Wednesday, October 27, 2021

Miscellaneous chart updates


Here are a few updated charts that track important information:

Chart #1

Today saw the release of September capital goods orders (Chart #1). Once again they were pretty strong. Capex (shorthand) is important because it is business investment in things that will enhance worker productivity in the future. This is therefore a good sign that future economic growth will be at least decent.

Chart #2

As Chart #2 shows, inflation expectations continue to move higher. 5-yr breakeven rates are now up to almost 3%, while the average rate for the next 10 years is now up to 2.7%. With the exception of early 1997, long-term inflation expectations are now up to 24 year high. The chart highlights another disturbing development, which is the very low level of 10-yr real interest rates, now -1.1%. That, combined with the -1.8% real yield on 5-yr TIPS is a sign that the bond market expects real economic growth to be quite anemic for the foreseeable future. Taken together, rising inflation expectations and negative and declining real yields add up to something approaching "stagflation." No wonder Biden's approval ratings are cratering.

Chart #3

Yesterday's release of national housing price statistics revealed continued and impressive strength in housing prices, which are up 20% in the past years. As Chart #3 shows, housing prices are at record highs, both nominally and in inflation-adjusted terms. 

Chart #4

Despite the huge increase in housing prices this past year, houses remain generally affordable, as Chart #4 shows. You can reach this same conclusion by comparing home prices to disposable income; that ratio today is roughly the same as it has averaged since 1987.

Chart #5

Household finances on average are in excellent shape today, as Chart #5 shows. Total financial obligations (payments for mortgage, consumer debt, auto leases, rents, homeowner's insurance and property taxes, all as a % of disposable income) are almost at their lowest level in over 40 years. 

Chart #6

Moreover, with M2 continuing to grow at a 12% annual rate and retail bank accounts swollen with over $4 trillion of extra money (see Chart #6), households have never been so flush. No wonder demand is outstripping supply these days. From the looks of things, these conditions are not about to change any time soon. Be prepared for more bad news on the inflation front.

46 comments:

Benjamin Cole said...

What a terrific wrap-up.

You young people may not know it, but in the the old days one (an ordinary one, that is) would have to look at the back of Businessweek or The Economist and hunt around for data. Now we are spoon-fed excellent reports from Scott Grannis.

One quibble, about house prices. Yes, affordable for those people who can buy houses. But others are renting, and rents have exploded, largely due to property zoning.

The anti-free-market property zoning results in a permanent type of "economic rent" being applied against the renting class. Boy, this cannot be good for the social fabric.

Additionally, without property zoning, even for-purchase housing would likely be much more affordable. Other goods have become cheaper. For-purchase housing could be cheaper too, if regulations could be brushed out of the way.

If you stop hitting yourself in the head with a hammer, things are so much better...







K T Cat said...

Thanks for taking the time to do this, Scott.

Adam said...

Scott,
The Reserve Bank of Australia (RBA) declined to buy the April 2024 bond in its regular market operation, even though yields were well above its target of 0.1%. The market responded by pushing the yield up yet further to 0.46% , daring the central bank to defend its commitment.
Is this going to happen around the world?

EHR said...
This comment has been removed by the author.
The Cliff Claven of Finance said...

Not mentioned here:

3Q 2021 Real GDP rose at a 2.0% annual rate

Private inventories rose at a +2.07 annual rate
The rising inventories accounted for all the growth

Meaning Real Final Sales were slightly negative

That is not good news.

Ataraxia said...

It's interesting how real and nominal house prices have consistently converged over the last 30 years.

wkevinw said...

On GDP print & inflation: The "most likely" outcome in my opinion, is more of the same on GDP- the same prior to 2020 = ~1-2% GDP ; which is very much stagnation.

Inflation for ~ 1 year could be 3-5%, but I don't see enough life in the economy to bump it much higher for longer.

Now, something could break due to just this combination, which is a small taste of stagflation. I don't know what would break, but if we get a violent bearish breakage, watch out for your financial instruments/investments.

