Economy crash =/= stock market crash?

Type_45

Nebulous2 said:

Type_45 said:

beavere38 said:

"Black Tuesday tomorrow?  Or Black Wednesday?  Perhaps."

Who knows, I'm not going to try and predict exactly what will happen. I still believe the top is in on the markets. If the Dow, FTSE and Dax make new highs then I am wrong. The market is massively overvalued and full of private investors using an unprecedented amount of margin. Valuations are based on potential future earnings. What could possibly go wrong? 

It is sounding like 1929 all over again. Once the first domino falls the rest will follow.

How do you know that governments won't just keep printing money and kick the can down the road?   

When money is printed it goes into the stock market, as you can see over the past 14 months of rises.

Only some of it has gone into the stock market. A tremendous amount of it has gone into people's pockets / bank accounts. Where it goes from there is a bit of an unknown and that uncertainty means valuing stocks is more difficult at the moment.

I'm seeing indications that my acquaintances are prepared to spend more than I would have expected. 

That's not my understanding.  When QE happens it goes to the banks, not the general public.

None of the QE has landed in my bank account.  

AlanP_2

Type_45 said:

Nebulous2 said:

Type_45 said:

beavere38 said:

"Black Tuesday tomorrow?  Or Black Wednesday?  Perhaps."

Who knows, I'm not going to try and predict exactly what will happen. I still believe the top is in on the markets. If the Dow, FTSE and Dax make new highs then I am wrong. The market is massively overvalued and full of private investors using an unprecedented amount of margin. Valuations are based on potential future earnings. What could possibly go wrong? 

It is sounding like 1929 all over again. Once the first domino falls the rest will follow.

How do you know that governments won't just keep printing money and kick the can down the road?   

When money is printed it goes into the stock market, as you can see over the past 14 months of rises.

Only some of it has gone into the stock market. A tremendous amount of it has gone into people's pockets / bank accounts. Where it goes from there is a bit of an unknown and that uncertainty means valuing stocks is more difficult at the moment.

I'm seeing indications that my acquaintances are prepared to spend more than I would have expected. 

That's not my understanding.  When QE happens it goes to the banks, not the general public.

None of the QE has landed in my bank account.  

Furlough money, loans and grants to businesses - all funded by QE. Whether you personally have received any of that lot is nothing to do with QE though.

sevenhills

AlanP_2 said:

Furlough money, loans and grants to businesses - all funded by QE. Whether you personally have received any of that lot is nothing to do with QE though.

It's funded by Government borrowing, furlough is a separate issue. QE will go into shares and Government bonds, so it will keep share prices higher, but will it affect the strength of Sterling?

Should this thread be on the Debate House Prices & the Economy section?

coastline

beavere38 said:

"Black Tuesday tomorrow?  Or Black Wednesday?  Perhaps."

Who knows, I'm not going to try and predict exactly what will happen. I still believe the top is in on the markets. If the Dow, FTSE and Dax make new highs then I am wrong. The market is massively overvalued and full of private investors using an unprecedented amount of margin. Valuations are based on potential future earnings. What could possibly go wrong? 

It is sounding like 1929 all over again. Once the first domino falls the rest will follow.

The markets have recovered far better than anyone anticipated and do look frothy but who knows if that will lead to a crash ? World growth is forecast and the vaccine programme should improve in years to come. So far inflation fears have been absorbed looking at the bond yield. 

GDP Growth Rate - Forecast 2020-2022 (tradingeconomics.com)

United States Government Bond 10Y | 1912-2021 Data | 2022-2023 Forecast | Quote (tradingeconomics.com)

Despite booming markets earnings forecasts are healthy and as result the heady P/E values are falling again. It wouldn't take much of a correction or even a sideways move in the indices to pull values back to recent years.

E4WTOJZWUAQm0g1 (900×652) (twimg.com)

Various indicators out there do suggest a topping process.

E4ZpXtLWEAQyk_r (680×454) (twimg.com)

The tea leaves also show an overbought situation and are correcting in recent days . I tend to look at the Full Stochastic on the daily chart which has rolled over. Note the times when it has neared the bottom range and the market has recovered. I can count 6 ? Feb, Mar , and May this year so far. All guesswork but not to be ignored if you like this kind of stuff.

