To Unleash or Not to Unleash, That is the Question…
LOVINGSTON, VIRGINIA – Corporate earnings have been going down for nearly three years. They are now about 10% below the level set in the late summer of 2014. Why should stocks be so expensive?
Example of something that one should better not unleash. The probability that a win-lose proposition will develop upon meeting it seems high. It wins, because it gets to eat…
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Oh, yes… because the Trump Team is going to light a fire under Wall Street. But they must be wondering about that, too. Raising up stock prices – as we’ve seen over the last eight years – is not the same as restoring economic growth and family incomes.
And as each day passes, the list of odds against either seems to be getting longer and longer. As the petty fights, silly squabbles, and tweet storms increase, the less ammunition the administration has available to fight a real battle with Congress or the Deep State.
Still – “Goldman Stock Hits Record on Bets Trump Will Unleash Wall Street,” reads a Bloomberg headline. Goldman Sachs is a pillar of the Establishment, with its man, Steve Mnuchin, heading the Department of the Treasury. So a win for Goldman is not necessarily a win for us.
“Unleashing” suggests a win-win deal, as in allowing the financial industry to get on with its business. But there are different kinds of “unleashings.” Some things – like Dobermans – are kept on a leash for a good reason. Unleashing the mob… or a war… might not be a good idea, either.
Untying Wall Street from bureaucratic rules is at least heading in the right direction. But it will only benefit the Main Street economy if Wall Street is doing business honestly, facilitating win-win deals by matching real capital up with worthy projects.
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Stocks are at record highs mainly due to the Fed 'pushing the rope' with record-low interest rates. Retirees on fixed-income cannot afford to live off of 0.1% savings rates so they are 'chasing' yields in stocks. On top of that, the proposed tax cuts have pushed levels even higher.
ReplyDeleteAre we poised for a bubble burst? you betcha. When? Who knows. But when novice investors start to get their first dose of losses, the cliff will start to collapse.