Scott Grannis said...

Ataraxia: Since I have adjusted historical prices for today's dollars, the two series must by definition converge to the current value. What is useful about the inflation adjusted series is to see how the peak in past prices (around 2006) was less than today's nominal peak.

Scott Grannis said...

Cliff, re GDP: I'm pretty sure that Q4 growth will be higher than 2%. The St Louis Fed's model is predicting 5% or more.

Ataraxia said...

Ahh. Thanks Scott... I should have picked up on that myself

Benjamin Cole said...

Another very solid quarter unfolding on the earnings front.

Perhaps we forget just how well run modern-day public companies are (hat-tip to management incentive packages, generally better governance of the last couple decades, and also the M&A crowd, who will buy a public company that is too much undervalued, and run it better).

The downside is state and federal governments, becoming expensive, intrusive and parasitic, and this includes the national-global security state.

In terms of macroeconomics, Trump actually got a lot of things right...Biden not so much...










Benjamin Cole said...

Add on: OK, say we have 5% inflation for the next three years, then tailing lower.

My guess is most public companies will capture the upside---higher price points on the selling side---but manage the downside, which is costs.

The employment cost index for September came out on Friday, and was up (private sector) 4.1% on year. Lately, productivity have been rising at 2%. So we end up with unit labor costs up about 2% annually, in the private sector.

Yes it could get worse, even tighter labor markets. But the C-19 scare seems to be winding down, along with extended unemployment benefits. The Biden Administration has ensured a wide open border with Mexico, which will help to drive down wages (yes, if you think the Donks are not an elite party, you have a lot to learn).

So...higher inflation and yet another and larger surge in corporate earnings?

Carl said...

"Scott,
The Reserve Bank of Australia (RBA) declined to buy the April 2024 bond"
i'm just an ordinary guy but i'll take a shot at this.

But, but…this is not supposed to happen…
Today the yield on that bond was reported as high as 0.8%...
From a central bank point of view supporting quantitative easing, this is not supposed to happen.
From an MMT point of view (which has become more relevant with a progression towards fiscal dominance on top of monetary dominance), this is not supposed to happen. See what Mr. Bill Mitchell (professor in Australia, one of the MMT modern founders), section on yield curve control, had to say about this in 2019.
http://bilbo.economicoutlook.net/blog/?p=42332
What we’re finding out is that monetary dominance and artificially pumped M2 doesn’t do much for inflation but fiscal dominance may result in some inflation despite being far from full employment if public funds are not spent productively (people being paid not to work, entitled safety net allowing people to quit, asset price inflation through a combination of monetary and fiscal dominance allowing a record amount of boomers to retire etc etc).
What’s interesting is that yields have been rising along the yield curve in Australia but the yield curve is flattening as yield curves are flattening (collapsing since last spring) in the US, UK, Germany etc). Yield curve flattening at this rate helps to differentiate what’s transitory: the recent inflation uptick or the recent GDP disappointment.
When dissecting GDP numbers, equipment investment is on the rise as a sign of corporate response to short term supply issues but structure investment fell 7.2% (-3.4% y/y) and has been falling since the end of 2019.
One should discount the possibility that we are seeing the first signs of withdrawal symptoms as a result of the so far planned decreased monetary and fiscal dominance.
-----
@Benjamin
Do you realize that, especially since the GFC, rising corporate profit margins (both absolute and relative) have been very tightly correlated to government deficits. Under the present regime and before non-linear changes, a larger surge in corporate earnings has to be correlated with...

The Cliff Claven of Finance said...

Cliff, re GDP: I'm pretty sure that Q4 growth will be higher than 2%. The St Louis Fed's model is predicting 5% or more.

My general thoughts on economic forecasts:
As a group, US economists have never predicted a recession,
so it's hard to take any predictions seriously.