$SPX | SharpChart | StockCharts.com

The weekly chart is also on the top regarding those indicators and won't stop there forever. So the clues are there but is it a correction or slow unwind ? I tend to ignore all that long term P/E stuff as things can stay overbought for years and you've missed out on the big moves. As ever always something to worry about. 

$SPX | SharpChart | StockCharts.com

Type_45

AlanP_2 said:

Type_45 said:

Nebulous2 said:

Type_45 said:

beavere38 said:

"Black Tuesday tomorrow?  Or Black Wednesday?  Perhaps."

Who knows, I'm not going to try and predict exactly what will happen. I still believe the top is in on the markets. If the Dow, FTSE and Dax make new highs then I am wrong. The market is massively overvalued and full of private investors using an unprecedented amount of margin. Valuations are based on potential future earnings. What could possibly go wrong? 

It is sounding like 1929 all over again. Once the first domino falls the rest will follow.

How do you know that governments won't just keep printing money and kick the can down the road?   

When money is printed it goes into the stock market, as you can see over the past 14 months of rises.

Only some of it has gone into the stock market. A tremendous amount of it has gone into people's pockets / bank accounts. Where it goes from there is a bit of an unknown and that uncertainty means valuing stocks is more difficult at the moment.

I'm seeing indications that my acquaintances are prepared to spend more than I would have expected. 

That's not my understanding.  When QE happens it goes to the banks, not the general public.

None of the QE has landed in my bank account.  

Furlough money, loans and grants to businesses - all funded by QE. Whether you personally have received any of that lot is nothing to do with QE though.

That's not where QE has gone.  Someone who knows more than me will have to explain to you.

Nebulous2

Type_45 said:

Nebulous2 said:

Type_45 said:

beavere38 said:

"Black Tuesday tomorrow?  Or Black Wednesday?  Perhaps."

Who knows, I'm not going to try and predict exactly what will happen. I still believe the top is in on the markets. If the Dow, FTSE and Dax make new highs then I am wrong. The market is massively overvalued and full of private investors using an unprecedented amount of margin. Valuations are based on potential future earnings. What could possibly go wrong? 

It is sounding like 1929 all over again. Once the first domino falls the rest will follow.

How do you know that governments won't just keep printing money and kick the can down the road?   

When money is printed it goes into the stock market, as you can see over the past 14 months of rises.

Only some of it has gone into the stock market. A tremendous amount of it has gone into people's pockets / bank accounts. Where it goes from there is a bit of an unknown and that uncertainty means valuing stocks is more difficult at the moment.

I'm seeing indications that my acquaintances are prepared to spend more than I would have expected. 

That's not my understanding.  When QE happens it goes to the banks, not the general public.

None of the QE has landed in my bank account.  

You've moved the goalposts. You were originally talking about 'printing money' which is broader than QE.  

Money printing - Wikipedia

The UK and US in particular have engaged in an unprecedented loosening of money supply to get us through the pandemic.  When you do that the money flows to all sorts of places.  Look at house prices, pay rises, sign on bonuses. Look at the money that has flown into cryptocurrencies. I read an article about them where people gambling on these were describing it as spending their 'stimmy' (stimulation) money. 

The Bank of England has a fairly relaxed view about how much of the windfalls will be spent. 

How has Covid affected household savings? | Bank of England

I'm not an economist - but know a bit about human behaviour, and the lure of the shiny is there for all of us. We've just bought a new electric bike for my wife - we've also just had a few days away. Neither of those feel extravagant, where  they would have done last year in lockdown. 

Looking around however and lots of people are going further. Our plumber is almost impossible to get as he is so busy putting in new bathrooms.  I'm of the view they have underestimated the amount that will be spent. 

AlanP_2

QE is the mechanism that has been used to make cash available to the central bank / Gov't at the end of the day to facilitate liquidity and to pay furlough etc. over the last 18 months or so.


If you disagree please explian where UK Gov't got those funds from?

Prism

Type_45 said:

AlanP_2 said:

Type_45 said:

Nebulous2 said:

Type_45 said:

beavere38 said:

"Black Tuesday tomorrow?  Or Black Wednesday?  Perhaps."

Who knows, I'm not going to try and predict exactly what will happen. I still believe the top is in on the markets. If the Dow, FTSE and Dax make new highs then I am wrong. The market is massively overvalued and full of private investors using an unprecedented amount of margin. Valuations are based on potential future earnings. What could possibly go wrong? 

It is sounding like 1929 all over again. Once the first domino falls the rest will follow.

