI increase provided that the listed global companies maintain or improve their profitability.
Trump is not taking credit for dollar drop but DJI increase! Quite an economist we have for the President!
Trump is not taking credit for dollar drop but DJI increase! Quite an economist we have for the President!
10
Hope the dominant animal spirit isn't a lemming
18
I just don't understand it. When a Democrat is in the White House, the Republic party describes what's happening as the "debasing of the currency ".
But when the Republic party occupies the White House, we don't hear that.
How can that be?
But when the Republic party occupies the White House, we don't hear that.
How can that be?
13
The Federal Reserve debases the country regardless of the party in the White House. It takes $20 today to buy what $1 bought when the Fed was founded.
That's because there are no mirrors in the White House, or in Congress. It's easier to be a Republican that way.
I am far from being a member of the 1% but i just made a small fortune off Apple in just the past 9 months and i only invested a few thousand. Bought and sold it on my own and without any banker or brokerage firm helping me.
It is so sad that people are so ignorant about finance.
It is so sad that people are so ignorant about finance.
9
The Dow Jones is going up because the goons with all the money are getting everything they desire from Trump and promises of more wealth and they are celebrating! The decline of the dollar has to do with how the rest of the world sees us, and it isn't good.
19
Exactly, who needs breathable air, drinkable water or financial protections from the Wall Street crowd.
3
Could this be a realization by investors and traders in other countries that American "shareholder value capitalism" is unsustainable, and is perhaps on the verge of implosion?
Corporate executives have clearly done an excellent of job inflating stock prices in the short term. They have done it through financial transactions and rent-seeking activities like buying back shares, mergers, and market consolidation. These activities generate "value" for investors as reflected in the share price, but produce no goods or services that contribute anything to the economy. Even worse, it's a zero-sum game that plunders the economy through continual displacement of workers with automation and outsourcing, wage stagnation those who still have jobs, and replacement of high-paying jobs with low-paying service-sector jobs and the "gig economy."
Transferring so much of the nation's wealth to investors can produce spectacular short-term "value." But when enough the "99%" can no longer afford to buy the goods and services that underlie all the financial transactions and rent-seeking, the economy will inevitably collapse. An economy cannot exist solely on stock buybacks and mergers. The bubble will burst when there's nothing underneath it.
Corporate executives have clearly done an excellent of job inflating stock prices in the short term. They have done it through financial transactions and rent-seeking activities like buying back shares, mergers, and market consolidation. These activities generate "value" for investors as reflected in the share price, but produce no goods or services that contribute anything to the economy. Even worse, it's a zero-sum game that plunders the economy through continual displacement of workers with automation and outsourcing, wage stagnation those who still have jobs, and replacement of high-paying jobs with low-paying service-sector jobs and the "gig economy."
Transferring so much of the nation's wealth to investors can produce spectacular short-term "value." But when enough the "99%" can no longer afford to buy the goods and services that underlie all the financial transactions and rent-seeking, the economy will inevitably collapse. An economy cannot exist solely on stock buybacks and mergers. The bubble will burst when there's nothing underneath it.
14
I think it clearly demonstrates the lack of faith in the long term prospects of the United States by investors. I wonder why? Could it be the incompetent we've elected to the Presidency? Or our completely dysfunctional Congress? These are problems that won't get solved overnight, if they ever do. And given the ever-widening divide between the electorate, and our propensity for "solving" problems with gun powder, the possibility for another Civil War can't be discounted.
Aside from that though, the skies are sunny and blue.
Aside from that though, the skies are sunny and blue.
9
Who cares down here.
When Wall street says to Main street "Let Them Eat Cake" and elephant of inequality crowds out the room, what's left except greed and despair.
When Wall street says to Main street "Let Them Eat Cake" and elephant of inequality crowds out the room, what's left except greed and despair.
8
Watch the carry trade in US Real Estate. That's when you know the end is coming. A weak dollar attracts foreign real estate investors where they can purchase property at a discount. As far as the US stock market, where else are you going to invest your money? Go out 10 years on the bond curve to get 3%? That caries more risk than a blue chip paying a nice dividend.
5
So what are you saying? Finally, after waiting since St. Ronald's pronouncements, we will see trickle-down prosperity finally reach Earth?
You see, our betters had our interests in mind all the time, we were just impatient. If Donald Trump, who is a billionaire and is sworn to protect us, is excited, then we should be too.
I'm going out to buy the biggest golf umbrella to turn upside-down to reap the most money.
You see, our betters had our interests in mind all the time, we were just impatient. If Donald Trump, who is a billionaire and is sworn to protect us, is excited, then we should be too.
I'm going out to buy the biggest golf umbrella to turn upside-down to reap the most money.
6
Fal-de-ra and fiddle-e-dee, that's all this is. It's junk, meaningless, the S & P is serious, the Dow is fictitious, it's a bubble that will burst and the guys on the floor won't be laughing.
3
Yet, so many people are underemployed and being paid dead wages, for forty years. Don't believe the unemployment rate. The middle class and working classes need to ditch both parties, and don't listen to Ivy League economists. We need a new system. Now.
3
Any analysis of this phenomenon that fails to recognize various nation's central banks (Swiss National Bank, for example) piling into stocks is incomplete. To quote Bruce wilds - Seeking Alpha: "Their incursion into this bastion of the free markets signals we have entered the era where true price discovery no longer exists." There is widespread consensus in the financial press that this attempt to ride up on a market where the banks have disconnected value from price will end badly.
2
Try reading the NYT 2015 article "A strong dollar is always good, except when it isn't." If the Dow were soaring under a Hillary Clinton presidency, you would be overjoyed.
4
I notice the middle class don't seem to be following the same path.
1
Market traders rely on short term "animal" instincts to place bets. Currency traders look at longer trend economic fundamentals.
I put my money on the currency valuers.
I put my money on the currency valuers.
1
The currency markets are dictated entirely by the world's central banks.
Bubble economy. Keep a diversified portfolio - high grade bonds, US and international stocks, broad index funds, low expense ratios. Don't buy high. Don't sell low. Don't cash out - inflation and taxes will erode value of cash. Keep saving. Don't get greedy.
Don't listen to Trump. He is speculator who has experienced catastrophic losses that have hurt his investors. He looks out for his own business interests, is not an economist and will not listen to economists. A complete charlatan.
Don't listen to Trump. He is speculator who has experienced catastrophic losses that have hurt his investors. He looks out for his own business interests, is not an economist and will not listen to economists. A complete charlatan.
13
Got to love the negative spin put on a good news item.
6
No, it's a realistic spin. See the article concerning the continued devaluation of the dollar over policy uncertainties. It's good news within the context of today's other events, but that's about all.
People forget that this isn't "real money" we're talking about, unless you're drawing on your investments today. Right now my 401k is very healthy, but I'm not fooling myself that that will always be the case. We are in for a correction, probably sooner than we think.
People forget that this isn't "real money" we're talking about, unless you're drawing on your investments today. Right now my 401k is very healthy, but I'm not fooling myself that that will always be the case. We are in for a correction, probably sooner than we think.
2
Paying down the mortgage is a safer bet on bottom line net worth at moment.
8
I do think real and driven by the idea of less tax and regulation. However this is a short term relatively speaking trade. If there is not delivery the markets adjust. Also Trump is a pig.
9
The DOW hitting 22,000 has very little to do with prosperity or a healthy market. It is more likely due to the financialization of the stock market as described by Rana Faroohar in her book. Corporations are borrowing for the purpose of artificially bolstering their stock prices with stock buy backs resulting in inflated stock prices. The effect creates a financial black hole that sucks in money while doing nothing to feed the legitimate role of the stock market, the recycling of money for investment that benefits the common good.
6
We'll see how much the animal spirits like the Fed pumping 50 billion per month out of the economy for the next four years as it unwinds the three rounds of quantitative easing that led to this bubble market.
4
THe Dow is 22,000 not because we have a robust economy...but because Central Banks around the world PRINT MONEY and traders buy stawks with it.
That is the only reason the Dow is 22,000. Any idiot can see this except the one we are talking about.
That is the only reason the Dow is 22,000. Any idiot can see this except the one we are talking about.
6
I own a luxury retail business in Manhattan, since the election our sales have been down 30%. Many other businesses are down the same. How is it that nobody is reporting this?
6
The rise of the Dow means the rich are getting richer. The fall of the dollar means everyone else is getting poorer. This dichotomy is simply an indicator of class disparity.
Robots are working (in the USA) while people are getting poor. Slaves are working worldwide while they starve.
The only people benefiting from this new economy are the 1%.
Robots are working (in the USA) while people are getting poor. Slaves are working worldwide while they starve.
The only people benefiting from this new economy are the 1%.
8
Asset prices have been driven higher since the global financial crisis as a direct result of quantitative easing manufacturing money that is chasing an investment return.
Since central bank interest rates have been held low to stimulate borrowing, stocks and property values have been the major beneficiaries.
The challenge for central banks is that while the level of quantitative easing has tapered off substantially, interest rates remain at close to historical lows and they have not been able to raise interest rates significantly yet due to the negative impact it would have on the fragile post crash economic recovery.
This means central banks are currently deprived of one of the key levers they usually have available to stimulate activity in the event of future economic shocks - reducing interest rates.
Let us hope for at least another 5 years of stable economic progress.
What could possibly go wrong ?
It's wandering around the White House wondering what to do in a world that it struggles to comprehend ......
Since central bank interest rates have been held low to stimulate borrowing, stocks and property values have been the major beneficiaries.
The challenge for central banks is that while the level of quantitative easing has tapered off substantially, interest rates remain at close to historical lows and they have not been able to raise interest rates significantly yet due to the negative impact it would have on the fragile post crash economic recovery.
This means central banks are currently deprived of one of the key levers they usually have available to stimulate activity in the event of future economic shocks - reducing interest rates.
Let us hope for at least another 5 years of stable economic progress.
What could possibly go wrong ?
It's wandering around the White House wondering what to do in a world that it struggles to comprehend ......
7
Did I miss mention of foreign investors? If they are investing at a constant level in their currency, it would inflate the index value as the dollar declines.
1
It is time for reputable new programs like NPR to stop including stock indexes with their daily news summaries. The "numbers" daily update promotes the illusion that the stock market is the indicator of economic health. As if we all had a good day because the DOW closed up. As I'd. If the DOW closed up but the economic disparity got bigger, then these "numbers" should not be held up like some positive news for humanity. If is high time for a better way to check in on the inclusive, real national economy.
13
A few years ago, the painting sold for $100 million. "It's not that the Picasso is worth so much, it's that the dollar is worth so little."
6
If the USD goes down in value relative to other currencies to it should take more to USD buy assets and the DJI goes up--little realizable wealth is created. More over, what is good for retirees, high stock prices and cheap dollars, isn't as positive for workers trying to save for retirement, having to buy expensive stocks with devalued dollars.
