The S&P 500 is now down 10.1% from the Feb 19th high of 6144

 A correction.

Mad King Ludwig attacks stock markets, won't answer pleas from businesses, Prince Elon's X suffers major cyberattack from unknown actors hehe

 

The king exercises his power, won't remove tariffs, markets sink

 He's reveling in the moment.

 

"I'm going to reduce interest rates by crashing the stock market with tariffs"

Bessent says Trump is focused on the 10-year Treasury yield and won't push the Fed to cut rates

 

Andrew Sullivan: The point is the abuse, whether it's Canada's Trudeau, Mexico's Sheinbaum, Germany's Scholz, Ukraine's Zelensky, or the S&P 500

 

Trump doesn't really believe in the tariffs, that they'll do anything one way or another. They are simply the readiest instruments which demonstrate his power, and the daily reminder to all and sundry that he is the king, Mad King Ludwig II of Bavaria reincarnate.

 

Trump says he’s not even looking at stock market, tariffs will make U.S. ‘very strong’ 

Trump ‘an agent of chaos and confusion,’ economists say — but a U.S. recession isn’t in the cards yet

So long, Trump bump: Tech stocks wipe out last of post-election gains 

 

Trump rejects pleas from business for more clarity on tariffs: ‘They always say that’ 

 

... Bartiromo interjected: “That’s not clarity.” ...

 

The Bully In His Pulpit

 

... Canada and Mexico are best understood as the baby in the playpen [whom Trump pelted with stones when he was five or six]. Trump himself re-negotiated a trade agreement with both in his first term. Have they violated that deal? No. Have they refused to cooperate on fentanyl and illegal migrants? No. Has Mexico reduced the pressure on the Southern border to almost nothing. Dramatically. Is there anything they can or could do to please Trump? No. The point is the abuse. And like all abusers, Trump constantly shifts what he is demanding, gaslights, threatens, charms, attacks … so that you begin to realize there is nothing you can do except wait for his mood to change. Welcome to monarchy. ...

Despite record highs in stocks in 2024, real return since the last secular peak in August 2000 still significantly lags previous periods of peak-to-peak returns

 

During four months in 2021, real return since August 2000 briefly hit the 5s: 5.06% in August, 5.02% in September, 5.17% in November, and 5.15% in December.

Real return swooned after that, as low as 3.63% in October 2022, making it seem like 2021 might have been a secular turning point.

But by October 2024 real return since August 2000 had recovered to 5.11%, and 5.2% in November, and 5.24% in December.

Is this the new secular peak?

Return might suggest, No, seeing how low it still is.

Valuation might suggest, Yes.

The annual average of the S&P 500 divided by GDP in trillions hit 186 in 2024, a level not seen since 1930 (228) on an annualized basis.

That ratio never got above 139 (2000) between 1937 (165) and 2020 (151).

And this ratio was 180 in 2021, 158 in 2022, and 155 in 2023, all unprecedented for the post-war.

But 186 in 2024 really takes the cake.

The price of the market is really, really rich for the return you get.

 

Real return from stocks was better under Trump I than under Biden

 

S&P 500 average real return, dividends fully reinvested

Nov 2016--Nov 2020: 13.18% per annum

Nov 2020--Nov 2024: 9.97% per annum

On a nominal basis it was a draw, that's how bad inflation was for stocks: Trump 15.33% per annum vs. Biden 15.39% per annum.

 

Although the Reagan Bull from July 1982--August 2000 was spectacular, yielding 18.99% nominal and 15.28% real, the actual Reagan era itself was still a huge battle with inflation

Nov 1980--Nov 1984: 10.5% nominal, 4.9% real

Nov 1984--Nov 1988: 17.06% nominal, 13.22% real.

S&P 500 new record high close: 6,118.71

 S&P 500 closes at a new record, Dow jumps 400 points as Trump pushes for low rates, oil: Live updates

The benchmark finished the day at 6,118.71, surpassing its prior all-time closing high of 6,090.27 recorded in early December.

Your reminder that average real return from stonks sux

S&P 500

 

August 2000 -- August 2024

4.90% per annum

August 1976 -- August 2000

10.49% per annum

 

 

Stocks markets are closed and mail won't be delivered today in honor of Jimmy Carter, because everything came to a halt under him, too

 OK, bond markets are open today, because SOMEONE has to pay for the 44% increase in the national debt which was racked up under Jimmy Carter.

Stonks soared, nominally, under Jimmy at 11.81% per annum on average January 1977 to January 1981, but because inflation was so terrible, 10.43%, real return for the S&P 500 clocked in at only 1.25% per annum during his presidency.

S&P 500 Equal Weight Index down 7.25% in December to date, US Treasury yields up a net 2.13% in the aggregate since the end of November

Both stocks and fixed income down at the same time is a real bummer, you know, like in 2022.

UST yields in the aggregate tonight are at 4.45 vs 4.356 at the end of November.

