Dow Monthly Lyn Alden
Dow has hit the bottom support and bounced. Will it continue to go down??
From macro economic perspective Lyn Alden.
Why This is Unlike the Great Depression (Better & Worse)
“The Great Depression in the 1930’s was a long deflationary economic downturn with an unwinding of a large debt bubble, and the United States was the largest creditor nation in the world at that time. The depression encompassed an early 1930’s recession, and then a late 1930’s recession, and then a massive fiscal funding effort for World War II with belt-tightening at home. Wealth concentration reached an extreme level during the early phases of it, and populism began to rise in the political scene.
In this era, we suddenly face a similar scenario. The Great Recession in 2008 was a massive downturn with total debts as a percentage of GDP at all time highs, and over a decade later, many people have not recovered. Wealth concentration hit an extreme level only matched by 1929, and populism is on the rise again. This time, we’re the world’s largest debtor nation. We now find ourselves in a likely second recession in 2020, along with a massive fiscal funding effort to counteract the negative effects of COVID-19 on the economy.
As I’ve said before, separating nominal return expectations from real return expectations is likely going to be important over the next decade, as inflation may return in earnest in the years following this deflationary shock.
Gold and silver remain attractive assets in my view for portfolio diversification. High-quality foreign companies, as well as U.S. domestic companies with high returns on invested capital and strong balance sheets, also continue to be attractive assets to own within the framework of a diversified portfolio.”
Great post bilbo. I am a huge fan of Lyns. She has a great understanding of monetary policy and its impact.
I just want to disagree a little on the “We now find ourselves in a likely second recession in 2020, along with a massive fiscal funding effort to counteract the negative effects of COVID-19 on the economy.”
The economy will not be helped. It will continue to deteriorate at an astounding rate. What is being helped is the TBTF banks, under the pretense of helping the economy.
https://wallstreetonparade.com/2020/05/wall-street-banks-paid-11-7-billion-in-dividends-to-investors-this-year-while-taxpayers-must-absorb-454-billion-of-bank-losses/
This latest “run-up” in the Dow, S&P and Nasdaq, is fueled by the retail investor, who is hoping that the market will make new highs as the lockdowns end.
GL
I just read up on this measure of the extremely bullish sentiment of the retail investor, after my comment 🙂 :
https://kingworldnews.com/public-going-all-in-again-on-stocks-but-here-is-the-big-surprise/