12
exactly . . why does the article not recognize this? Also no consideration of the Fed's plan to start selling its balance sheet, sucking up liquidity.
3
Maybe the Chinese government should start tossing accusations that the Fed and export-oriented American corporations have been illegally colluding to keep the dollar's value artificially low? Good thing the current administration is so diligent about ethics!
In the meantime, I've been waiting for my consumer debt interest rates to reflect the incredibly low cost of institutional borrowing ... hasn't quite happened yet, but I'm sure these policies will eventually trickle down!
In the meantime, I've been waiting for my consumer debt interest rates to reflect the incredibly low cost of institutional borrowing ... hasn't quite happened yet, but I'm sure these policies will eventually trickle down!
17
I wrote in the '90s that "The Stock Market's Up for the Wrong Reasons" and find it more true with each passing year.
Then, as now, a significant portion of a stock's value is it's earnings per share and that is enhanced when wages and benefits are lessened along with other labor costs. This is underscored when these costs are "outsourced" to other countries.
I also mentioned NAFTA as "Not A Favor To America" at that time.
Then, as now, a significant portion of a stock's value is it's earnings per share and that is enhanced when wages and benefits are lessened along with other labor costs. This is underscored when these costs are "outsourced" to other countries.
I also mentioned NAFTA as "Not A Favor To America" at that time.
6
Another self-proclaimed expert. Invest some money and see how easy it is to generate wealth.
3
Eh. Buy-and-hold works for me. The Dow goes up over time. Trying to target this or that stock is a waste of time. You might as well just throw darts at a dartboard. The trick is, having the intestinal fortitude not to panic when the Dow takes one if its inevitable periodic nose dives. After you've been through a few, it becomes a lot easier to be philosophical.
2
The Dow is about the financial sector. It is a description of wealth. It does not give a true picture of how well citizens are doing. I'm more concerned about people having health care, housing and education than about how well a stock buying billionaire is fairing.
38
So stocks are worth more dollars, but really Worth about the same, in value, as pre-Trump.
7
Tax reductions are a sugar high with a crash sure follow. Gov't spending including paying their employees decent wages, buying goods and services and investing in the next generation is a better stimulus to the economy than huge tax reductions. They only drain the public coffers and hamstring its ability to improve the nation.
The Republicans see that as a positive. But after 4 years of Trump self promotion, they may find that their dream of a capitalist triumph will be a nightmare with the stock market an empty shell game.
The Republicans see that as a positive. But after 4 years of Trump self promotion, they may find that their dream of a capitalist triumph will be a nightmare with the stock market an empty shell game.
26
Question: did this country's - or perhaps the world's - economic leaders deliberately sabotage bank CDs and bonds to push people like me in the stock market? If so, they succeeded.
I invest in stocks because interest rates on CD's have for years been so low that there is no other place to put my money, other than perhaps real estate which may also be in a bubble. I remember - and invested - in CD's when the rate was about 7.25% for a 5-year, FDIC-insured CD. That was, maybe, 15 years ago. I felt safe. Since then, I liquidated my CDs, which after taxes do not even keep up with inflation, and reluctantly moved into stocks. Beneficiaries - other than overly paid CEO's - are the financial advisers who thrive on the idea that investing is too complex for the average person. This shift, I think, is not the "invisible hand" of the market, but something contrived to benefit certain sectors, while leaving the rest of us feel insecure in the Wall Street casino which puts even Las Vegas to shame.
I invest in stocks because interest rates on CD's have for years been so low that there is no other place to put my money, other than perhaps real estate which may also be in a bubble. I remember - and invested - in CD's when the rate was about 7.25% for a 5-year, FDIC-insured CD. That was, maybe, 15 years ago. I felt safe. Since then, I liquidated my CDs, which after taxes do not even keep up with inflation, and reluctantly moved into stocks. Beneficiaries - other than overly paid CEO's - are the financial advisers who thrive on the idea that investing is too complex for the average person. This shift, I think, is not the "invisible hand" of the market, but something contrived to benefit certain sectors, while leaving the rest of us feel insecure in the Wall Street casino which puts even Las Vegas to shame.
48
Thank you for bringing up CDs. Pundits query why the middle class gets nothing out of the surging markets. CDs were the option for those of us who risked stocks and lost big time in the recession. Now banks pay next to nothing in savings account interest. What does it take to get banks to offer CDs?
11
Not only did they do it, but they admitted it on the record.
4
Re: ". But Why Is Dollar Declining?"
a) It's supply and demand.
Argentina's 100 yr bonds sold at annual yield of 7.9% . The real (inflation adjusted) yield on 10 yr T-bills is 0.38%. The nominal rate is 2.32%
The near zero interest rate of the Fed is imperiling pension funds - they must find higher returns or face bankruptcy. They are desperate. And they do not believe that the Fed anytime soon will return to historical interest rates (3% plus rate of inflation)
b) The US economy does not look so great, internationally
Industrial production, latest available
US + 2% June
Japan + 6.5% (May)
Germany + 4.9% (May)
Sweden + 8% (May)
Singapore + 13.1% (May)
(The Economist, July 29, 2017)
As to dollars sloshing around, the Central Banks , by 2016 had injected 9 Trillion (trillion) of new money. What would you expect ? And the greatest injector of them all was the Federal Reserve
http://money.cnn.com/2016/09/08/news/economy/central-banks-printed-nine-...
a) It's supply and demand.
Argentina's 100 yr bonds sold at annual yield of 7.9% . The real (inflation adjusted) yield on 10 yr T-bills is 0.38%. The nominal rate is 2.32%
The near zero interest rate of the Fed is imperiling pension funds - they must find higher returns or face bankruptcy. They are desperate. And they do not believe that the Fed anytime soon will return to historical interest rates (3% plus rate of inflation)
b) The US economy does not look so great, internationally
Industrial production, latest available
US + 2% June
Japan + 6.5% (May)
Germany + 4.9% (May)
Sweden + 8% (May)
Singapore + 13.1% (May)
(The Economist, July 29, 2017)
As to dollars sloshing around, the Central Banks , by 2016 had injected 9 Trillion (trillion) of new money. What would you expect ? And the greatest injector of them all was the Federal Reserve
http://money.cnn.com/2016/09/08/news/economy/central-banks-printed-nine-...
11
Just curious about the multiple use of the phrase "animal spirits" when so much of the market's activity is through computer driven programmed training.
18
The Dow is relatively meaningless, not a true representation of the US economy; S&P 500 much more meaningful. Dow will hit 23,000 (4.8% gain, not such a big deal), and it will probably hit 21,000 again (4.5% drop - so what?).
6
Maybe other countries that have large dollar positions are using it as leverage against Trump's trade threats?
14
God this makes me so nervous.
14
If the stock market had this identical performance since November 9 with Clinton victorious, it would be hailed as The Second Coming by the core readership of the NY Times.
Classic.
Classic.
8
Typical
1
JD, You're full of it. Democrats are too smart to lie to the people like that. The market did great under Obama for 8 years, but he didn't brag about it.
As anyone should know, the market dies better under Democrats than under Republicans.
This run-up could well end up like Baby Bush's. More importantly, most of it is due to the decline in the value of the dollar. Using Trump's childish logic: we are weak, because the dollar is weak.
As anyone should know, the market dies better under Democrats than under Republicans.
This run-up could well end up like Baby Bush's. More importantly, most of it is due to the decline in the value of the dollar. Using Trump's childish logic: we are weak, because the dollar is weak.
5
On the contrary, I would be saying that she was too new in the role to have had much direct impact, so any credit should go to her predecessor.
Watch the bubble grow and grow.
8
In my opinion any new money going into stock market is employee 401k contributions where the employee is locked in to buy each pay period. The tears will flow when the markets go down.
15
America had a poorly functioning Department of Treasury, an unbalanced President with one foot in Moscow, and a looming debt ceiling,
and yet...
And yet the stock market bubble for no particular reason soars like a Zeppelin.
and yet...
And yet the stock market bubble for no particular reason soars like a Zeppelin.
11
The stock market is a fictitious market manipulated by big banks. Expect a major collapse soon.
12
The paranoid cynic in me wonders what the absolute ceiling will be, or what anticipated world event will trip the trapdoor.
I fear in more ways than one that winter is indeed coming.
I fear in more ways than one that winter is indeed coming.
1
Who knows? I have been a buy and hold investor for many years in both up and down markets. It has worked well over time. Vanguard Mutual Funds are excellent in this regard.
1
Gee, goody! Those with money and even more to invest are manipulating the stock market and making more money. YIPPIE!
The other 75% (?) are treading water and spitting out water from our third going under.
I know, lets give those with more money than anyone in history, and making record profits a huge tax cut so they MIGHT grace us pee-on's with a sprinkle of their good grace. If only they had more money, then those "others" could receive a break. Not a raise, but cake.
I'll be investing in tumbrel cart wheels and pitch-forks.
https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitc...
The other 75% (?) are treading water and spitting out water from our third going under.
I know, lets give those with more money than anyone in history, and making record profits a huge tax cut so they MIGHT grace us pee-on's with a sprinkle of their good grace. If only they had more money, then those "others" could receive a break. Not a raise, but cake.
I'll be investing in tumbrel cart wheels and pitch-forks.
https://www.ted.com/talks/nick_hanauer_beware_fellow_plutocrats_the_pitc...
17
"I'll be investing in tumbrel cart wheels and pitch-forks." I wish that I could afford to do the same. :)
1
Any article that U.S. the Dow as a benchmark for the stock market is already flawed. Why do journalists continue to do this?!
9
The S & P 500 is a more sturdy path than the narrow DOW.
1
The bigger the boom, the bigger the bust.
8
If you're religion is capitalism you believe what you believe because you believe, not because you have evidence. And so the bubble will cool or burst when emotions cool and facts become unavoidable.
4
Four words I can tell you why the dollar is declining. The Chinese Silk Road and very few people know that is going on and very little media coverage on it too as well. That is why sanctions will end up backfiring in a spectacular way on us as we are going to be left out of so many markets that it will shock you. Just ask yourself why is Germany starting to lean eastwards.
14
There are mutual funds that invest internationally as a good way to spread your money around.
1
BUBBLE ECONOMY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Why is the market up?
Can anyone explain it, really explain it?
Nope. Just a lot of smoke and mirrors, a lot of people using rhetoric like it is a magic spell.
What is driving valuations up?
Lack of regulation. That is not a value, that is freedom to steal.
The whole economy, so recently nearly collapsed, is a giant bubble, we're climbing up the edge of a massive cliff and this idiots are just going to try and herd us over it.
Why is the market up?
Can anyone explain it, really explain it?
Nope. Just a lot of smoke and mirrors, a lot of people using rhetoric like it is a magic spell.
What is driving valuations up?
Lack of regulation. That is not a value, that is freedom to steal.
