I think the bottom line is that the hot market is Trump Bashing stories. Pursuing a story that might vindicate him or show him to be the victim of an abusive Obama Administration would bring down the thunder of the entire Left and it would mean basically having to admit that they’ve been butt kissing enablers for the past 2 presidential terms, and that their defenses of Obama and Hillary were really just the soft bigotry of lowered expectations because they were so focused on ‘first woman’ and ‘first black man’ without bothering to listen to what either of them actually said. The cognitive dissonance would then cause the entire left side of the political spectrum of the US to collapse under it’s own weight. Think Inception.
Eventually, probably when a recession comes along and crushes corporate earnings, it will become clear that earnings and the high valuations attached to them are unsustainable. When that happens, the same unsophisticated investors blindly plowing their money into the market will panic and rush to the exits similarly to what happened in 2001 and 2008/2009. Therefore, we can expect a minimum 50% drop in the S&P 500 and long term returns—I’m talking about 20 to 30 years—below 4% per year given that the S&P 500 earnings yield is 3.83%.
Myriad changes to the financial structure have seemingly safeguarded the financial system from another 2008-style crisis. The big Wall Street financial institutions are these days better capitalized than a decade ago. There are "living wills," along with various regulatory constraints that have limited the most egregious lending and leveraging mistakes that brought down Bear Stearns, Lehman and others. There are central bank swap lines and such, the type of financial structures that breed optimism. Read More
The DJIA actually did a lot better than a lot of the other averages. The Dow Jones transports were down just over 4%; 445 points. the NASDAQ was down over 4% as well - 315 points. Weakness across the board in the stock market today. And it's not just the homebuilders and the autos. I've been talking about those sectors as leading indicators and, yes, many of those stocks made new 52-week lows today as well. But they were not the worst performers on the day.
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