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Red Hot Stocks!
Stocks are red hot…and so are other investments, resulting in these headlines:
The Best First Half for Financial Markets Ever — U.S. News and World Report, 28 June 2019
Global stock markets on track for best first half in 20 years — City A.M., 23 June 2019 (London publication)
By the numbers: Best June for the Dow since 1938, S&P 500’s best first half in two decades — CNBC, 29 June 2019
How can this be? I thought we were facing global peril from trade wars, and President Trump’s tariffs and Tweets were wrecking everything. What happened?
The view from the City of London, the former center of global capitalism and still a major player, was this:
The stock market expansion comes thanks to central banks around the world signalling they will cut interest rates or launch new stimulus to help deal with growing global headwinds.
But does that really explain six months, rather than one or more bumps in response to one or another major central bank’s comments? Surely there is more. The CNBC article, linked above, provides an excellent summary with charts, telling a story of very wide growth, rather than reliance on one or two strong horses. Indeed, the Dow Jones Industrial Average, and the S&P 500, and oil, and gold all have flourished in the first half of this year.
It appears that people have decided that President Trump is serious about negotiations, and that foreign leaders, on the other side of the series of negotiations, are taking him seriously. It makes sense, then, to continue betting on a brighter future. The U.S. News and World Report article, while lacking charts, has a detailed summary of the incredibly broad range of investment instruments that are simultaneously prospering.
What a six months for financial markets. Global equities have piled on $8 trillion, bonds are on fire, oil prices have surged by almost a quarter and a Greek bank is one of the world’s best performing stocks.
Everything added together it may well be the best first half of a year ever and one that not even the most wily investor would have predicted after the dire end to 2018 and what has happened since.
The world’s two top economies are slugging it out in a full-blown trade war and the recession warning klaxons are blaring, but still the performance numbers and milestones are astonishing.
[…]
“It is very unusual to see this breadth of strength,” said HSBC Asset Management’s chief global strategist, Joseph Little. “The question is, has it been too fast and too furious. It’s a very good question.”
Left out of all of these articles are the fundamental improvements on employment in the world’s largest economy. American wages are rising for those who had long been left behind. President Trump will not let a week go by without touting the great good employment news for women, African-Americans, and Hispanic/Latino people. He has held two high-profile presentations with men and women who have been freed from prison and given an opportunity to work for a living.
Taken together, all of this seems to say that we are building a more resilient, a broader and deeper consumer base. President Trump seems to be prevailing, at the margin, on energy policy and regulatory reform. He showing signs of actually forcing a slowing of the flood of illegal immigration, pointing towards a longer term pressure on U.S. employers to hire Americans of all backgrounds and to pay them an honest day’s wage for an honest day’s work. All of this is to the good of a longer term healthy U.S. economy.
No wonder, then, that financial markets of all sorts would be doing so well. If the advocates of capitalism are right, and if we continue to nudge the world towards more honest and open trade arrangements, then we should see the global pie continue to grow. Putin may not like President Trump’s more effective checks on the new czar’s revived imperial ambitions, but he and his cronies certainly benefit from the rising ruble. Xi may yet crash the trade talks, but after the clown shows put on for two nights by the Democratic presidential hopefuls, he has to be assessing that prospects of influencing an American presidential election again (see President Bill Clinton’s Chinese contributors), are fading.
Past performance does not predict future results. There’s many a slip twixt the cup and the lip. We live in uncertain times. Yet, there may be more cause for optimism in the Trump/Pence 2020 campaign now than a year ago. The ranks of people with reason to cheer “USA! USA! USA!” have grown since Election Night 2018. Americans eligible to vote are going to know the truth of their own lives and those around them, no matter how much Google and Facebook try to influence them to vote for the tech lords’ party.
Published in Group Writing
The beginning of summer, and the close of the first half of 2019 brings “Hot Stuff” in the economy. Will July find the economy starting to “Chill Out” or might it keep simmering through 2020? Please stop by and sign up to share your own angle on the the July Group Writing theme, “Chill Out,” however loosely construed.