The whole economy, so recently nearly collapsed, is a giant bubble, we're climbing up the edge of a massive cliff and this idiots are just going to try and herd us over it.
5
I seem to remember that when trump was campaigning he talked about " a big juicy stock market bubble" (presumably caused by the effective management of the economy by his nemesis Obama), and then congratulated himself on selling all of his stock holdings before the bubble burst. Now he points to the "bubble" as a result of his genius at management. So which trump is correct?
10
Neither.
3
Of course our current President has taken all the credit. He seems to forget- he is merely piggy-backing off of the 8 years preceding him. When President Obama took office the DOW was under 8000; when he left, it was almost 20,000. When Donald Trump's tenure can match those numbers- his "credit" will be deserved.
27
It's interesting how so many readers have taken an article that discusses an interesting and relevant question, and found unrelated things to complain about. What is discussed in the article is important to everyone whether they invest in the stock market or not. The strength or weakness of the dollar impacts nearly everyone in the US. Dollar weakness makes foreign goods cheaper here and US goods more expensive abroad. This is bad for companies that export their goods overseas and bad for the US labor force of those companies. This could be impetus for lower wages and higher unemployment.
Also, the stock market going up is generally good for people. You might not be in the stock market directly, but if you have a pension or a 401K or other retirement plan, it is likely that those assets are invested. Also the endowments of schools that your children go to are invested. A poor performing stock market will make the cost of education that much higher and could cause the quality of the education received to be lower. The direction of the stock market can directly or indirectly impact things that affect most individuals, rich or poor, such as interest rates, the housing market, the ability of small businesses to finance growth and many other things. Yes, rich people may get richer, but this this stuff does matter to the other 99%, as well.
Also, the stock market going up is generally good for people. You might not be in the stock market directly, but if you have a pension or a 401K or other retirement plan, it is likely that those assets are invested. Also the endowments of schools that your children go to are invested. A poor performing stock market will make the cost of education that much higher and could cause the quality of the education received to be lower. The direction of the stock market can directly or indirectly impact things that affect most individuals, rich or poor, such as interest rates, the housing market, the ability of small businesses to finance growth and many other things. Yes, rich people may get richer, but this this stuff does matter to the other 99%, as well.
3
You write: "Dollar weakness makes foreign goods cheaper here and US goods more expensive abroad."
Actually, it is the opposite. A weaker dollar lowers the price of American goods abroad, boosting exports. A weaker dollar also makes foreign goods bought here more expensive, because a dollar does not buy as much.
Actually, it is the opposite. A weaker dollar lowers the price of American goods abroad, boosting exports. A weaker dollar also makes foreign goods bought here more expensive, because a dollar does not buy as much.
17
you got it backwards
2
P Andrew, a weaker dollar makes imports more expensive, obviously
1
Also note, the Federal Government has been printing money under the Obama administration for years on end at almost 0% interest, allowing companies to support the unreal valuations via massive stock buybacks. Get free money from the government, invest it in yourself, create a solid support for the stock, enjoy the rising market and sell out. What's not to love?
Furthermore, the dollar was rising due to weakness in Europe (Greece and Brexit). A strong dollar is a double-edged sword: bad for large multi-national (GE, P&G) which derive lots of earnings from foreign countries. Good for buyers.
The cognitive dissonance liberals must feel as they see 25% gains in their portfolios under an administration they loathe must be tough. I never see the topic written about anywhere on left-of-center papers. Good on Mr. Thomas for putting the pen to the paper.
Furthermore, the dollar was rising due to weakness in Europe (Greece and Brexit). A strong dollar is a double-edged sword: bad for large multi-national (GE, P&G) which derive lots of earnings from foreign countries. Good for buyers.
The cognitive dissonance liberals must feel as they see 25% gains in their portfolios under an administration they loathe must be tough. I never see the topic written about anywhere on left-of-center papers. Good on Mr. Thomas for putting the pen to the paper.
1
Speaking of congnitive dissonance, those 25% gains came during the Obama years. And in the campaign, Trump promised to fire Janet Yellen and get that interest rate up again. Somehow, he is now continuing the (as you see it) irresponsible behavior of his predecessor. What's not to love, indeed. Somehow, the "evil Fed" is doing the same thing it was doing before, but now it's OK.
4
A falling dollar is good for US exports, bad for imports, good for reducing trade deficit.
But the wealthy have to pay more for their Paris shopping sprees and skiing in the Alps. That make a weakening dollar bad news, I guess.
I hate this "strong"/"weak" business. We're not talking health; we're talking imports vs. exports. (Granted, many exports use imported components).
I admit I skimmed this story (more than once), so I apologize to Mr Thomas, jr if I missed it, but I saw no evidence that he understands this. If so, he is ignorant and incompetent and should not be writing about financial news. Maybe for Fox.
But the wealthy have to pay more for their Paris shopping sprees and skiing in the Alps. That make a weakening dollar bad news, I guess.
I hate this "strong"/"weak" business. We're not talking health; we're talking imports vs. exports. (Granted, many exports use imported components).
I admit I skimmed this story (more than once), so I apologize to Mr Thomas, jr if I missed it, but I saw no evidence that he understands this. If so, he is ignorant and incompetent and should not be writing about financial news. Maybe for Fox.
1
I would have thought that the answer was obvious: the depreciation of the dollar is leading to better-than-expected reported dollar revenues, and hence earnings, for US companies, especially exporters. Higher earnings for the same price-multiple leads higher prices.
Why is the dollar is depreciating? Surely, in part, because non-US economies have started to rev up again.
So it would seem you've got the implied causality exactly backwards in the question you're asking.
Why is the dollar is depreciating? Surely, in part, because non-US economies have started to rev up again.
So it would seem you've got the implied causality exactly backwards in the question you're asking.
5
My understanding would be that since the average American holds assets in dollars and gets paid in dollars, the average American will find the real worth of his holdings will go down. Foreigners will find that American properties and products will be cheaper, so businesses will sell more if their raw materials come from this country, otherwise manufacturing costs will cause the prices to rise as well.
What this implies is that if you are debt [in dollars], your debt is less in absolute value, but remains the same in dollars.
If you have assets [in dollars], your assets have less absolute value.
If you have assets invested in non-dollar denominated investments or in a stock market which is adjusting to the lower dollar value, your assets maintain absolute value [rising in dollars].
So the rich get richer in dollars, the poor owe the same in dollars, the middle class loses absolute asset value, so that they find foreign travel and products more expensive, and housing becomes prohibitively expensive. The Republican shell game continues.
What this implies is that if you are debt [in dollars], your debt is less in absolute value, but remains the same in dollars.
If you have assets [in dollars], your assets have less absolute value.
If you have assets invested in non-dollar denominated investments or in a stock market which is adjusting to the lower dollar value, your assets maintain absolute value [rising in dollars].
So the rich get richer in dollars, the poor owe the same in dollars, the middle class loses absolute asset value, so that they find foreign travel and products more expensive, and housing becomes prohibitively expensive. The Republican shell game continues.
11
History isn't kind to the GOP when they control the House, Senate and White House. Exhibit A) The Great Depression, Exhibit B) the Great Recession, Exhibit C) Coming soon. And that isn't cherry picking those are basically the only two times in the last 100 years the GOP has had all three. Footnote: Eisenhower initially had a red house and senate but it was so close to 50/50 as to be not worth talking about. And he was sane, thoughtful and wise.
20
At the moment, the "insane not thoughtful and unwise" GOP president is presiding over a stock market run that has hit 35 new highs since election night. We can all play Fun With Statistics. My net worth likes mine.
2
Good for you, but it does nothing for the people Trump promised to help. Instead, he helps the rich get richer.
Most of us can't invest enough into stocks for this to make any meaningful difference.
Most of us can't invest enough into stocks for this to make any meaningful difference.
There might be a simple and not especially dangerous explanation. If the underlying value of the Dow stayed constant in an absolute sense, when the value of the dollar drops then the price of the Dow in dollars will naturally go up. Since Black Friday (Trump's Inauguration) the dollar is down about 10% and the Dow is up about 10%.
The historically high price/earnings ratio is much more worrisome.
The historically high price/earnings ratio is much more worrisome.
3
Why don't you explain how the Dow is for "retail" investors? No one who does investments for a living worries much about those 30 stocks (whichever 30 make up the list today). You follow the companies where you have money.
Or in invest widely - the S & P 600, Mutual Funds, including foreign ones.
We the people: these kinds of records prove one thing for sure. There is no shortage of capital for investing in promising economic endeavors. Consequence: 'priming' the investment pool, by having lower taxes on investment income serves no purpose for the population as a whole. The capital gains tax (and loss deferments) are just one of the ways that it pays a lot more to be wealthy than to be productive. This should be stopped, for the good of our economic system.
4
While this is good news for my 401K, I have no illusion that this is all speculation. It can go away tomorrow.
Remember Greenspan's "irrational exuberance"? This is what I'm seeing now, so I really can't get too excited over it. If I can access these funds in another eight years -- that will be the true payoff from today. Until then, duly noted.
Remember Greenspan's "irrational exuberance"? This is what I'm seeing now, so I really can't get too excited over it. If I can access these funds in another eight years -- that will be the true payoff from today. Until then, duly noted.
12
Buy and hold. Live through the ups and downs.
Yes, The Top 1% Global Financial Elite Robber Barons are getting richer and richer. The Con Don's buddies are very happy.
Average people might be happy, too, because their 401Ks are getting fatter. Let's put it in perspective. I win $1 Million dollars. I give you $1.
Is that a good deal when you pay your $1 back in taxes and I do not pay one dime on the other $999,999,999? As a matter of fact, I'm going to put you into debt so every cent you make will come to me.
That is our financial system today and it will only get worse if WE THE PEOPLE do not get The Con Don and his Robber Baron party OUT of our governments at all levels. They think they are winning but the truth is that nobody wins in the long run in their destructive games. Everybody loses and average/poor people lose it all.
Average people might be happy, too, because their 401Ks are getting fatter. Let's put it in perspective. I win $1 Million dollars. I give you $1.
Is that a good deal when you pay your $1 back in taxes and I do not pay one dime on the other $999,999,999? As a matter of fact, I'm going to put you into debt so every cent you make will come to me.
That is our financial system today and it will only get worse if WE THE PEOPLE do not get The Con Don and his Robber Baron party OUT of our governments at all levels. They think they are winning but the truth is that nobody wins in the long run in their destructive games. Everybody loses and average/poor people lose it all.
11
If the current upward movement is due in large part to retain investors, that means institutional investors are cutting back. Who would you trust to predict the future of the market? Look out below.
3
A buy and hold strategy generally works well over a long period, at least so far.
All administrations, from Bush to Obama and before, publicly claim they want a strong dollar, but policy concerns display a different strategy. Weak dollars assure a strong export strategy making our multi nationals more competitive with weaker world wide currencies. This decreases the trade deficits between exports and imports and assists in boosting corporate profits.
