If Republicans were smart they'd run on SPX hard for the remainder of the campaign because it's all they've got

 S&P 500 rises to record high as oil and yields move lower

Yields aren't significantly lower, oil is $88 and $98, and USA gasoline is $4.32.

 

 

Is the stock market a good value?

 Nominal gross domestic product Q2 2026: $32.563030 trillion (updated Sep 30, 2026)

SPX Jun 2026 average level: 7,450.03

Median valuation ratio 1938-2019: 81

GDP(81)=SPX fair value

32.56303(81)=2637.60 fair value Jun 2026

32.56303x=7450.03 actual value Jun 2026

x = 228.79 actual valuation ratio Jun 2026

Valuation ratio above 81 in Jun 2026: 182.45%

Answer: NO

Mother of all investment opportunities: 1982

Valuation ratio: 35

 

 

 

Welcome to The 26th Anniversary of The Lost World

When average real return from stocks was 86% better. 

This incorporates the inflation data for August 2026 reported last week.

 

 

NBC News: Labor share of business income falls to historic lows as corporate profits explode

American workers are getting the smallest slice of the pie on record

 

Rob Wile

 

Since 2000, the value of the S&P 500 stock index has gained about 600%. Over the same period, inflation-adjusted worker earnings have climbed just 12.5%. 

 

It is now the least rewarding time to be a worker in the U.S. economy since the government started keeping track.

The share of economic growth captured by labor in the form of compensation like wages fell to a record low last quarter, hitting 52.8%, according to the Bureau of Labor Statistics, which began recording the statistic in 1947.

In other words, even as the economy continues to grow, worker pay comprises an ever smaller slice of the pie.

The data comes as stock prices continue to hover near all-time highs, while wage growth is barely keeping up with inflation.

On Friday, the Bureau of Labor Statistics reported that wage growth slowed to its lowest rate in five years in August and remains below the broader pace of price growth.

It’s the latest data point reflecting a decades-long stagnation in returns to labor, while corporate profits have exploded.

Since approximately the start of this century, the S&P 500 stock index has gained about 600%. Over the same period, inflation-adjusted worker earnings have climbed just 12.5%.

Wages vs. inflation

Since April, the prices consumers pay are rising faster than wages.

As of April 2026, inflation has outpaced wages, spiking in May at 4.2% before falling to 3.3% in July. Wages have continued a downward trend since March 2025 when the annual change was 4.2%, falling to 3.1% in August 2026.

What’s driving it all?

Economists aren’t really certain about the exact cause, but a confluence of factors appears to be at work, according to Mike Konczal, vice president of policy and research at the Economic Security Project and a former White House chief economist in the Biden administration.

The start of the century coincided with what is known as the “China Shock,” as Beijing’s entry into the World Trade Organization massively accelerated globalization and offshoring.

The shock chipped away at the number of traditional blue-collar workers in the U.S., and it reduced the bargaining power of those who remained.

Meanwhile, technological advances have allowed the typical worker to generate larger volumes of more valuable services.

But those gains are being captured as company profits, not as wage growth.

The trend appeared to reverse, or at least stabilize, for a brief period during the post-pandemic economic reopening. But exactly why that happened is still not entirely clear.

The decline resumed after President Donald Trump returned to office in 2025.

Konczal said some economists believe corporations have sought to increase their profit margins at the expense of higher wages for workers in order compensate for the economic uncertainty that Trump’s tariff policies have created.

Regardless of the specific reasons behind the renewed drop in gains for labor, the decline has implications for all of society, Konczal said.

It stands to increase wealth inequality by putting more resources in the hands of capital owners — namely stock market investors — while the returns to workers stagnate.

It also has fiscal implications: Konczal said efforts to increase taxes on wealth or corporate profits have proved politically untenable so far, compared with the current arrangement of taxing earned income and wages instead.

