VickyCaramel wrote: ↑
piginthecity wrote: ↑
No such thing, Vicky. Just typing two words and separating with a stroke doesn't make them related.
By and large people in my country don't care about politics in United States.
One is one thing and one is another. It's niaive of you to think you can shore up a flaky argument about one thing by appealing to an argument about something else entirely.
Clarity of thought involves focussing, discrimination, and simplification. Not lumping topics together in a vaguely defined package based on how they make you feel.
If you had quoted that in context, anyone could see I am not talking about those two things, I am talking about the tactics of the opposition to those things, which are identical - Autistic screeching.
Not only is the hysteria the same, but the excuses are the same. Bad news is the fault of the thing, but when it's good news, they claim the policies haven't come into effect yet.
I am in general agreement with Vicky and I also think Matt has a bit of Trump Derangement Syndrome (sorry Matt... I still love love you man!)
A few things are on my mind. I read in the WSJ that many individual investors stayed out of stocks because they were afraid of Trump. I would argue that this is an irrational fear, but I can see why people were afraid. Trump says the most outrageous things, but I think he mostly says things for effect. He is always trying to make a deal. So, when he says he is going to tear up trade agreements I think this is a negotiating tactic. But... many other people take him at his word.... that he is going to tear up trade agreements and thus destroy the economy. Well, if no one believed his words then his tactics would fail. He has to get at least some people to believe him. I am AMAZED after a full year that people have not figured this out. Haha. So, all those people who were scared and didn't figure out Trump stayed out of the market and lost the opportunity to enjoy the proceeds from the greatest market increase in decades. Of course, all those people that lost out on the market have even more reasons to hate Trump. They think Trump kept them out of a market that Obama had set up for growth. So...... none of these people can ever give Trump any credit for the market growth. They will NEVER give Trump ANY credit because this breaks their heart. They can't admit the misjudged Trump and this caused them to loose money.
Now, Obama didn't do anything fundamentally wrong, but he did have strong anti-business tendencies. I think these things kept business in a cautious position. Obama was a regulation monster... shitting out more business restriction than most presidents. People behave based on their emotions to a great degree so the plodding thoughtful style of Obama just kept things smooth and calm. There are always things that businesses worry about. Interest rates have been ridiculously low to encourage growth and debt creation, but this just had business worried that some day rates would go up and the economy would grind to a halt.
So.... here comes Trump. He says crazy shit for sure. Many people take him at his word, but business people are the group most likely to understand Trump. He is a bloviating deal maker..... just like them. He says crazy stuff, but his goal is to grow the economy. This is in stark contrast to Obama and Hillary. The Democrats clearly want to grow the regulation/nanny state and Trump clearly wants to destroy it (or at least curtail its growth).
That press conference that Trump held with the room full of paper from eliminated regulation. That is REAL SHIT. Sure, a bunch of it was Obama regulations that had not yet gone into effect, but Trump stopped it. It was going to be real, and it was going to be just one more piece of shit that business would have to deal with.
Of great significance was the behavior of the Fed. They did see things heating up a bit in the economy so they bumped up interest rates. The economy didn't even treat it like a speed bump. In fact, the economy absorbed the increase with such aplomb that it actually increased investor confidence. Trump's pro economy rhetoric helped the Fed have the courage to bump up rates and it worked perfectly.
The new tax law has been universally positive to business. If the tax code had not passed we would see a stock market at much lower values. Most businesses are now in a pro growth and pro American investment stance.
All of this is good news except for the ballooning debt. The debt will have to be paid one day. Hopefully, the Federal tax revenue will increase due to profit growth and we will avoid a debt crisis. We will see. In the near term, most investors and businesses think the debt is not in tragic territory. As long as this is the general feeling then investment levels will be high. So far so good.
Inflation is the thing to watch for. If inflation grows, and especially if it outpaces GDP growth, we will have a bubble bursting condition. Stock prices will decline as investors take a more cautious stance and business pulls back investment.
If we see a little bit of wage growth the economy will continue to grow at gang-busters. A big concern among economists is that average wages have stayed flat. This means that families have limited spending ability. If wage growth outpaces inflation then this will signal that it is time for an economic growth cycle. More spending will push up prices and profits. Business will make improving profit and this will further spur growth. But... WATCH OUT! This effect will ultimately push up inflation. As soon as inflation becomes a concern (at 4% or so)... then the bubble will burst.
It is hard to say how big the bubble will be. Have no doubt however... there will be a bubble. A smart investor will pull out of stocks and move to cash and other stable securities. The trick is to avoid riding the bubble to the ground. The other trick, of course, is to go back into stocks at the bottom. Too many people stay in the market so long they lose money, and then they pull out of stocks. They don't go back in the market till it has gained 20% or so. Fuck... that is all lost opportunity. When the market is low you must stay in.
So......... in conclusion......... Obama had set up a stable but slow moving economy.... but Trump is running it up the front side of a bubble. Now is the time to make money. Watch inflation...... and once it starts to grow..... you may be seeing the bubble start to pop!