2
I am very surprised that Thomas seems to be totally unaware of the impact interest rates, both current and anticipated, play in the foreign exchange and stock markets.
After the election, US rates were expected to be increased by the Fed at a pretty decent clip. It is now obvious that they will increase at a slower rate. Meanwhile, the ECB has announced that it will begin unwinding its ultra loose policy, timing uncertain. This makes the dollar less attractive and the Euro more so. Thus, the dollar falls on the exchange markets.
It is not so dissimilar for stocks. If future cash flows are going to be discounted by lower rates, stocks become more attractive. And if investing in financial instruments are gong to provide lower interest income than was anticipated, it also makes putting your money in stocks more attractive. So stock prices go up. They could also go up if growth would pickup, but there is no sign of that yet.
After the election, US rates were expected to be increased by the Fed at a pretty decent clip. It is now obvious that they will increase at a slower rate. Meanwhile, the ECB has announced that it will begin unwinding its ultra loose policy, timing uncertain. This makes the dollar less attractive and the Euro more so. Thus, the dollar falls on the exchange markets.
It is not so dissimilar for stocks. If future cash flows are going to be discounted by lower rates, stocks become more attractive. And if investing in financial instruments are gong to provide lower interest income than was anticipated, it also makes putting your money in stocks more attractive. So stock prices go up. They could also go up if growth would pickup, but there is no sign of that yet.
4
Real analysis. There's an anomaly.
As you point out, both foreign exchange and stock markets are driven not only by interest rates, but also by expectations. If stock traders expect an interest rate of 4%, their valuation of stocks will be lower than if they expect an interest rate of 2%. And if currency traders believe that they can earn only 2% on dollar investments, they will value the dollar lower than if they expected to be able to earn 4%.
I think anticipated tax cuts may also have an impact on the stock market, but most of this movement is probably accounted for by Janet Yellen.
As you point out, both foreign exchange and stock markets are driven not only by interest rates, but also by expectations. If stock traders expect an interest rate of 4%, their valuation of stocks will be lower than if they expect an interest rate of 2%. And if currency traders believe that they can earn only 2% on dollar investments, they will value the dollar lower than if they expected to be able to earn 4%.
I think anticipated tax cuts may also have an impact on the stock market, but most of this movement is probably accounted for by Janet Yellen.
2
Yes, ot course the Dow (or S&P) and the value of the dollar may move in opposite directions. That is built into the system of stock valuation, when so many of those companies are multi-national in profit earnings and asset ownership. By accounting rules, when the value of the dollar goes down, vs. other currencies, foreign earnings and assets are revalued upward when measured in US dollars. When the value of the US dollar goes down, vs. other currencies, the reverse happens. Profits made abroad and assets abroad are revalued downward in terms of US dollars.
2
I am sorry, I worded that last sentence incorrectly. When the value of the dollar goes UP, vs. other currencies, the profits made abroad and assets located abroad are revalued downward in US dollars.
If I had a Business section in my newspaper, I wouldn't show company ticker symbols with their stock prices, but with their minimum wages and benefits (health care, pensions, ...) offered. Non-corporations—real people—need to know the real value of corporations, and we only know the real value of a corporation by how it really values us.
covfefe's "promise to slash regulations" has already been fulfilled, and "and cut taxes" hardly far behind with the vile GOP, and that will decrease the real value of corporations across the board as they pay and serve us even less than the scraps they already did. It would fall to Congress and the Supreme Court to rein in that disaster, but the latter is captured by the GOP with Thief Justice Gorsuch and the former is in de facto recess until 2018.
covfefe's "promise to slash regulations" has already been fulfilled, and "and cut taxes" hardly far behind with the vile GOP, and that will decrease the real value of corporations across the board as they pay and serve us even less than the scraps they already did. It would fall to Congress and the Supreme Court to rein in that disaster, but the latter is captured by the GOP with Thief Justice Gorsuch and the former is in de facto recess until 2018.
7
blind guess...
The US top 10% revenue buy the current governing trends, and would rather have their funds under US control - so they invest locally and the Dow climbs.
Overseas, it's another story. Foreign investors do not really buy the current US governing trends, and the dollar falls.
it's symmetrical for that reason, too : same roots, only mirroring points of views.
I guess this symmetry can only go so far, and at some point it will overturn one way or the other... any bets ?
The US top 10% revenue buy the current governing trends, and would rather have their funds under US control - so they invest locally and the Dow climbs.
Overseas, it's another story. Foreign investors do not really buy the current US governing trends, and the dollar falls.
it's symmetrical for that reason, too : same roots, only mirroring points of views.
I guess this symmetry can only go so far, and at some point it will overturn one way or the other... any bets ?
1
So now everybody can rightfully accuse trump of being a currency manipulator?
1
Follow the lemmings as they throw themselves off cliffs. Lots of money, including foreign money is entering the stock market. Trump cannot keep making gross errors in his policies and get away with it and the market can't keep going up. Sooner or later, he's going to make a huge faux-pas (mistake in French), and watch how the market will supposedly "correct" itself!
4
Here we go again people......the last scene in "The Big Short".
28
The International community knows that we are headed towards further chaos with Trump and most likely. The US is no longer the leader of the free world and the Trumps rule.
4
Value of the dollar reflects inflation of stock prices.
4
If only a booming stock market meant a booming nation. I wish this would somehow translate into prosperity in Appalachia, but it mostly just translates into prosperity on Wall Street.
66
The stock market is notoriously volatile, and any upward trend is guaranteed to be followed by a downward one. We go boom and bust on a regular basis now.
The only question for most Americans is why did we allow pensions to be replaced by unstable 401Ks and IRAs? During the last crash, people with large 401Ks lost thousands and thousands, and people with smaller 401Ks or IRAs only lost a couple of thousand. Regardless, we all lost money we could not afford to lose. And that money that we earned and paid into our IRAs in the hopes of having a little bit more to live on when we're old is now burning a hole in the pocket of some one percenter, who can't decide whether to buy another luxury car or a fifth vacation home. While the middle-class, losing more money than it can possibly afford to lose, wonders if they are going to wind up living under crumbling American bridges.
The stock market is for big money gamblers, and it is the height of injustice to force middle-class people to give up solid pension plans in exchange for so-called retirement plans that guarantee nothing except that some rich guys working the stock market will get richer. 401Ks and IRAs are a scam thrust upon us by the finance industry.
The only question for most Americans is why did we allow pensions to be replaced by unstable 401Ks and IRAs? During the last crash, people with large 401Ks lost thousands and thousands, and people with smaller 401Ks or IRAs only lost a couple of thousand. Regardless, we all lost money we could not afford to lose. And that money that we earned and paid into our IRAs in the hopes of having a little bit more to live on when we're old is now burning a hole in the pocket of some one percenter, who can't decide whether to buy another luxury car or a fifth vacation home. While the middle-class, losing more money than it can possibly afford to lose, wonders if they are going to wind up living under crumbling American bridges.
The stock market is for big money gamblers, and it is the height of injustice to force middle-class people to give up solid pension plans in exchange for so-called retirement plans that guarantee nothing except that some rich guys working the stock market will get richer. 401Ks and IRAs are a scam thrust upon us by the finance industry.
55
Communist nonsense, living in the United States allows liberty which creates wealth. Thousands of educated hard-working Americans that came from nothing are retiring as millionaires because of the stock market and the miracle of compound interest. Only clueless twits enmeshed in Marxist doctrine (statist managerial highly centralized) believe the stock market has anything to do with gambling.
Over the last 100 years the DJIA has provided an average annual real return of about 7%. That is hardly gambling and about as sure a thing then most everything else in life.
Over the last 100 years the DJIA has provided an average annual real return of about 7%. That is hardly gambling and about as sure a thing then most everything else in life.
1
Even in the good old days, many working people never received pensions. However, they saved all their lives in a bank and were rewarded with a fair interest rate. This allowed them to retire and have a decent retirement. Those days are long gone. There is "No Other Alternative" to playing the S&P indexes as a bank paying 0.90 percent is just not going to cut it. It will all end badly, the only question is when.
7
Where, exactly, do you think companies that still have pension plans invest their assets. During the last crash, pension funds also lost significant sums and these shortfalls have impacted business by forcing them to either make larger contributions (leaving less for reinvestment in their business), end those plans as they became unaffordable, or in the worst cases, the plans were transferred to the taxpayers to make up a portion of the shortfall when the companies went bankrupt.
2
"The Dow Jones industrial average on Wednesday morning passed the 22,000 milestone for the first time, an 11 percent surge for the year that is being driven of late by increasingly bullish retail investors piling into stock"
Maybe so, but with very low interest rates, the stock market is seen as the only game in town by people who have money to invest and pension funds that need revenue to meet their obligations. They are betting on capital gain rather than revenue.
This is risky business as no tree rises to the sky. When the markets drop significantly, a lot of people are going to lose money they can't afford to lose.
Maybe so, but with very low interest rates, the stock market is seen as the only game in town by people who have money to invest and pension funds that need revenue to meet their obligations. They are betting on capital gain rather than revenue.
This is risky business as no tree rises to the sky. When the markets drop significantly, a lot of people are going to lose money they can't afford to lose.
8
If you look at a 5 year history of the dollar versus currencies like the South African Rand and other African currencies - it is clear that since Obama's first year the dollar gained and gained strength. As soon as the election occurred the tide turned and we've lost over 10% in many African currencies since Trump. As I work on various US contracts in Africa this has been a significant economic issue. Our State Dept dollars go significantly less towards the assistance we provide AND the Trump administration wants to cut the state department spending.
4
What a joke! The South African Rand and the Polish Zloti are increasing in value against the American Dollar! With Trump at the helm, sooner or later the American stock market and the US Dollar are due for "corrections". I just hope dumpkoff (President T) doesn't make a huge mistake, and plunge the US Dollar to record lows!
3
>>
"In every stock-jobbing swindle everyone knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in safety."
Marx
"In every stock-jobbing swindle everyone knows that some time or other the crash must come, but every one hopes that it may fall on the head of his neighbour, after he himself has caught the shower of gold and placed it in safety."
Marx
11
The foolish, uninformed, never Trumpers will view the glass as half full and containing sulfuric acid.
If you socialists out there are in denial, if you are secretly hoping for Trump to fail so you can feel vidicated in your opinion.
I have two words for you " stick it ".
If you socialists out there are in denial, if you are secretly hoping for Trump to fail so you can feel vidicated in your opinion.
I have two words for you " stick it ".
1
Tom
Nobody has to root for Trump to fail.
He is accomplishing that objective all by himself. Worst POTUS ever.
Nobody has to root for Trump to fail.
He is accomplishing that objective all by himself. Worst POTUS ever.
5
junkman,
Maybe we are waiting for Trump to do what he said he would do. Remember?