Many unusual problems in 4Q 2021:

supply chain issues before Christmas goods shipments peak

IC chip shortages continue

vaccine mandate firings / resignations

COVID deaths per day per 100,000 Americans
in 2021 exceeded 2020. Vaccine effectiveness
is "wearing off" and the cold weather
increases all respiratory diseases as people
spend more time indoors and get less vitamin D

Joe Biden is president =
one bad decision after another.

A 5% growth rate for real GDP growth rate
in 4Q 2021 is very optimistic.

Benjamin Cole said...

Carl--

Verily I have been puzzling over fiscal deficits for a long time without making any conclusions.

If the Fed can hold onto its balance sheet and transfer interest income to the US government, then I wonder what is a fiscal deficit.

I am not sure the MMT crowd is wrong; what is wrong is that they always have social welfare spending on their minds, instead of lower tax rates on productive people.

Anyway, that's what I believe this week.

Also, the austerity program in Greece has been a complete disaster.

Carl said...

^"Austerity" will have its days of 'glory' again, either from bright politicians applying it wisely (unlikely because of the J-shaped curve of pain before pleasure) or from an imposed constraint somehow. From an individual perspective (opportunistic), timing is the challenge.
When looking back in history, i see people like Mr. Paul Volcker who was able to navigate political circles in order to do what's right (despite two closely tied recessions). i also see Mr. Paul Martin (Canada's finance minister when federal fiscal debt hit credit agencies' radar in the 90s) who was able to articulate and apply a plan to restore a sustainable fiscal balance.
Oh and by the way, the path towards MMT has already started and the movement is fed by noble intentions.
Tea party activist shouting at a demonstration: "Don't touch my Medicare". Yeah, 'we' are at that stage.

Adam said...

This is relly weird, capitalims needs central planning?
https://medium.com/@ryan79z28/im-a-twenty-year-truck-driver-i-will-tell-you-why-america-s-shipping-crisis-will-not-end-bbe0ebac6a91

Benjamin Cole said...

S&P 500 at new record zenith.

We may dislike inflation, but moderate inflation may be good for corporate profits.

In moderate inflation, most companies can raise prices continuously (in small increments) but raise wages once a year.

Carl said...

^On the expectation that corporate profits will continue to diverge from main street wages.

In 1999, Mr. Buffett suggested:
" In my opinion, you have to be wildly optimistic to believe that corporate profits as a percent of GDP can, for any sustained period, hold much above 6%. One thing keeping the percentage down will be competition, which is alive and well. In addition, there's a public-policy point: If corporate investors, in aggregate, are going to eat an ever-growing portion of the American economic pie, some other group will have to settle for a smaller portion. That would justifiably raise political problems--and in my view a major reslicing of the pie just isn't going to happen."

Well, at this point, the gradually slowing growth of the economic pie has been linked to increasing corporate profitability (magnified during the Covid downturn thanks to help from above). Is this sustainable?

A nagging concern revolves around the following question:
Is the rising corporate profitability mostly an effect of business acumen or is it mostly tied to rent seeking?

Johnny Bee Dawg said...

The Fed is NOT going to keep propping up markets to cover for our installed President's Socialist policies now that voters are putting PUBs back in office. The Fed will punish investors next year if voters put on the brakes on Fundamental Transformation.
We are going to need a Global Tax so we can cool the earth, and stop people from being so gosh-darn self sufficient.

And make sure you get all the small children the shot for a disease that poses them no risk.
Get the OAS (Original Antigenic Sin) going quick in their little bodies to keep broad natural immunity from ever ending the Covid spread. Non-sterilizing booster shots for life!! Never ending Covid! What a great subscription model! Yay.

Maybe one of the new Pharma billionaires will buy Fauci a cute little Beagle Pup for a thank you present! (sans vocal chords, of course. Who needs all that noise?)

Carl said...