UST yields have risen 375 basis points net in the aggregate in the three months since the Fed started cutting the Fed Funds Rate on September 18. That's +6.93%, which is hilarious.

 

The Fed Chair Jerome Powell gave them what they wanted, a one quarter point interest rate cut, and the spoiled markets threw a fit anyway because of what he said about next year

The S&P 500 Equal Weight Index is down almost 7% this month, to date.

Meanwhile, more inflation for the rest of us, which Powell has never really tried to stop. You know, like Christianity hasn't failed, it just hasn't really been tried.

 

Secular bear Rosie not throwing in the towel . . . again

 Rosie was on the wrong side of the trade in April 2011 when the bear went bullish. Is he again now?

He uses the same phrase, too, "not throwing in the towel", lol.

In April 2011 he claimed he wasn't throwing in the bear towel after the S&P 500 had already recovered from the 2008 debacle. Then the market slid 20% all the way to October 3, 2011, with the index falling to 1099 again, right where it was exactly three years earlier on the very same date.

It was . . . spooky!

If you had followed his take that April, you'd have lost 20% again. On top of all your losses in 2008. Ouch. Ouch.

Many of us who had kept our powder dry couldn't believe it in October 2011. We thought we were headed back to the depths of March 2009 again, too, just like the last time the market fell to 1099. I mean, that was a free-fall from there in 2008. TARP got signed in a panic that week to stop it, to no avail.

But October 2011 turned out to be more of a retest than we realized, one of the last great buying opportunities of the period. It was a brutal, crushing period of doubt, which some of us still live with.

Now it's the reverse, with unbelievable euphoria everywhere, with the S&P 500 at 6075.

A period of euphoria seems to me like a damned strange time to throw in the bear towel again, after missing out for two years by his own admission. I have no idea if Rosie is the contrary indicator he appears to be.

But the valuation of the market is pre-1920s crazy right now. It is literally not on the charts of our experience in the post-war, or even from the roaring '20s. We have GDP of $29.354 trillion, meaning a valuation of 207, when fair value has been 81 since the Great Depression.

I'm not in it, and I intend to keep staying out, because I can.

Good luck out there to those of you who go where angels fear to tread.

Stonks went bananas today

 

how it started

how it went

Stocks remain wildly overvalued and seriously underperforming

 The S&P 500 averaged 5,792.32 in October 2024 (the all-time high was on 10/18 at 5,864.67).

Nominal GDP was updated on Oct 30th at $29.349924 trillion for 3Q2024.

That yields a ratio of SPX/GDP of 197.35 vs. median of 81.

Stocks remain wildly, obscenely, off-the-chart overvalued.

The formula is GDPx = SPX.

29.35(81) = 2,377.

The market would have to fall 3,415 points just to hit median valuation at current GDP, or about 59%.

You can see a similar analysis here, where the median is 79.7 vs. current 200.7.

Real return from SPX since Aug 2000 is now about 5.1% per annum vs. 7.4% before that (including the Great Depression, the depression of 1920, and every collapse before that going back to 1871), 31% worse.

We are living through developments echoing the lunatic era of the 1920s, which ended in tears.

Owe no man anything . . ..

 

 

 

Trump and Harris agreeing on ending the filibuster rule reminds me of McCain and Obama agreeing on something inadvisable in 2008

 

They both interrupted their campaigns to vote for TARP on October 1, 2008, which became law on Friday, October 3, but did nothing to stop the panic.

On Monday, October 6 Jim Cramer came on the Today Show at 7am and told people who needed their money in the next five years to sell their stocks.

The S&P 500 fell from 1099 to 848 by October 27th, almost 23%, on its way to the March 9, 2009 closing low at 676 (there was an intraday low of 666 on March 6).

Over 500 bank failures marked the era fueled by these events, and more than 6 million lost their homes.

And no one went to jail.

Nothing good will come of ending the filibuster, either, not with the country this divided.

 

Gold up 26% . . . in 2024

Gold soared above the $2,600 level on Friday for the first time, extending a rally boosted by bets for further U.S. interest rate cuts, and rising tensions in the Middle East.

Spot gold was up 0.7% at $2,605.50 per ounce, while U.S. gold futures rose 0.6% to $2,630.30. Silver gained 0.5% to $30.93.

Bullion’s latest rally got a fillip after the Federal Reserve initiated an aggressive easing cycle on Wednesday with a half-percentage-point reduction, adding to the appeal for gold, which pays no interest.

Prices of the safe-haven asset have climbed 26% in 2024, its biggest annual rise since 2010 . . .. 

 

More. 

$SPX is up 19.82%.

Real return from stocks since the August 2000 top after 24 years now underperforms the pre-2000 eras by ONLY 33.7% per annum, nominal by 21.3%, yippee! What a great country!

Welcome to the 55th anniversary of Peak America

 

 

long term return from stocks peaked in 1969, 36 years after 1933 (always buy low)

Core CPI inflation piles another 3.4% price increase on top of all the price increases consumers have had to endure already, and the stock market thinks this is GREAT NEWS