Wall Streeters are crooks. Bankers are scum. Republicans are ripping us off.
Trump was going to drain the swamp. Instead he filled it. He said he would help me. Not the mega rich.
Instead, now he got rid of the overtime rule. He wants to lower the min. wage. He wants to get rid of the Consumer Protection Bureau. Resending the Fiduciary rule will not help me. He told me my HealthCare would be cheaper and better.
Tell me Junkman, is he lying?!
What has he done to help me and mine?
This is not denial, these are facts. Some of us hoped Trump would do as he said. Guess what. He has not even come close. In fact he has admitted he just said those things to get elected.
So tell me Junkman, why should we root for this liar and those that lie with him? Especially those that want to "stick it" to us?!
Maybe we are waiting for Trump to do what he said he would do. Remember?
Wall Streeters are crooks. Bankers are scum. Republicans are ripping us off.
Trump was going to drain the swamp. Instead he filled it. He said he would help me. Not the mega rich.
Instead, now he got rid of the overtime rule. He wants to lower the min. wage. He wants to get rid of the Consumer Protection Bureau. Resending the Fiduciary rule will not help me. He told me my HealthCare would be cheaper and better.
Tell me Junkman, is he lying?!
What has he done to help me and mine?
This is not denial, these are facts. Some of us hoped Trump would do as he said. Guess what. He has not even come close. In fact he has admitted he just said those things to get elected.
So tell me Junkman, why should we root for this liar and those that lie with him? Especially those that want to "stick it" to us?!
7
What goes up...
2
What goes up is destroyed by the Street as they hedge their bets both ways and when the tsunami comes and they are caught they just whine to Washington who floods them with money and doesn't even make them quit or go to jail.
2
The stock market is like an airplane full of goats. Once a critical mass moves to the front of the plane, the rest follow, causing it to crash. Conversely, once a few retreat to the rear, the rest follow, causing it to crash. All this while the "goats" fully understand this, but they do it anyways.
Other than some irrational exuberance by hopeful corporations thinking their taxes or regulation situations might improve, or hopeful consumers doing the same, what is causing the spike?
I can buy a steady increase, but any spikes are generally bubbles - let's revisit this in 2-3 years and see where we are, with some expert goats having gamed the system or telling us they saw it coming. Meanwhile Trump will blame others, even the Republican party, for anything bad.
Other than some irrational exuberance by hopeful corporations thinking their taxes or regulation situations might improve, or hopeful consumers doing the same, what is causing the spike?
I can buy a steady increase, but any spikes are generally bubbles - let's revisit this in 2-3 years and see where we are, with some expert goats having gamed the system or telling us they saw it coming. Meanwhile Trump will blame others, even the Republican party, for anything bad.
5
The Nasdaq and S & P are down. A lower dollar is good for exports. Lots of fail here. The relation between inequality and slow long term growth would be a lot more this century.
THE B.U.B.B.L.E. is nigh. Wall St does NOT represent reality, and those who are getting rich are doing so at the expense of the pioorer people and the nation as a whole.. It is like one of those laws of physics that says you can't create something out of nothing. The rich are created on the backs of the poor, not clever investing. But for economists that old adage applies: when your paycheck depends on your not understanding, you won't understand. However, the people understand, it's just that we have no power to fix it except pitchforks and other small utilities--and trump hasn't made it any easier, but just you wait.....................................
6
How does this news impact, in a positive way, middle America? The people who voted for Trump and continue to support him are not the beneficiaries of the Dow's 22,000 surge. These are the people who are still waiting for the coal jobs to come back to their communities, the wage increases that were promised; and the draining of the swamp that created their plight.
This news is great if you have the financial means to take advantage of a market that is looking pretty good right now - but, I have to provide a spoiler alert...this surge in stocks, this fast, means that they are overpriced, which means that we may be headed for a new bubble that will eventually pop.
This news is great if you have the financial means to take advantage of a market that is looking pretty good right now - but, I have to provide a spoiler alert...this surge in stocks, this fast, means that they are overpriced, which means that we may be headed for a new bubble that will eventually pop.
9
OK, so the US has become a predatory currency manipulator.
Is that supposed to be a bad thing, or only when someone else does it?
Is that supposed to be a bad thing, or only when someone else does it?
1
"What the wise man does at the beginning, the fool does at the end" W.Buffet
4
No comments anyone? Hypocrites had an addictive personality, no?
The end is near.
1
And then there is a new beginning.
Wow, how commenters can find negatives here, one must be either: 1. Not in the market with investments/risk, or 2. You are a Bernie supporter who wants to give free stuff away to buy votes off of the backs of successful individuals hard work. Look at Venezuela right now....19 yrs ago the chavistas looked eerily like today's Dems.
3
Or perhaps you are just completely unaware of the boom and bust cycle of Wall St. And that the two largest financial reverses in the last 100 years in America occurred during the two prior times the GOP controlled the WH, Senate and House. Coincidence? We shall see in the next 40 months. One is happenstance, twice is coincidence, three times is enemy action.
Chuck, Venezuela??
Why don't you look at Germany? That's more like of what Bernie was proposing, right?
Why don't you look at Germany? That's more like of what Bernie was proposing, right?
What is the value of clean air?
Can you put a price on clean water?
What are the animals of the Earth worth to us?
Market speculation and the "world's oldest profession" have a lot in common.
Selling one's soul is a Hell of a price to pay.
Can you put a price on clean water?
What are the animals of the Earth worth to us?
Market speculation and the "world's oldest profession" have a lot in common.
Selling one's soul is a Hell of a price to pay.
4
The dollar is declining because America is living off the credit provided by such countries as China, which is buying our debt. The federal debt is over $20 trillion, up from $11 trillion when Obama took office in 2009. Debt accumulation like this is not sustainable. Yet Congress continues to spend like a drunken sailor; even a Republican majority in the Congress and a Republican in the White House cannot stop the spending. Trying to curb spending at the federal level brings wails of protest from every special interest group under the sun. The dollar will only return to its historical strength when and if Congress is able to curb its big spending habits.
3
You might ask yourself why the GOP has pushed a "No new tax" policy for the last 40 years as our debt has mounted. Incredibly irresponsible, and when you look at the massive spending under Bush, plus 5 trillion + wasted on two unwinnable wars started by Bush, and finally the trillions Obama had to "borrow" to keep Wall St. and our economy making the Great Depression look like hiccup you see the GOP is the problem. This is made clearer when you look at who had the WH, Senate and House for the Great Depression and Great Recession... hint they like elephants, but don't have the same memory. About 2/3's of the national debt was run up by GOP President's and the rest can be directly laid at the feet of their no new tax policy. Even Reagan raised taxes, like 9 times. Because government costs money, and we all want roads, firemen and an inexpensive postal service.
4
You are forgetting the last time we had a budget surplus, it was when Clinton left office. He left Bush $128 million surplus. So under Bush, the debt increaded to $11 billion to fund 2 wars, tax cuts for the rich, and unfunded drug benefits. Under Obama, the debt only increased another $9 billion, as he managed to decrease our war involvement, bail the economy out of the mess Bush left him, feed those who lost jobs under the Bush recession, extend healthcare to billions (which increases the productivity of the workforce and put money into the economy thst generated tax revenue), and still had to pay interest on that debt Bush left him. Government debt is not like family debt. It helps keep our economy moving for the average person.
1
So what accounted for the rise in an dollar in the last year when we also had a $20T debt? The debt is meaningless. It's a scorecard of T-bill issued. The US can pay for bond redemptions and interest in any amount at any time. The debt has supposedly been "unsustainable" since Reagan.
1
'Why is the Dow rising while the dollar sinks?'
Sometimes, I suspect, the obvious is the answer.
The rise in the Dow is all about money-brokers trying to make huge, quick and selfish money by movin' money.
The Stock market is no longer representative of the country's productivity or wealth, but primarily of the wealthy's Hamptons-funding.
The dollar, on the other hand, is what the 'Others' are settling for. It's closer to the actuality of how far less than 'exceptional' this bed-pan of a nation has slid. E pluribus ego.
Sometimes, I suspect, the obvious is the answer.
The rise in the Dow is all about money-brokers trying to make huge, quick and selfish money by movin' money.
The Stock market is no longer representative of the country's productivity or wealth, but primarily of the wealthy's Hamptons-funding.
The dollar, on the other hand, is what the 'Others' are settling for. It's closer to the actuality of how far less than 'exceptional' this bed-pan of a nation has slid. E pluribus ego.
4
“Animal Spirits”. Isn’t that a quaint term for; I have no idea why the markets are rising but I’m jumping on board this train. There was another term used back in the 90’s dot.com era to describe this kind of excitement. Greenspan coined it. “Irrational Exuberance”.
Isn’t that what all this craziness in the market it about?
Isn’t that what all this craziness in the market it about?
2
The dow is not a very good indictor. The s&p 500 is much better and it has not gone up that much lately. tdump had nothing to do with the market. How abut very low interest rates giving us no where else to go.
5
People still think that the stock market supplies funding for businesses to grow ... it doesn't. The Stock Markets are indicators of the success of rent extractors. Nobody else is doing well at all and because of that confidence in the American economy is sinking and along with it confidence in the dollar.
5
It is called a bubble based economy that is all the market is right now one big bubble that will pop sooner or later leaving the poor holding the bag.
5
Why do I just know these people in Washington are going to ruin my IRA? The debt-ceiling, tax reform, the budget... only ten working days left... and Trump wants health care first. Over Niagara Falls in a barrel....
1
Unfortunately our self-proclaimed “smart” president does not realize that neither a strong stock market nor a weak dollar does much for his base – in fact, both financial trends probably hurt rather than help a majority of working class whites that propelled Trump into the White House.
The rapid rise in the stock market is largely benefiting the top 10% who are most invested in it. The working class barely has enough money to put in retirement accounts, which have seen continuous paper gains since 2009, albeit, at a slightly better pace over the past 9 months. Working class folks are not active investors in the stock market with individual Ameritrade, E*Trade, Schwab, etc. trading accounts. So Trump’s euphoric tweet in this regard is a slap in the face to his base.
Also, a weak dollar is a huge wet blanket on the consumer economy, which makes up 2/3rd of our GDP. A weak dollar makes all those consumer goods, especially from China, more expensive. And, it’s the working class that’s hit the worst because it has to pay more for everyday consumer goods at Target, Sears, Walmart, etc. throughout the heartland.
So be careful what you brag about, Mr. President, it might come back to haunt you.
The rapid rise in the stock market is largely benefiting the top 10% who are most invested in it. The working class barely has enough money to put in retirement accounts, which have seen continuous paper gains since 2009, albeit, at a slightly better pace over the past 9 months. Working class folks are not active investors in the stock market with individual Ameritrade, E*Trade, Schwab, etc. trading accounts. So Trump’s euphoric tweet in this regard is a slap in the face to his base.