“The economy can start to become unequal in a way that it’s not just the CEO who makes more, but people who own shares do, and that wealth is very, very unequal,” he said.

 

 

This will never not be funny

They hate you with the heat of 1,000 suns. 

 U.S. payrolls rose 162,000 in August, much more than expected; unemployment rate at 4.1%

 

VGPMX vs. SPX since May 1984

Vanguard Global Capital Cycles Fund, now invests at least 25% in precious metals and mining securities but also in high quality but scarce utility and telecom infrastructure, average annual since inception 5/23/1984 through July 2026:

6.10% (10 years 9.10%, 5 years 20.54%, 3 years 27.34%, 1 year 56.05%!)

SPX average per annum nominal, dividends reinvested, same period:

12.01% 

VGENX vs. SPX since May 1984

Vanguard Energy Opportunities Fund Investor Shares average annual since inception 05/23/1984 through July 2026:

10.01% (last 10 years 7.71%, 5 years 19.86%, 3 years 19.06%, 1 year 32.72%!) 

S&P 500 average per annum nominal, dividends reinvested, same period:

12.01% 

VGSIX vs. SPX since May 1996

Vanguard Real Estate Index Fund Investor Shares average annual since inception 5/13/1996 through July 2026 (single-family residential REITs are just 3.35% of the current holdings):

 

9.07% (last 10 years 4.61%, 5 years 2.28%, 3 years 9.15%, 1 year 15.04%)

 

S&P 500 average per annum nominal, dividends reinvested, same period:

 

10.30% 

Silver and gold and stocks, oh my

And the winner is . . . stonks.

 

$5 July 1996 to $63 July 2026 = 8.8% CAGR nominal over 30 years, no dividends (cost to secure unknown)

$382 July 1996 to $4,173 July 2026 = 8.3% CAGR nominal over 30 years, no dividends (cost to secure unknown)

$644.07 July 1996 to $7,450.03 June 2026 = 10.46% average per annum with dividend reinvestment, 8.53% without, nominal (VFIAX current expense ratio 0.04% vs. 0.72% average industry)

Labor's share of business income made another new low in 1Q2026, the fourth consecutive quarterly decline

 Meanwhile Applesauce Brains II:

Trump says ‘everybody’s profiting’ from recent market rallies — but it’s mostly the 1% 

 ... The bottom 50% of households collectively hold just 1% of that stock and mutual fund wealth.

 ... According to a Gallup Poll often cited by Treasury Secretary Scott Bessent, 38% of American households have no exposure to equities at all.

... As of the first quarter of 2026, the top 1% owned half of corporate equities and mutual fund shares, or about $27.64 trillion, according to the most recent Federal Reserve data, while the top 10% of Americans hold more than 87%.

Meanwhile, the bottom 50% of households collectively held just 1% — or $590 billion — of that stock and mutual fund wealth.

“Half of Americans effectively own no stocks,” said Mark Zandi, chief economist at Moody’s. And “to be in the top 1%, you need to make over $750,000 annually.” ...

 

 

Core pce inflation remained high but falling during Greenspan's first seven years, but stayed below the trend he helped to create for the remaining thirteen

PCEPILFE fell to 2.23% yoy in 1994 and as low as 1.27% by 1998 even as the Fed Funds Effective Rate (DFF) averaged 5.49% for four years 1995-1998.

Greenspan's observed "irrational exuberance" in stocks certainly wasn't caused by low interest rate policy. By today's standards his policy was hawkish even as the market formed a bubble.

His career core pce inflation performance averaged 2.46% yoy.  

It is difficult to imagine today's world being at all patient enough to tolerate Alan Greenspan, especially the Alan Greenspan of 1987-1990 when DFF averaged 7.89%.

He would be run out of town like Ben Bernanke and Jerome Powell, neither of whom arguably were in office long enough to really judge fairly by comparison with Alan Greenspan and both of whom were shabbily treated by Obama and Trump.