Damn, C, this is good.
From the top of Everest everything is downhill, though — i.e., what media stories there are about the economy are one-day stories at best, and certainly don’t become things broadcast media especially does a full-court press on. But you can be pretty sure if this time next year the economy’s even a little off from its current record levels, the spin is going to be that America and the world is falling into recession.
One of the things that helped Reagan in 1984 is Carter had hashed things up so much with stagflation that it took until the summer of ’82 to get the ship turned around, which meant the economic boom was only two years old when the election came around. Obama’s policies kept a governor on the economic engine locked at about 25 mph, but it wasn’t anywhere near the mess Carter’s was, and once Trump was elected, businesses which had been holding back their investment plans went all-in. So the boom started almost immediately after 1/20/17, and will be about 3 1/2 years down the line when next year’s election arrives.
Will that make a difference? Hard to say, and at the moment, there’s doesn’t seem to be the same sort of ‘irrational exuberance’ the post-9/11 recovery of the past decade had, fueled by the bad mortgage-created housing boom. But Trump’s strongest card next year if he can keep it will be the economy, and the ability, like Reagan, to ask voters “Are you better off now than you were four years ago?“
Wow! So good.
How come I know so many people my age who cannot find a good job?
Imagine the positive, glowing and sensational headlines and reporting of this by the national media … if such results had been achieved during the Barack Hussein Obama administration.
The weakness of the Democrats the possibility of Trump being re-elected and further gridlock has big corporations in a happy place. The swam is not being drained (good for those hiring lobbyists) and the Dems are being neutered on their socialist dreams.
All of that will reset, when the Dems get organized around their best candidate and the media makes a Dem win seem likely. So, lock in your gains now and be ready to buy back in next November ;)
Because companies prefer to hire young and / or foreigners.
Yes. I wonder about the college market bubble, the massive inflation of college degree costs, fueled by the same sort of government manipulation of the market through facilitation of easy loans. Yet, there has not been the same sort of massive secondary markets for college loan paper, in large part because the risk is squarely on the person who took out the loan.
I do wonder, however, if there is a more hidden risk. What of all the construction for student and employee housing around colleges, inflated by endless easy student loan financing? What of inflated administrative staff sizes and salaries? If this is down to community college level, the effect could fairly widespread.
It would create an interesting cross-dynamic for Democrats though. While their measures to force banks into making bad loans to people less likely to pay them back sparked the mortgage crisis, they were fine with demonizing the banking industry and Wall Street when the whole thing collapsed (before fixing things so their preferred banks and financial institutions would survive). If the colleges started collapsing demonizing them would mean attacking the very institutions that have spent the past 30-plus years trying to churn out young progressives (and since under Obama the government pretty much took over the student loan business, demonizing that isn’t an option either — they’d be left following up Bernie’s free tuition for all with demands that virtually all colleges be declared too
bigimportant to fail — which given the current cost of college, a lot of people aren’t going to buy into.This aged well.
Except for his wife’s college, that she drove squarely into the ground while cashing her golden parachute check.
I’ll say this about the Sanderses…es. They really practice what they preach.
Like his face.
If someone is at the top end of an earning curve (meaning they’re pricey), they’re unlikely to be in it for the longer term, and are more likely to have aging skillsets, well, those might be some reasons.
Depends on the market. Where you are, what type of job, etc. I’m currently reviewing resumes for a gig on my team, and the resumes are all over the place, meaning a breadth of experience, including a few people who are clearly older (based on their resume’ going back to the mid 1980s. I’ll take the right person if they get the job done, and I don’t care if they’re 35 or 70.
But if you’re looking for someone longer term, 3-5 years, to stay, it might be different math. Which explains why the contractor/consultant market is a screamer in my neighborhood, and why so many people prefer it. Higher rates of pay, lots of opportunity to work at companies if you’re thinking of finding a permanent gig at one of them, and the ability to flex/move as you want.
The fact that the economy is doing well, and some people are having trouble finding a job (when the hot market for labor means hiring companies have to essentially be less picky) means something else is going on.