Also, a weak dollar is a huge wet blanket on the consumer economy, which makes up 2/3rd of our GDP. A weak dollar makes all those consumer goods, especially from China, more expensive. And, it’s the working class that’s hit the worst because it has to pay more for everyday consumer goods at Target, Sears, Walmart, etc. throughout the heartland.
So be careful what you brag about, Mr. President, it might come back to haunt you.
4
And yet the base loves Trump for it. Why? I think the words of "Cool, Cool Considerate Men," from the Sherman Edwards musical "1776" explains it: "...most men with nothing would rather protect the possibility of becoming rich than face the reality of being poor." -- thegamesmenplay.com
1
I saw the movies, "Wall Street, "The Wolf of Wall Street" and "The Big Short".
What I haven't seen is a fair wage. Show us those "TAX RETURNS".
What I haven't seen is a fair wage. Show us those "TAX RETURNS".
6
The 1% is starting to excavate their incomprehensible number of dollars buried in treasure islands, and the money is hitting the world markets because the pirates see their loot devaluing in the sand. This time would come one day simply because treasure does not stay buried for ever.
Like a run on the banks, once one pirate digs up his treasure, another thinks they better get at theirs too, lest their loot devalues as the supply of dollars on the market exceeds demand, and inflation in the money supply drives down the value of each and every dollar not invested to keep pace with inflation.
They want to invest this cash in the markets because the reptile in the back of their brains says "invest the cash to exceed inflation or lose it!" But of course, the more cash that hits the markets, the more it inflates the money supply until the point arrives where everyone standing around looks at each other and discovers the money is worth less than it was before: they took too much out of the sand, put it into circulation, now it's cheap. The DOW is at 22,000 very weak dollars, and at some point in the near future, the weakness will be so great that investors will have to pull their cash out lest it become too worthless to even bother collecting.
If the 1% would just keep all the wealth they collected from us buried, then they would maintain their great inequality which is where rich-poor comes from, and they would not devalue their holdings by digging it up. Oh, but greed...
Like a run on the banks, once one pirate digs up his treasure, another thinks they better get at theirs too, lest their loot devalues as the supply of dollars on the market exceeds demand, and inflation in the money supply drives down the value of each and every dollar not invested to keep pace with inflation.
They want to invest this cash in the markets because the reptile in the back of their brains says "invest the cash to exceed inflation or lose it!" But of course, the more cash that hits the markets, the more it inflates the money supply until the point arrives where everyone standing around looks at each other and discovers the money is worth less than it was before: they took too much out of the sand, put it into circulation, now it's cheap. The DOW is at 22,000 very weak dollars, and at some point in the near future, the weakness will be so great that investors will have to pull their cash out lest it become too worthless to even bother collecting.
If the 1% would just keep all the wealth they collected from us buried, then they would maintain their great inequality which is where rich-poor comes from, and they would not devalue their holdings by digging it up. Oh, but greed...
5
No offense but show me the inflation. Gas prices are about half what they were 10 years ago after Katrina. Milk? TV's? Cars? Almost everything has risen minimally over the last decade. Your idea sounds great if markets were rational, but they are not, like people they are emotional and herd related. Which is why contrarians do better over time.
Of the items you listed, only gas is a necessity for Americans as most of us need to drive for work, especially those of us in rural areas with not transit system.
As for TVs, the working class "upgraded" our TVs for free when our wealthier friends bought flat screens. Some of us even went TV shopping by driving through the rich neighborhoods and selecting a "new" model from the side of the road.
What is killing our budget (and sometimes literally killing us) is the skyrocketing costs of medicine, healthcare, and rent.
As for TVs, the working class "upgraded" our TVs for free when our wealthier friends bought flat screens. Some of us even went TV shopping by driving through the rich neighborhoods and selecting a "new" model from the side of the road.
What is killing our budget (and sometimes literally killing us) is the skyrocketing costs of medicine, healthcare, and rent.
2
I was referring to inflation in the money supply among the wealthy, not us...yet. They stay rich by keeping it all to themselves, right?
The CPI will only be affected by the sheer volume of dollars entering the markets if that money gets into our hands, into the hands of the masses, which it might never. There is inflation among the wealthy, and inflation among the masses -- I am referring only to the former.
The trick for the Central Banks is to reel in all that cash before it ever gets into our grubby, dirty hands!
The CPI will only be affected by the sheer volume of dollars entering the markets if that money gets into our hands, into the hands of the masses, which it might never. There is inflation among the wealthy, and inflation among the masses -- I am referring only to the former.
The trick for the Central Banks is to reel in all that cash before it ever gets into our grubby, dirty hands!
1
As for the rise in the DJIA, it could just be smoke and mirrors. The reported value of the dollar could be speculation and fear. It really doesn't matter, because everything I learned in Macroeconomics 101 and Mircroeconomics 101 don't apply anymore. Furthermore, I don't trust reports by the government. Why not? One example is the canard about inflation remaining low. That's easy to report when you change the definition. The rate of inflation has NOTHING whatsoever to do with the rising cost of living and squeezing the middle class and the poor.
2
Bring some facts. Gas? Down 40% from 10 years ago. Milk? The same price. Just where is the massive inflation? Widgets? Report or not, inflation is something we would see and feel. And whether you look at limes, windshield wipers, DVD's, or duct tape, things pretty much cost what they did 10 years ago.
1
Yes, john those things have stayed relatively the same but the staples that middle class and poor people must buy has skyrocketed: rent, food, utility bills, insurance. Never understood why "staples" are not included in the inflation number.
2
The two, dollar exchange rate and DOW index, are related. Because the dollar goes down the DOW goes up because US stock becomes cheaper. Looking from other currencies the DOW does not move so much in real terms, only in $ it goes up. Look at the graphs. The dollar is 8% down from 96 to 88 or since Trump's inauguration. The DOW went up 10% from 20000 to 22000. So the net DOW increase in other than $ currencies is not so dramatic as Trump wants people to believe.
4
Not necessarily cheaper in that regard, but the capital volume in the stock market is definitely inflated. In a way, the stock value has not really surged and this trend could make individual investors who heavily rely on trends and inadequate information dangerously optimistic, especially when the Trump Admin. has yet to pass a substantial overhaul bill that he has promised, meaning that all this hype is, as the article pointed out, based on a mere promise.
The aspect of trade is also worrisome for the domestic market. Weak dollar means that it's now cheaper for foreign entities to engage in trade calculated in dollar. Overall it is a flow of capital out of the US market. It will show up as revenue in corporate reports and make rosy GDP figures, but the benefits will not be accessible to working/middle class.
Just my personal take. Please correct me if I'm wrong.
The aspect of trade is also worrisome for the domestic market. Weak dollar means that it's now cheaper for foreign entities to engage in trade calculated in dollar. Overall it is a flow of capital out of the US market. It will show up as revenue in corporate reports and make rosy GDP figures, but the benefits will not be accessible to working/middle class.
Just my personal take. Please correct me if I'm wrong.
We measure the Dow in dollars. If the value of the dollar goes down but the assets contained in the Dow stay the same, it's fairly simple to deduct that some of the increase in the Dow is just a reflection that the dollar now buys less across the board.
As an extreme example, if the dollar weakens by dinner such that it's only worth the same amount of a quarter was at breakfast, how surprised should we be that the Dow appears to be 4x as high at the end of the day?
As an extreme example, if the dollar weakens by dinner such that it's only worth the same amount of a quarter was at breakfast, how surprised should we be that the Dow appears to be 4x as high at the end of the day?
7
This is a shallow analysis and points the lay reader to specious logic. Foreign exchange rates have little to do with the level of the stock market and a lot to do with differences in bond yields and inflation across currency zones.
The dollar strengthened substantially in the 2015-2016 period as European rates fell into negative territory. As rates have converged between Europe and the US in recent months, exchange rates have normalized.
If anything a weaker dollar helps US multinationals (i.e. the stocks that make up the Dow) that earn relatively greater income internationally as their foreign income now converts into more US dollars. Hence, it makes sense that the "stock market" (i.e. the Dow) would go up as the dollar weakens.
The dollar strengthened substantially in the 2015-2016 period as European rates fell into negative territory. As rates have converged between Europe and the US in recent months, exchange rates have normalized.
If anything a weaker dollar helps US multinationals (i.e. the stocks that make up the Dow) that earn relatively greater income internationally as their foreign income now converts into more US dollars. Hence, it makes sense that the "stock market" (i.e. the Dow) would go up as the dollar weakens.
11
Eight years of QE by the Fed with insanely low interest rates will do that to your precious dollar.
With the dollar cheaper, US stocks become cheaper to foreign buyers, who then buy and push stock prices up...not that difficult.
With the dollar cheaper, US stocks become cheaper to foreign buyers, who then buy and push stock prices up...not that difficult.
7
The question I have is that given that 60-70% of all market volume now consists of microsecond trades between computer programs, how accurate are the pricing data created by these trades?
Short-term computer based trading cares nothing about how the equity being traded is doing in the real world, after all.
Short-term computer based trading cares nothing about how the equity being traded is doing in the real world, after all.
3
We are still in the Obama economy. The Trump administration has done very little that affects the economy, so Obama deserves credit for this stock market.
Another thought-- When the general public--the retail investor--gets into the market, it may be a signal that the game is nearly over. Sell.
Another thought-- When the general public--the retail investor--gets into the market, it may be a signal that the game is nearly over. Sell.
54
Carter Kennedy, you are correct to point out that the policies of prior administrations could continue to affect the economy and stock prices. However, during Obama's term, stocks went up mostly (a) as a bounce-back from the depressed levels to which they had fallen because of the financial crisis and (b) because of the extraordinarily loose monetary policy of the Federal Reserve, keeping interest rates very low for a very long period.
You are right to caution that large-scale exuberance is a sign of a bubble. However, at this point, retail investors have not yet committed a lot to stocks. The market's rise appears to be caused mostly by fundamental positive factors (low inflation and interest rates, rising profits, less-draconian regulatory outlook and the potential for tax reforms/cuts.)
You are right to caution that large-scale exuberance is a sign of a bubble. However, at this point, retail investors have not yet committed a lot to stocks. The market's rise appears to be caused mostly by fundamental positive factors (low inflation and interest rates, rising profits, less-draconian regulatory outlook and the potential for tax reforms/cuts.)
How wonderful ! It seems like that old familiar tune in which "The rich get rich and the poor get poorer. In the meantime, in between time, ain't we got fun?" is still relevant today.
4
What percentage of the dollar's swoon is attributable to the looming fight over raising the debt ceiling and chances of another 2011 debacle?