@Johnny Bee Dawg
Last July 9th, there was this exchange:
You:
"New Daily Deaths 7 day average for Missouri thru July 7....ZERO
ZERO DAILY DEATHS is not much of a "hot spot", despite what the media says.
https://www.worldometers.info/coronavirus/usa/Missouri"
Me:
"Your interpretation of the recent worldmeter data is incorrect.
Also see the Missouri public health website referred to above.
Also look at the their recent hospitalization pattern (Missouri, by age group etc):
https://covid.cdc.gov/covid-data-tracker/#new-hospital-admissions
Because of vaccinations mostly as an effective at-risk group protection, this coming wave will be much less significant but 'we' are letting the natural experiment going to an extent that is difficult to reconcile with rational analysis.
It's sad in a way that this issue has become so childishly political because the heterogeneous response has cause a recurrent pattern (waves) with, first, cases spreading in younger age groups, in groups where basic behaviors vary, and then with people getting sick, hospitalized and dying and eventually reaching at-risk groups. Without vaccines (Missouri is not a positive outlier here), this wave would have been associated with much worse outcomes.
Just stay tuned to the increasing covid-death pattern in Missouri in the next few weeks.
A fascinating aspect is that this heterogeneous approach with much irrational input is likely to be the vehicle of choice as we enter a phase when 'macro' topics such as inflation (or the desperate lack thereof) will take center stage at the policy level, for better or for worse. This too shall pass.
-----
Follow-up:
https://www.worldometers.info/coronavirus/usa/missouri/
-----
The virus story and related public interest are about to falter with the gradual slip to low-grade and variable endemicity but the inflation story is unfolding and we're about to find out if the economic fundamentals can support the beginning of a whiff of monetary tightening during the early days of fiscal tightening related to partial retraction of public deficit support.

Johnny Bee Dawg said...

Yep, and how are daily deaths doing?
(Hint: Missouri 7-day average thru yesterday is ONE. Still no hot spot.) Ro < 1
People moving on with life? Movies, concerts, ballgames, dining, shopping, flying.

Give elderly & immune compromised a shot, and leave the rest of us alone.
A tiny sliver goes to the hospital. No hospital has been overwhelmed. IFR of Covid is about 0.5%…or less.
Shot does NOT stop anyone from getting Covid or spreading Covid. It reduces symptoms once you get Covid…for about 20 weeks, then it wears off. Vaccine performing poorly all over the world.

Worst policy in the world was to widely vaccinate with a non-sterizing “vaccine” in the middle of a pandemic. Idiocy. Fauci & Gottleib know this. They got rich beyond measure, tho.

Now we have ensured the virus will linger for years. Because of OAS almost none who get Covid after the shot will build natural immunity, and will get Covid over and over. Boosters forever.

Let’s see how inflation goes as M2 growth decelerates, bond purchases taper, and supply chains open up by Spring, and people go back to work.

Carl said...

^This may not be the place to discuss the virus but there is a certain template in place if (when) inflation follows a downward trajectory with 'growth'.
The previous post was related to the formation of an opinion based on inputs and i submitted that your inputs were wrong, a situation which puts your conclusions at risk.
The response: more wrong inputs...
Here is a bipartisan list of two relevant inputs concerning the Missouri hospital situation last summer:
https://www.npr.org/2021/08/05/1025248670/missouri-hospitals-are-struggling-to-cope-with-summer-spike-of-covid-19
https://fox4kc.com/news/doctors-push-for-vaccines-as-kansas-missouri-hospitals-become-overwhelmed/
-----
Back to the inflation scare with the 30-yr Treasury yield 'spiking' to 2.02%...
When the reflation 'recovery' will lose steam, there will be tremendous pressure to go full MMT and 'we' will need solid arguments to maintain a sound currency, not politically contaminated and empty slogans.

Benjamin Cole said...

Another day, and another record zenith on the S&P 500. They say Wall Street is forward looking.

Q3 earnings season not bad at all, mostly positive. Corporate profits are better than ever.

The Biden Administration is a negative, but they seem flat-footed.





John A said...

Some people here are making up numbers to serve some ideological point.

7-day moving average of Covid cases in Missouri is over 1100 as I write this:
CDC: Missouri cases
^ Select Missouri for the state and Daily Cases for the View.