 

 

Everything sold off today

Stocks were down across the board, with the NASD 100 notably down 4.77%. The equal weight S&P 500 is down 0.52% month to date.

The Tech sector was down the most on the day, 5.78%.

The Consumer Staples sector was up the most on the day, 1.64%, which looks defensive against a possible coming recession. The Utilities sector was up half that.

The U.S. 10Y yield rose to 4.55%, and the 20Y and 30Y yields rose above 5.00. YTD return for VUSUX is now down 0.85%.

Oil retreated 3%.

Metals were down across the board, silver down over 8%.

Crypto was down across the board, too, with Bitcoin falling below $60k.

But DXY climbed! +0.658 to 100.071.

The theory is investors are upset that today's "strong" jobs numbers (the 70k hospitality hires is probably World Cup related, a one off, so forget that) indicate easy money from the Fed is now absolutely out of the question, and maybe even a rate increase is coming because the economy is running too hot, which is silly with 1Q GDP at 1.6% annualized. CNBC called that "solid" lol.

Jokers say everyone's just raising cash to buy overpriced SpaceX in its IPO next week.

Investors are taking profits ahead of SpaceX IPO, says Capital Wealth’s Kevin Simpson

SpaceX is worth less than half of its $1.75 trillion IPO target, Morningstar says

Gold and silver are still up 5+% year to date

 SPX +10.52% ytd

WTI +53.11% ytd

 

Meanwhile in April: 

Hamburger +18.9% yoy

Coffee +29.0% yoy

Unleaded regular gasoline +28.0% yoy

Electricity +7.2% yoy

Natural gas +3.1% yoy

[Trump 9/21/2024: "We will cut your energy prices in half. Mark it down . . . within 12 months . . ."] 

Milk +1.5% yoy

Whole Chicken -1.6% yoy 

Eggs -56.1% yoy

Tomatoes +50.0% yoy

 

And: 

30-year mortgage average monthly, above 6% since August 2022

Full time jobs above 50% of population just 6 of the last 25 quarters, all under Joe Biden

 

Republican House Speaker Mike Johnson (LA-4) was for the ban on insider stock trading in Congress before he was against it

 My favorite part about his new position is that if we don't allow our representatives to make money somehow, we'll stop attracting talent to Washington, D.C.

You know, like Trump, whose primary talent is corruption. 

💋 

 

Silver is still up 6.14% year to date, gold 5.09% even as energy prices march higher

 But SPX is up 8.02% ytd.

WTI is up 84.01% ytd.

VGENX is up 20.88% ytd.

 

Investment grade corporate securities:  

VWESX is down 1.54% ytd.

VFICX is down 0.65% ytd.

VFSTX is up 0.27% ytd.

 

US Treasury securities:

VUSUX is down 2.52% ytd. 

VFIUX is down 1.05% ytd.

VFIRX is up 0.16% ytd. 

 

Inflation:

CPI (CPIAUCSL) is up 3.77% year over year in April.

PCE (PCEPI) is up 3.49% yoy in March. 

 

Nominal Broad Dollar Index:

April: 119.03

1Q2026: 119.01

2025: 122.75

5Y: 119.94 

 

GDP, Compound Annual Growth Rate

5Y: 7.031% nominal, 2.775% real 

 

 

Silver is up 12.24% ytd, gold is up 9.15% ytd

 SPX: +7.88% ytd

WTI:  +66.2% ytd

Ronald Reagan's faith in the American people's better judgment about how to spend their own money was . . . misplaced

"Well, our loyalty lies with little taxpayers, not big taxspenders. What our critics really believe is that those in Washington know better how to spend your money than you, the people, do. But we're not going to let them do it, period."

-- Ronald Reagan, Nationally Televised News Conference, June 30, 1982

The secret of Ronald Reagan's success was that he stroked the vanity of the people. 

Nominal return from SPX since he made those remarks has been 12.48% per annum through April 2026.