1
Okay, so instead of companies and investors putting money into more factory floor space in anticipation for all the increased orders based on the weak dollar they are just putting it into the stock market to make a quick buck. What could go wrong? One reason for the weak dollar I don't see mentioned here could also be decreased demand for the dollar, in other words decreased demand for American goods. Take one example: Mexico, in anticipation of a repeal of NAFTA or at least less than favorable terms has started shifting orders for corn cattlefeed to Argentina and away from the United States. I doubt this trend is just isolated to this one product. Trump has made it clear he thinks America is getting bad deals. The scary version of this is that other countries are following suit and looking elsewhere for products they used to get from the US. And before we all get too excited about cheap American products spurring demand let's remember that companies in Asia hedge currency fluctuations. Most likely they're still purchasing the dollar at where it was at 6 months ago. And like I said earlier, if they are anticipating sudden price changes because of tarifs they might be looking elsewhere too. Go Trump right?
8
"instead of companies and investors putting money into more factory floor space in anticipation for all the increased orders based on the weak dollar they are just putting it into the stock market to make a quick buck."
So right, and if all of the companies and investors were given a huge tax break do we think they would respond differently? It seems that the ideas of trickle down economy just don't work very well.
So right, and if all of the companies and investors were given a huge tax break do we think they would respond differently? It seems that the ideas of trickle down economy just don't work very well.
1
Several posts have already accurately described the widening economic gap in our country. I will just add that until corporate law is addressed to level the playing field between workers and shareholders, this gross disparity will continue.
In an effort to always maximize profits, we have a system where laying off thousands of workers will push up a company's stock price, giving your workers a raise will hurt your stocks.
This is perverse. And it cannot help the economy in the long run to continually damage the financial prospects of American workers.
In an effort to always maximize profits, we have a system where laying off thousands of workers will push up a company's stock price, giving your workers a raise will hurt your stocks.
This is perverse. And it cannot help the economy in the long run to continually damage the financial prospects of American workers.
139
And, with respect to companies/firms that are not public, if the choice is laying off a worker(s) or firing the pool boy, the worker always loses.
4
Carla Benson, you are correct to point out that, sometimes, companies improve profits by laying off workers. You are also right to bemoan the rising inequalities.
But, that is not happening currently. Unemployment rate continues to decline. Employment opportunities are increasing, although most jobs require higher levels of skills than available to those who did not have college degrees or other vocational skills.
But, that is not happening currently. Unemployment rate continues to decline. Employment opportunities are increasing, although most jobs require higher levels of skills than available to those who did not have college degrees or other vocational skills.
2
Lower taxes and reduced regulations on big corporations mean less overhead and increased profits. So yes, people who can afford it are buying stocks because they expect higher dividends. But what about Americans who don't own stocks and are mainly concerned with paying the monthly bills? Will their salaries or wages go up dramatically? Will the demand for consumer products here in America increase significantly? Somehow, I doubt it. most of the money will go to the wealthiest among us, and they will use it to buy even more stocks. This looks like a dangerous bubble to me. When will it pop?
71
Let me also add that more money in the pockets of corporations will mean more mergers, consolidations and buying up competition. This will translate to many office, factory and store closings and many lost jobs.
6
Jeff, you are right to point out that the rising stock markets benefit primarily those who own stocks. But, it is not only the rich who benefit. Most middle-class people also have their savings (401k) in stocks or stock-market indices. They benefit too. In addition, pension funds of our governments and companies also invest in stocks. When they benefit, so do the pensioners.
You are right to caution that it could be a dangerous bubble. But, for now, it does not appear to be one because the market's rise is based on several sound and favorable factors (rising earnings, low inflation, low interest rates, less-draconian regulatory outlook and the potential for tax reforms.)
You are right to caution that it could be a dangerous bubble. But, for now, it does not appear to be one because the market's rise is based on several sound and favorable factors (rising earnings, low inflation, low interest rates, less-draconian regulatory outlook and the potential for tax reforms.)
1
To John L from Greenwich, CT. OK, you're right. People with 401ks and pensions (if the pensions have been funded) benefit, but nowhere near as much as multimillionaires. Also, dividends are taxed at only 15% regardless of income level. So it's regressive on both ends. So earnings are at the same rate, resulting in perhaps hundreds of dollars for the middle class person and thousands or millions for the rich one. Then when tax time rolls around, the middle class person gets a slight break (if he/she itemizes taxes) and the rich one gets a bonanza. This takes us in the wrong direction so far as income inequality is concerned.
As to your list of sound and favorable factors. Earnings have risen only slightly. Inflation and interest rates have been low for many years. Less regulation (especially on the financial industry) during the George W. Bush administration was a major cause of the Great Recession. And his tax cuts ballooned the deficit. I'm not optimistic at all.
As to your list of sound and favorable factors. Earnings have risen only slightly. Inflation and interest rates have been low for many years. Less regulation (especially on the financial industry) during the George W. Bush administration was a major cause of the Great Recession. And his tax cuts ballooned the deficit. I'm not optimistic at all.
3
Maybe someone here more conversant in market lingo can explain to me how the pocket books of average everyday Americans benefit when the dollar falls and the market gains don't accrue to other indices.
3
Emma Jane, you are being modest. You are making a good point. Average everyday Americans do not benefit directly from the Dollar's decline. However, the stock market gains could benefit average everyday Americans INDIRECTLY. Many average everyday Americans have their savings (401k, IRA) invested in stocks. They benefit. Also, most government and corporate pension funds also invest in stocks. Through them, pensioners benefit and the governments and companies benefit (because they don't have to keep contributing into the pension funds at the same rate). More indirectly, rising stock markets make it easier for American businesses to raise capital, invest and employ people.
1
Oh, the prospect of lower taxes and upending regulation has those "investors" in a frenzy, eh? Given that the country is already relatively lightly taxed and that many of those reviled regulations are in place for a good reason, it's unclear what the long-term benefit might be. What's really happening is familiar enough. Wall Street and America's greedy elites are hoping for another short-term score. Actually investing in people, infrastructure and sustainable growth is totally beside the point. There hasn't been a serious and responsible Republican administration since Nixon, and the Trump regime may well be the worst yet.
38
Innocent Bystander, you are right to assert that regulations are in place for good reasons. However, you are mistaken in thinking that our (American) tax rates are already low. Compared to most other countries, American tax rates are higher today (because many other countries have lowered their rates in recent decades.)
Trump's regime may turn out to be the worst or not bad. We have to wait and see. It has barely begun. However, your statement that there hasn't been a serious and responsible Republican administration since Nixon is highly debatable. Yes, Nixon opened up our relationship with China and ended the Vietnam war. But wasn't he close to being impeached? Also, many experts view the Reagan administration as having been both serious and successful.
Trump's regime may turn out to be the worst or not bad. We have to wait and see. It has barely begun. However, your statement that there hasn't been a serious and responsible Republican administration since Nixon is highly debatable. Yes, Nixon opened up our relationship with China and ended the Vietnam war. But wasn't he close to being impeached? Also, many experts view the Reagan administration as having been both serious and successful.
Dollar weakness = EAFE strength. Money flows out of the US to elsewhere at the same time massive liquidity (thank you central bankers) drives completion strategies which drive ETFs higher which drive a greater need for institutional investors to not risk one's career and underperform. All professional investors know you don't lose clients in down markets, you lose them in up markets. As a consequence, a feedback loop produces Yardeni's melt-up. Dance while the music is playing. This is the way the financial world works.
2
Just think of all the awesome results we HAD from 8000 to 19000 pts on the stock market = and all under Obama!
111
The Fed balance sheet went from $800mm in 2008 to currently $4.4 trillion. You're Obama-fueled stock market increase is just an illusion and is about to come crashing down when the Fed starts to shrink its balance sheet (hint, it's starting now)
3
11000 in eight years equals 1375 a year.
Jer, you are right to point out that stocks rose during Obama's term also. However, wasn't much of that a bounce back from the steep decline stocks had suffered from the financial crisis?
Wall Street is becoming richer and the main street is becoming poorer. Income gap among Americans is unbelievable. Very unfair
25
Ashraf Chowdhury, you are right to point to the rising income gap as a malady. However, you are mistaken in your view that Wall Street and Main Street are adverse to each other. When stock prices rise, Main Street also benefits in many ways, including: (1) Many in the Main Street have their (401k) savings in stocks; they benefit from rising stock prices; (2) Most pension funds of governments and corporations invest in stocks; that benefits the pensioners; (3) Rising stock prices make it easier for companies to raise capital to grow, invest and employ people.
Of course, there is no direct correlation between stock prices and general welfare. But, they are more symbiotic than adverse to each other.
Of course, there is no direct correlation between stock prices and general welfare. But, they are more symbiotic than adverse to each other.
1
With historically low interest rates, and in the EU and Japan, negative interest rates, and close to US$1.5 trillion held off shore by U.S. global corporations, there is really no where to put money but the NYSE and other smaller exchanges.
And a drop in the dollar makes stocks priced in US dollars cheaper.
An increase in US interest rates will offset the dollar decline but will risk triggering an economic slowdown. The future will be, as usual, entertaining.
And a drop in the dollar makes stocks priced in US dollars cheaper.
An increase in US interest rates will offset the dollar decline but will risk triggering an economic slowdown. The future will be, as usual, entertaining.
1
things weredoing just fine (except for the cheats on WS) before 2007 when interest was 6% or more. It is a combination of crooks, bought politicians, and the rich who will eventually die with loads of money.
1
Are 'powerful animal spirits' somehow different from 'irrational exuberance'?
No one knows what will trigger it, or when, but we do know that the inevitable reversal will be fuelled by those same animal spirits. Greed, invariably, turns into fear.
No one knows what will trigger it, or when, but we do know that the inevitable reversal will be fuelled by those same animal spirits. Greed, invariably, turns into fear.
68
Virgil, you are right to call attention to the patterns of greed and fear which affect markets. However, you should note the difference between "animal spirits" and "irrational exuberance." Animal spirits could be rational or irrational while irrational exuberance is, er, irrational. It is entirely possible that the exuberant animal spirits we see currently are rational because they are based on the favorable outlook of several factors which affect markets (low inflation, low interest rates, less-draconian regulatory outlook, recovering profits, etc.)
I can't help but recall the state of the economy at the end of the Bush presidency and the tripling of the Dow during the Obama years. The recent market uptick is the result of investors' anticipation of a corporate tax cut. Trump himself has done nothing concrete yet. His plan to cut taxes and regulations sounds eerily like Bush's plan. Remember the "Bush tax cuts?" Let's hope the economy doesn't crash and burn again.
41
Phil Dunkle, you are right to caution against giving all the credit to Trump for the market uptick. However, you should note that so many factors affect the stock markets that NO president should be given all the credit (or all the blame) for the stock market's performance during her/his term. The stock market increased during Obama's term but most of it was a bounce back from the steep decline in 2008 from the financial crisis. Similarly, Bush also took the country into expensive wars and increased national deficits. Every president's term is usually a mixture of achievements and failures.
Your cautionary note is a good one. Although the current market outlook is favorable (low inflation, low interest rates, less-draconian regulatory outlook, rising corporate earnings, etc.), we face potential dangers from North Korea, terrorism and political scandals.