7-day moving average of Covid deaths in Missouri is 28 as I write this:
CDC: Missouri deaths
^ Again, select Missouri for the state and Daily Deaths for the View.

Like many other states, Missouri has a strong intra-week pattern of Covid cases and deaths reporting. Most deaths are reported on Mondays. Rest of the weekday has a few cases, and on weekends, none are usually reported.

I live in Missouri, BTW.

Al said...

Tesla!!!

Benjamin Cole said...

"A coronavirus outbreak in Iowa deer is prompting scientists to worry if the animals could be a reservoir for the virus in the long term"--Business Insider 11/4/21

There is something spooky about C-19.

The academic literature is that viruses have great difficulty in hopping between species, normally. But C19 infects dogs, cats tigers, minks, deer, raccoon dogs, civets, pigs, apes and so on.

Sure seems like C-19 is a Frankenstein virus, first seen immediately outside a lab in Wuhan that was cooking up more-potent coronaviruses through gain-of-function research.

Just by chance, no?

Frankly, this story is too hot to tell for America's elites, who are deeply invested in China and buddy-buddy with the CCP (see Apple, Disney, BlackRock, GM, WalMart, and verily, now even Tesla).

Trump had more flaws than any other dozen men put together. But he sometimes blurted out the truth.


Johnny Bee Dawg said...

John A.

Your link to Covid deaths doesnt go to anything showing 7 day average daily deaths.
Worldometers does. Scroll down to the bottom and click 7 day average.
Its ONE

Carl said...

"Your link to Covid deaths doesnt go to anything showing 7 day average daily deaths.
Worldometers does. Scroll down to the bottom and click 7 day average.
Its ONE"
The 7 day excuse doesn't explain the 'issue'.
When looking at these graphs, you have to integrate the fact that recent data will need to be retrospectively actualized going forward in order to take into account data that has happened and not yet reported along the whole chain (it's similar to the insurance reserves concept, IBNR etc). So Last July 7th, when you looked at the data, it said zero but when you look at the graph now (with the retrospective actualization), it shows 15 (!!).
Of course the difference between 15 deaths and zero deaths is not that significant in a way especially if it's not you and the virus is slowly becoming endemic but the number of easily preventable Covid-19 disease burden in the US has been staggering in large part because of easy misses (ie vaccine coverage) and also because of the nonchalance around data discovery.
-----
Why is this relevant here (macro stuff)? Benjamin Cole really makes me think hard about the sustainability of corporate profitability going forward (and the potential impact on my portfolios). Related to this topic, i'm trying to figure out where the puck will be. However, this process assumes that i can figure out where the puck is now (ie are presently reported profits a manifestation of mirage prosperity or a sign of fundamental strength?).
-----
^The origin of the virus is an important consideration but should not have been and should not be used as an excuse for poor execution and bad outcomes related to covid disease burden. When the 2007-8 financial crisis hit, relevant actors put 'emergency' measures in place and decided to look into causes after. Of course, eventually, people find out that the second part is just as important although people have a recurrent tendency to waste crises. Here we (about to) go again?.

John A said...

JBD:

The links I gave are from the actual, official CDC statistics. The links don't work directly, you have to pull down the pull-down menus as I described. It's not hard.

Once again, go here:

https://covid.cdc.gov/covid-data-tracker/#trends_dailycases

Under "Select a state or territory" choose Missouri. Then beneath View select Daily Cases, and then Daily Deaths.

As I write this, the 7-day moving average of cases for Missouri is 1,189.
And the 7-day moving average of deaths for Missouri is 28.

Those are the official numbers.

randy said...

"The origin of the virus is an important consideration but should not have been and should not be used as an excuse for poor execution and bad outcomes related to covid disease burden."

A dense commentary above, but not clear what you think the poor execution was?