How do you know that governments won't just keep printing money and kick the can down the road?   

When money is printed it goes into the stock market, as you can see over the past 14 months of rises.

Only some of it has gone into the stock market. A tremendous amount of it has gone into people's pockets / bank accounts. Where it goes from there is a bit of an unknown and that uncertainty means valuing stocks is more difficult at the moment.

I'm seeing indications that my acquaintances are prepared to spend more than I would have expected. 

That's not my understanding.  When QE happens it goes to the banks, not the general public.

None of the QE has landed in my bank account.  

Furlough money, loans and grants to businesses - all funded by QE. Whether you personally have received any of that lot is nothing to do with QE though.

That's not where QE has gone.  Someone who knows more than me will have to explain to you.

Indirectly it is. QE money buys existing government bonds/gilts from banks and pension funds. This gives them a surplus of cash. The government then issues new gilts to borrow more from those banks and pension companies. Some of that cash also ends up in private loans and equities too.

Type_45

Prism said:

Type_45 said:

AlanP_2 said:

Type_45 said:

Nebulous2 said:

Type_45 said:

beavere38 said:

"Black Tuesday tomorrow?  Or Black Wednesday?  Perhaps."

Who knows, I'm not going to try and predict exactly what will happen. I still believe the top is in on the markets. If the Dow, FTSE and Dax make new highs then I am wrong. The market is massively overvalued and full of private investors using an unprecedented amount of margin. Valuations are based on potential future earnings. What could possibly go wrong? 

It is sounding like 1929 all over again. Once the first domino falls the rest will follow.

How do you know that governments won't just keep printing money and kick the can down the road?   

When money is printed it goes into the stock market, as you can see over the past 14 months of rises.

Only some of it has gone into the stock market. A tremendous amount of it has gone into people's pockets / bank accounts. Where it goes from there is a bit of an unknown and that uncertainty means valuing stocks is more difficult at the moment.

I'm seeing indications that my acquaintances are prepared to spend more than I would have expected. 

That's not my understanding.  When QE happens it goes to the banks, not the general public.

None of the QE has landed in my bank account.  

Furlough money, loans and grants to businesses - all funded by QE. Whether you personally have received any of that lot is nothing to do with QE though.

That's not where QE has gone.  Someone who knows more than me will have to explain to you.

Indirectly it is. QE money buys existing government bonds/gilts from banks and pension funds. This gives them a surplus of cash. The government then issues new gilts to borrow more from those banks and pension companies. Some of that cash also ends up in private loans and equities too.

Your opinion is noted, but as I say, we're waiting for someone who knows more than me to explain.

Prism

Type_45 said:

Prism said:

Type_45 said:

AlanP_2 said:

Type_45 said:

Nebulous2 said:

Type_45 said:

beavere38 said:

"Black Tuesday tomorrow?  Or Black Wednesday?  Perhaps."

Who knows, I'm not going to try and predict exactly what will happen. I still believe the top is in on the markets. If the Dow, FTSE and Dax make new highs then I am wrong. The market is massively overvalued and full of private investors using an unprecedented amount of margin. Valuations are based on potential future earnings. What could possibly go wrong? 

It is sounding like 1929 all over again. Once the first domino falls the rest will follow.

How do you know that governments won't just keep printing money and kick the can down the road?   

When money is printed it goes into the stock market, as you can see over the past 14 months of rises.

Only some of it has gone into the stock market. A tremendous amount of it has gone into people's pockets / bank accounts. Where it goes from there is a bit of an unknown and that uncertainty means valuing stocks is more difficult at the moment.

I'm seeing indications that my acquaintances are prepared to spend more than I would have expected. 

That's not my understanding.  When QE happens it goes to the banks, not the general public.

None of the QE has landed in my bank account.  

Furlough money, loans and grants to businesses - all funded by QE. Whether you personally have received any of that lot is nothing to do with QE though.

That's not where QE has gone.  Someone who knows more than me will have to explain to you.

Indirectly it is. QE money buys existing government bonds/gilts from banks and pension funds. This gives them a surplus of cash. The government then issues new gilts to borrow more from those banks and pension companies. Some of that cash also ends up in private loans and equities too.

Your opinion is noted, but as I say, we're waiting for someone who knows more than me to explain.

Sure, I am am happy that they will explain that some of the QE money has in fact gone into furlough and business loans.