Your cautionary note is a good one. Although the current market outlook is favorable (low inflation, low interest rates, less-draconian regulatory outlook, rising corporate earnings, etc.), we face potential dangers from North Korea, terrorism and political scandals.
1
Maybe I am just getting old, but the same thing happened at the beginning of Reagan's term and then when Bush took over. However, neither president sustained that growth.
16
Edgar, cheer up, you're not getting too old if you remember Reagan! The economic growth was sustained all through Reagan's term (despite the brief stock market crash in 1987). However, the economy faltered during Bush Sr.'s term because of oil price spike (caused by Saddam Hussein's invasion of Kuwait). Economic growth continued during the 1990s.
In other words, sustainable economic growth is possible.
In other words, sustainable economic growth is possible.
Is Middle America supposed to be pleased with this - this very institution which Trump railed against in order to exploit and manipulate his voters? I don't care a whit about how our stock market "soars." It just lines the pockets of the already wealthy who, in turn, care not one whit about us. When I see wages go up for the people who actually work for a living; when I see more of us gainfully employed; when I see affordable health care, our kids educated, our own homes, then I may, only may, consider Wall Street of some benefit. Some things just refuse to change, however.
240
Speak your mind, sister Kathy. Well said!
8
I invest in the market, by no means am I wealthy I never will be but I do invest. You all complain that the only people investing are the wealthy, you couldn't more wrong.
18
Kathy Lollock, the issues you raise (wages, jobs, healthcare, education) are all important. However, please be assured that Middle America also benefits when the US Dollar trades lower because, as explained in the article, American exporters (where many in Middle America are employed) benefit from a lower Dollar. The rising stock market also benefits members of Middle America who have savings (401K and other retirement accounts) invested in stocks.
1
The missing statistic that connects the rising Dow to the falling dollar is the Gini index of inequality. As finance continues to be the tail wagging the dog of the economy, it isn't surprising that more and more of America is owned by fewer and fewer Americans.
167
JMJackson, you are right to be unhappy about inequalities (measured by the Gini index). However, you may be mistaken in looking for connections between the Gini index and the stock markets or the US Dollar. You are also incorrect in calling "finance" the "tail wagging the dog of the economy." Finance (the flows, price, supply of and demand for capital) is merely one of the factors that is involved in economic activities. It is neither the tail nor the head. If one wants to compare it to a body part, finance could be compared to blood.
I'm not sure if it's clear from this article, but a "weaker" dollar means foreign countries are able to purchase more from America. The spirits love that idea right now. What you are looking for is a balance between strong and weak because a dollar that is too strong can lead to problems as well.
16
Mark, you are on the mark! Too strong a dollar could affect our exports. Also, a strong dollar is likely to be the result of relatively higher interest rates in the US versus abroad. That could also be negative. On the other hand, a strong dollar would attract foreign investments into the United States which is good. On the whole, the exchange rate is much more the RESULT of market forces than the CAUSE of stock prices or economic growth.
1
The Times and particularly the reader's comments section is probably the last place in the world where you want to come to understand finance, economics, and tax policy.
1
Consumer confidence is creating more business and higher stock prices in the USA.
We run a small business.
Days after the election our phone starting ringing with customers willing to spend money.
We had had our busiest 6 months in the last 30 years.
We spend a lot of time on the road and are seeing more SOLD signs on real estate than for a very long time.
NOT a Trump Zombie, just telling the truth.
We run a small business.
Days after the election our phone starting ringing with customers willing to spend money.
We had had our busiest 6 months in the last 30 years.
We spend a lot of time on the road and are seeing more SOLD signs on real estate than for a very long time.
NOT a Trump Zombie, just telling the truth.
9
Joe Paper, thanks for pointing to the improvements in your business. Sometimes, we become too cynical and fail to appreciate the resilience of the American economy and its ability to bounce back.
John,,We almost did not survive the great recession.
We had to lay off 40%.
We had a very hard time until all of this happened.
Some say the stock market does not help the little man.
That is so foolish.
When folks see their stocks go up they spend money and it does trickle down to the workers who would other wise be home unemployed.
We had to lay off 40%.
We had a very hard time until all of this happened.
Some say the stock market does not help the little man.
That is so foolish.
When folks see their stocks go up they spend money and it does trickle down to the workers who would other wise be home unemployed.
I gather that if you use a dollar-adjusted metric the Dow Jones would be flat--just like the "all tweet and no action" Trump presidency.
52
Paul Wortman, you bring up a good point that currency should be factored into measurements. However, that would be irrelevant to us Americans because, most of us are Dollar-based, i.e., our income, expenses, liabilities, assets and savings are all denominated in Dollars. Dollar-adjusted returns would only be relevant to non-American investors.
1
@John L Don't forget importers and travelers who will pay more dollars.
Animal Spirits?
I would call it Mean Spirits.
As shown by continued Corporate profits and a Share Market that has broken the records, whilst wages, income distribution, Minimum wages , poverty levels and the financial security and wealth of the majority of Americans continues to flounder and either remains flat or provides marginal growth , if at all.
Amid the continuing record Profits, Returns on Equity, Dividends and rewards to those very few, most everybody else is told that Business can't afford to raise overtime, pay bonuses, increase Minimum Wages , Pay for Holidays or Maternity Leave...or anything much at all...as usual.
Whilst Profits made overseas avoid Tax and the very Rich and their Companies look forward to tax cuts and further advantages to Increase the success, party and profits just a few select will continue to enjoy as this boom continues to reach newer and higher levels of profits and prosperity.
For the other 90% of people...the struggle continues, things get harder and hope continues to lose the lustre always over promised but rarely now is thought by many to have been as real and genuine as it briefly was , for those with memories.
Now its a cheap, hasty veneer that most use to cover up the stark reality that increasingly, no one really cares about most others but react and respond to those that have the cash and the lies to plant them, to say that they really do care...but don't.
For most, Winter has and continues to come in this Game of Groans.
I would call it Mean Spirits.
As shown by continued Corporate profits and a Share Market that has broken the records, whilst wages, income distribution, Minimum wages , poverty levels and the financial security and wealth of the majority of Americans continues to flounder and either remains flat or provides marginal growth , if at all.
Amid the continuing record Profits, Returns on Equity, Dividends and rewards to those very few, most everybody else is told that Business can't afford to raise overtime, pay bonuses, increase Minimum Wages , Pay for Holidays or Maternity Leave...or anything much at all...as usual.
Whilst Profits made overseas avoid Tax and the very Rich and their Companies look forward to tax cuts and further advantages to Increase the success, party and profits just a few select will continue to enjoy as this boom continues to reach newer and higher levels of profits and prosperity.
For the other 90% of people...the struggle continues, things get harder and hope continues to lose the lustre always over promised but rarely now is thought by many to have been as real and genuine as it briefly was , for those with memories.
Now its a cheap, hasty veneer that most use to cover up the stark reality that increasingly, no one really cares about most others but react and respond to those that have the cash and the lies to plant them, to say that they really do care...but don't.
For most, Winter has and continues to come in this Game of Groans.
88
The market soars because everyone is anticipating their tax cut and tax amnesty for all that money offshore.
The dollar sinks because all of that wealth will be siphoned off to the top, while the manufacturing base\common folk gets left behind.
Am I wrong ?
The dollar sinks because all of that wealth will be siphoned off to the top, while the manufacturing base\common folk gets left behind.
Am I wrong ?
214
Yes - actually - you are - the stock market reflects the present perceived value of the future value of a bundle of companies - so a small part of that might be an increase in profitability due to a lighter tax bill - HOWEVER...
The dollar is falling because people DOUBT that personal or corporate tax cuts will be forthcoming.
Do you have a complex dichotomy of competing narratives that has yet to be resolved.
The dollar is falling because people DOUBT that personal or corporate tax cuts will be forthcoming.
Do you have a complex dichotomy of competing narratives that has yet to be resolved.
2
@Steve
So you are saying that the value of the American dollar ( the currency of the world ) is based on people's perceived notions ? really ?
hmmm , that is a new one to me.
So you are saying that the value of the American dollar ( the currency of the world ) is based on people's perceived notions ? really ?
hmmm , that is a new one to me.
3
Funky as well as many libs just like to pass the blame on the republicans and the wealthy because as we all know no democrat or liberal invests or has money in the market. Why just ask Ms. Pelosi about her insider trading habits. Aren't you all supposed to be the smart ones in the room? At least that's what you tell the rest of us.
2
Isn't the DJI a bad measure of the stock market in general? Isn't it a static list of companies that no longer represent that market as a whole? Planet money, NPR, and others have talked about how poorly the DJI represents the market for a while.
9
Justin, you are right to point out that DJI does not represent the market as a whole. However, other broader indices (such as S&P 500 and Nasdaq index) have also risen with DJI.
Headline: Dow Passes 22,000, but Market’s Surge Meets Dollar’s Swoon
“And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful”
Warren Buffett.
When I see headlines like this, I get fearful.
“And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy only when others are fearful”
Warren Buffett.
When I see headlines like this, I get fearful.
29
Stocks are valued in dollars. Think of them as fractional ownership of the economy, which we know is growing at 2-3% per year. Any Dow Jones growth above and beyond that simply reflects that one dollar is worth that much fractionally less. The math is pretty simple.
1
Strong stock market, high-priced dollar -- the two are not connected. (Calling the dollar "strong" just makes silly people think a high-priced dollar is a good thing, which it isn't necessarily.)
10
If the price of shares of stock on the NYSE represents an assessment of its value as an investment by a world wide population of interested parties, then it is entirely logical that a diminution in the value of the dollar would be matched by an increase in the dollar price of the stock. Isn't that exactly how real inflation works?
9
wentwest, it doesn't quite work that way. The price of NYSE shares is not an assessment of its "value" by a "worldwide population of interested parties." The price of shares is merely the price at which a small number of shareholders elect to trade (usually a small number of) their shares. It is not a measure of "value" as a whole, as you suggest.
Inflation is usually the measure of price increases of the goods and services we consume. That is not directly related to or directly caused by stock prices or the dollar's exchange rate.
Inflation is usually the measure of price increases of the goods and services we consume. That is not directly related to or directly caused by stock prices or the dollar's exchange rate.
Multinational Corporations vs. Nation States - food for thought.
20
Jordan Chassan, indeed, you point to an important issue that we face today. Multinational Corporations (MNCs) benefit from worldwide trade and markets (and from the declining Dollar). However, individuals in any particular country may or may not benefit from the factors which benefit MNCs. An important corollary is the fact that, in recent decades, most media organizations are also owned by MNCs (Disney owns ABC, Viacom owns CBS, Universal owns NBC and Fox and CNN are MNCs too.) Naturally, most media organizations are less sensitive (if not totally opposed to) the idea of Nation States.
2