My wife and I were just talking, and of the hundred or so people we know casually, and their hundreds of people, we can only think of 2 deaths - both darn near 90. Not one hospitalization. Quite a few infections that sucked but not noteworthy. Now that's just anecdotal, and probably our universe is just lucky. For sure many families somewhere have lost someone tragically, and that shouldn't be minimized. But - how to reconcile that with never ending neurotic fear so many are living with...

Also thinking, when someone is trying to sell me something, I shade their information knowing their bias. All of the data is being published by some entity trying to sell us something. Pharma selling vaccines. Hospitals understandably expressing potential alarm in fear of actual alarm. CDC selling an illusion of competence. The politicians selling an illusion of "protecting us".

I get the sense the politicians are are starting to feel boxed into a corner because the public is increasingly tiring of living in despair, but pols have nothing else to offer - no end in sight. Just the next existential risk. This mindset typically leads to "solutions" that cause worse outcomes than the problem.

I genuinely fear we will find in years to come that vaccinating kids was a horrible mistake. I hope to God I'm wrong, but it seems setup as something Michael Chrichton might write.

Carl said...

@randy
Thank you for the healthy pushback. Somewhat unusual these days on the internet.
Of course, your points are valid.

In the natural course of human events, 'we' have become a civilization and the human course has been impacting (for better and for worse, assuming more of the former on a net basis in the name of progress) the course of natural events. Humans, as a species, were not supposed to live much beyond effective replication stage and the virus is just doing its thing. The first question is: should we let it? The second question: how (shared values)?

The previous existential questions shouldn't preclude 'us' from being efficient whatever 'we' choose.

The vaccination question is two-sided. Why have we come to be suspicious about a solution that has been, at least so far, nothing less than amazing (if the goal is to limit disease burden)?
-----
Speaking of productivity, Q3 results are out and, as expected, as non-productive citizens are gradually going back to work, previous productivity trends are reappearing.
-----
Humble opinion: kids these days are exposed to much worse than simple molecules.

Benjamin Cole said...

Well, evidently, before the world ends in a hyperinflationary explosion...the S&P 500 sets record zenith after record after record....

Alfred E. Neuman rules!

Adam said...

Scott,
This opinion is worth looking at
https://voxeu.org/article/expectations-data-indicate-us-entering-recession-about-now

Could you plse comment on this plse

Scott Grannis said...

Adam: Consumer expectations data can sometimes signal an upcoming recession, but more often than not, sentiment is a lagging indicator. In any event, I’ll stick by my trusted monetary indicators, which are saying that a recession is just not in the cards. I’ve posted many updates of one of my favorite charts, which shows 1) the real Federal funds rate and 2) the slope of the yield curve. Today those indicators strongly suggest that monetary policy is extremely accommodative and liquidity is abundant. If you add to that a measure of credit spreads (which are currently about as low as they get, which signals very healthy economic conditions), then I conclude that a recession is not likely at all, at least for the foreseeable future.

Every recession in my lifetime, with the exception of last year, was the direct result of an extreme tightening of monetary policy by the Federal Reserve. Today we have precisely the opposite of those conditions. Monetary policy has never been so tight.

Benjamin Cole said...

I think the last sentence needs correction.

Carl said...

^i wouldn't say it was a freudian slip but...if the unconscious is brought into the macroeconomic equations, then it will be unusually difficult to maintain rational conversations. :)
Seriously, money is obviously not tight but trying to put oneself into their shoes, it must be awfully uncomfortable to contemplate any kind of money tightening given the debt addiction issue and given the fact that the Shiller PE just reached 40..
https://www.multpl.com/shiller-pe
It's a pain to recurrently signal potential downside but in 1989, it was the modest central money tightening in the land of the rising sun that became labelled as a pin (that burst the bu$$le).
What is a recession and was the Covid recession a recession?

Benjamin Cole said...

Carl-

Verily, how about today, is money tight in Japan? They have been in borderline deflation for decades, have pegged their sovereign bonds at near-0% and the Bank of Japan owns half the gigantic national debt.

