It's time to prop up those indexes and paint a pretty picture!
As you can see in AfraidToTrade's S&P chart, we burst back over our 2,360 line on the S&P and now we just need to get back over the yellow zone and it's on to all-time highs and, dare we dream, multiple of 25 times forward earnings on our stocks?
It's very exciting, usually only bond holders accept 4% on their money because bonds are supposed to be a safe, risk-free asset so investors are willing to accept a lower return in exchange for safety. Now stocks are only returning 4% on our money and people seem fine with that and a 10-year note pays 2% and your checking account pays 0.2% – if you are lucky.
The gist of that is that the money you make, that you work hard for, is not rewarded when you either save or invest it. That then forces you to give your money, VERY CHEAPLY, to the Top 1% – to the Banksters (savings, checking) and the CEOs (stocks, bonds, labor).
You work hard, they pay you less and then, when you want to save or invest your pay – they pay you less again – and then they blame YOU for not working hard enough to get through life without Government handouts (ie. taxing them). You would think this Administration would be making that shockingly clear to voters by now but CNN did an amazing interview with 6 Trump voters and, after two months, all but one gave him an "A" for performance and the guy that gave him a "B" said he simply never gives As or he would have.
The problem with the pyramid above is that our Top 20% are now so rich that there's nothing left to take from the bottom 80%. Once they finish taking your Social Security and Medicare money – there won't be anything left to take (other than jobs through automation, of course) but, before they leave you destitute, they have to first dismantle the Social Safety Net, lest someone points out that it is their duty to feed or educate starving children or some other Liberal nonsense.
Is it any wonder that retail sales have been weak? Earnings of the bottom 90% are 10.7% lower than they were in 2002 and an average salary of $30,439 doesn't buy what it used to either. That's why clothing stocks are going down and down – they have to report sales every month (every week we get retail reports, in fact) so there's no hiding the pain (and Lululemon just got clobbered yesterday) but what happens when the rest of retail reports next month? Beware of any company you own that relies on selling to the bottom 80% for their income!
If the economy were actually in good shape and consumers were actually feeling good, then they'd buy some clothes! The disconnect is that the same people who give Donald Trump straight As for his performance so far (even as Mike Flynn is heading for witness protection before flipping on his boss, which is funny as he himself said this about people who ask for immunity) are just as deluded when asked about their economic outlook, so we have these irrationally enthusiastic polls that lead to irrationally enthusiastic stock purchases and God help us all if reality ever rears its ugly head!
Fortunately, reality is just an opinion and your reality is just as valid as mine – that's how things work now, truth is simply a matter of who wants it more, right? And nobody wants it more than our beloved Top 0.1%, whose share of our National Wealth has jumped from 7% pre-Reagan to 25% this year – a 257% increase for our Top 140,000 citizens who make, on the low end, $5M per year.
They've got the President they want, they've got Congress they want, they have the market they want – what could possibly go wrong? Even this morning, as the markets began to falter slightly overnight, Bloomberg's very first article of the day (12.00 am) was a puff piece on Goldman's the Fed's Bill Dudley and how he works to keep the Fed focused on PROTECTING THE STOCK MARKET and, yesterday, in Florida he said:
"I don’t think we are removing the punch bowl, yet. We’re just adding a bit more fruit juice."
Now THAT is how you dress a window!
Have a great weekend,
– Phil
