Professor Mark J. Perry's Blog for Economics and Finance
From the early March lows, the Dow Jones Industrial Average has seen a spectacular rise of about 45%, marking the best six-month stock market rally since January of 1933 (see chart above).
HT: Drudge Report.
Originally posted at Carpe Diem.
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
11 Comments:
wow. that's not exactly a ringing endorsement for this rally to have legs.
i guess we should party like its 1933. which is to say i'm going to go stuff a bunch of soon to be worthless paper money into a mattress and eat a can of cold baked beans.
Marshall,
The stock market tends to be a leading indicator of recovery.
Instead of cold baked beans...how about chilling with a 5 o'clock martini. A globalized economy offers unprecedented opportunities however, periodic crises tend to have a domino effect. All of which is very disquieting however, eventually, these problems resolve themselves.
I'm kind of with Marshall on this one. This may be a good indicator UNLESS this administration decides to "fix" the already fixed economy and plunges the economy into another several years of negative growth.
The Fat Lady is singing for this recession. Maybe now it is her first tentative song, but baby she is going to get all sweaty, shake those big boobs up and down, and start belting out the hits in a few more months.
The world has changed, and for the better. There is gobs of investable capital everywhere. (See Anthony Downs, Niagara of Capital). High savings rates in China, Asia, Europe and huge capital formation in USA.
VC guys have money, private equity guys have money, hedge funds have money, bond funds have money, mutual funds have money. Mt Everest of money on the sidelines.
In a few more years, you will hear the mantra again--"too much money chasing too few deals." Get used to it. It will be what you hear for decades and decades. The world has entered a long-term phase of generating excess capital.
That means huge rallies in certain asset classes, generally rising values. Land will be good, stocks good, commodities good.
Remember, Asia is already growing again. We are the laggards.
A 20-year boom is ahead. If I could wave a wand, it would be to create an ultra-sturdy financial system. The rest will take care of itself.
There is more R&D going on now, by some large factor, than every before. There must be dozens and dozens of R&D shops for every one of 50 years ago. There must be $100 in VC funds for $1 of 50 years ago.
I look at the energy sector a lot. I can tell you there is no good idea not funded by VC guys, and a lot of mediocre ideas that are.
I think we are on the cusp of a 20 year boom.
Sometimes, you just have to tolerate good news.
"Sometimes, you just have to tolerate good news."
- great line anon 11:23
Another positive indicator is the price of copper which is the highest that it has been in a year. This website also has rises in other base metals ie. aluminum, nickel, tin, titanium.
A globalized economy offers unprecedented opportunities
...to undermine the United States and those who work within it. No thanks for the threats.
All of which is very disquieting however, eventually, these problems resolve themselves.
The problem is that "temporary" and "eventually" are stretched to multi-decade/multi-generational scales.
The world has changed, and for the better. There is gobs of investable capital everywhere. . High savings rates in China, Asia,
Blood money.
The world has changed, and for the better. There is gobs of investable capital everywhere. . High savings rates in China, Asia,
Blood money.
Specifically that it's blood money if held in somewhere like China, India, Latin America, Vietnam versus less despotic countries.
the folks that run those corporations seem to have their doubts:
"TrimTabs Investment Research reported that selling by corporate insiders in August has surged to $6.1 billion, the highest amount since May 2008. The ratio of insider selling to insider buying hit 30.6, the highest level since TrimTabs began tracking the data in 2004.
"The best-informed market participants are sending a clear signal that the party on Wall Street is going to end soon," said Charles Biderman, CEO of TrimTabs."
Insider Trading and Investor Sentiment Signaling U.S. Stock Market Top
Seth,
On one point, I believe we can agree that at present growth rates, China and India are projected to overtake the U.S. as the world's largest economy. Trade, globalization, & technological innovation however, are not zero sum games. I believe that the U.S. will remain a dominant player.
Predicting the future is never easy.
1933. How encouraging. The mother of all double-dips.
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