Coronavirus And The Prospect Of Global Recession
This morning on my cellphone I saw your question about whether markets are heading for a bear market.
Although my unfailingly prophetic money-manager-brother has taught me that predicting fundamental market shifts is a fool's errand, he has continually asserted for the last five years that a doozy of a recession (or worse) is on its way, and when it strikes, there will be no safe refuge in any financial vehicle except precious metals. (Since 2015, he has held that gold will reach $2000 an ounce.)
But back to the stock market as an indicator of bear markets.
Technically, the definition of a bear market is when the Dow falls 20% from its most recent high.
Notably, Trump administration economists have just lowered their prediction for 2020 GNP growth from 1.9% to 0.9%.
1.9% is anemic.
0.9% sucks.
Neither of these numbers manages to keep up with inflation which, to my mind, makes it very difficult for the stock market to recover its "irrational exuberance," a term you may remember from former Federal Reserve chief "Alan Greenspan" who coined the phrase when the dot.com bubble was bursting in the mid-'90s.
Couple 0.9% GNP growth with interest rates so low that interest rate reduction has limited use to pull the economy out of recession, plus sorely limited tax revenues in the wake of Trump's "Tax Law giveaway to the rich" (and ensuing debt levels like we've never seen before), then take into account the overarching fact that Obama's economic expansion (inherited by Trump) is very "long in the tooth," and it becomes impossible (for me at least) to see how "Trump-drunk" investors can re-load enough irrational exuberance to fight their way out of the hole they've dug.
But despite this wealth of damning evidence, it remains impossible to predict (with any measure of certainty) how irrational exuberance might play out in the minds of Trump cultists so self-pithed that, in 2016, they actually elected Malignant Messiah. (Well... the Electoral College elected Trump. Hillary whooped his ass, getting 4.56% more popular votes than "His Toxicity.")
How Deep -- And How Thick -- Is The Bullshit?
No comments:
Post a Comment