I don't understand any of it, though Japan has a stable population, and it is easy to build housing, and people like to save money in Japan.

Before C19, they had 160 job opening for every job hunters, and even now there are more opening than hunters.

If someone landed in Japan from Mars in 1990, and wrote a textbook about macroeconomics in 2021...the axioms and proclamations would look different than what we have today....



Carl said...

Hi Benjamin,
Fascinating indeed. What could this mean? Japan has a found a way "out" or has been able, so far, to postpone the inevitable?

Japan is different (demography, institutions etc and they are, somehow, a leading indicator of what's to come) but there are shared themes. Japan population is aging. Private savings (households) have been coming down and, with the continued expected shrinkage in working age population, are expected to soon reach negative territory (ie dissaving ie selling JGBs in the 'private' market). So far, the BoJ has been able to absorb all excess JGBs.

Perhaps this will all make sense at some point and there may be a way out of this mess that is not foreseeable at this point.

However, the rational framework (Abenomics) involved three arrows: monetary easing, judicious and timely fiscal easing and structural reforms to increase growth potential. The third arrow is the last one but the most important. The idea of the first two arrows was to promote the third one. The first and second arrows can be considered a 'success' but, in Japan, it's the very 'success' of those two arrows that have effectively allowed Japan to afford not to tackle the painful third arrow.

In the 30s (i know you think Japan used easing to its advantage then to modulate the consequences of the Global Great Depression) but the last arrow then was to promote a remilitarization-reflation economy. Of course that seemed to work beautifully for quite some time but the end outcome had to mean a Pearl Harbor gamble.

Along a similar line of thinking, Japan policies will have to include a full MMT gamble (when? with the next downturn?). As you may know, the politics of Japan has seen a creeping rise of influential politicians with a growing component of MMT policies in their 'programs' along a growing share of citizens expecting direct payouts from the government.

The 2020-1 recovery in the US (MMT-like) has shown that inflation (including wage inflation) can manifest itself even with a tremendous amount of idled workers (participation rate not recovering) directly as a result of fiscal policy. So we are finding out that the alternative theory may have some clear constraints (even if those constraints are not supposed to exist in our modern world).

Benjamin Cole said...

Carl-

I have spent 40 adult years pondering US GDP, and perhaps the last 20 thinking about monetary policy.

You are the first person to mention the Japan success story with MMT, during the Great Depression. Sadly, Japan wasted the effort on a cruel war machine, instead of better roads, factories, schools and farm equipment. But alone among developed nations, they sidestepped the Great Depression.

I am one of the few pro-business kind of guys that thinks MMT might have it right. But also that most MMT advocates are wrong when they talk about more social welfare spending, instead of more tax cuts on productive people (such as investors and workers).

Always protect and enhance your productive people and industries. The rest will follow.

Well, time will tell. We have seen a 40-year-long global disinflationary trend, one that baffled US macroeconomists for the entire four decades.

But the nice thing about macroeconomics debates is that no one is ever wrong.

What happens next...well, baffles me.

Adam said...

Thanks for your take Scott.
Carl, re:high P/E of SP500.
Also future eps growth ratio matters, names like MSFT have very big pricing power.

Johnny Bee Dawg said...

Wow…look at the gap DOWN this morning on the 30 year Treasury yield.
No biggie. Just interesting.

It ALMOST as if all the bad policy, new debt, spending, mandates, handouts, and lawless government are becoming a heavy heavy wet blanket on growth and profits and freedoms.
ALMOST!

Hurry and get your forced government injection.
This is a Brave New World.

Fred said...

It's an Atlanta Braves' New World! Soon to be a Georgia Bulldogs' New World! GO HERSCHEL!

ebg investor said...

It is likely that the two days of TSLA dumping shows a possible impact on the market, if the taxing of a not realized capital gain will pass the legislation.

Adam said...
This comment has been removed by the author.
Adam said...

JBD,
Any ideas what dems can do, to undo the danger of positive political momentum gained in Virginia on Nov 2 by rep.?