Just socking away a one time investment of $2,000 in the S&P 500 that summer and forgetting about it would have yielded you almost $353,000 by now.

But today just 2.6% of Americans in general have at least $1 million in a retirement account, and HALF of retirees aged 65-74 have only $200,000 or less.

Meanwhile, our betters in Washington have put the country $39 trillion in debt, and 73% of us die in debt ourselves, with the average owed just under $62,000.

The government we deserve!

 

Sleepwalking into a big recession: SPX hits new all-time intraday high 7230.12 on May 1 after oil jumps 78% year to date

 ‘Misplaced euphoria’: Markets are sleepwalking into a recession amid Iran war oil price shock

Global economies could be “sleepwalking” into a “big recession”, as investors continue to underplay the impact of the oil price shock, Amrita Sen, founder and director, market intelligence at Energy Aspect, told CNBC’s “Squawk Box Europe” on Monday. ...

“This is a massive, massive energy crisis. I have been equally amazed at how the equity market is completely dismissing it, talking about how great Q1 results are. They are not going to be great nearly to the same extent in Q2.” ... 

Gold is up 6.82% year to date, silver is up 5.29%

 SPX is up 5.42% ytd

WTI is up about 78% ytd 

The Jerome Powell Fed Chair era draws to a close effective May 15, but Powell could remain a Fed governor until his term ends in January 2028

Fed holds rates steady but with highest level of dissent since 1992

... In what may have been Chair Jerome Powell’s final meeting at the helm, the rate-setting Federal Open Market Committee voted to hold the benchmark funds rate in a range between 3.5%-3.75%. Markets had been pricing in a 100% chance of no change. ...

It wasn't much of a dissent when the vote to hold rates steady was 11-1. Three of the eleven simply disagreed that right now the Fed should say as it does in the official statement that it remains open to new information which might suggest additional rate cuts in the future, when in their opinion that sends the wrong signal when inflation remains as elevated as it is at present.

Jerome Powell says he will continue to serve as a Fed governor, calls Trump criticism ‘unprecedented’  

... “My decisions on these matters will continue to be guided entirely by what I believe is in the best interest of the institution and the people we serve after my term as chair ends on May 15, and will continue to serve as a governor for a period of time to be determined,” he added. ...

Stock investors fared very well under Powell. Bond investors, not so much 

...  the S&P 500 rallied 14.7% annually under Powell, the third best performance for Fed chairs going back to 1970, Bespoke Investment Group found. ...

“He believed in easy money. He voted for all the QEs. He voted for zero interest rates,” Boockvar said. “It’s only when inflation mugged him ... that he became more hawkish ... .”

But the problem with accommodative monetary policy is, “Easy money gets investors drunk on things, and puts beer goggles on them,” Boockvar said. ’Sometimes it ends up OK, but other times it ends up in rampant inflation.”

 ... The Bloomberg US Aggregate Bond Index that aims to track all U.S. investment-grade debt returned just under 2% annually during Powell’s tenure, far below the average of 6.5% since the 1970s, according to Bespoke. ... 

Analysis: The Warsh revolution is coming. Powell won’t stand in the way. 

... the only major challenge for Warsh, as far as Powell is concerned, will be driving consensus within the Fed for where to set interest rates. Wednesday’s dissents suggest that won’t be easy. But Powell, whom Warsh has described as a failed chair who chose inflation, went out of his way to say Warsh is up to the task.

The chair’s job is to “create consensus” among the Fed’s voters and to “be inside their thinking,” Powell said.

Warsh “has the capabilities, skills to be very good at that,” Powell said.

 

If Warsh cuts interest rates in this environment, he'll be choosing inflation, too.

Inflation is very painful for the people, but for a government which absolutely refuses to get its fiscal house in order Powell's choice of inflation was the only medicine available to him, faced as he was with a national debt snowballing toward $40 trillion and the moon after that, and desperately in need of devaluation.