Big downturns are byproducts of financial/economic panics. Have no doubt, another one (panic) driven by decades of bad decision-making across the public and private sector and TIME is coming. Those reading the message of the market have the best chance to survive and thrive while masses angrily search for scapegoats to satisfy their pain.
Adam Smith's invisible hand influences not only capital (flows) but also cultural, political, and social norms. Change is already underway, but the public will have difficult recognizing it until another panic grips the headlines.
The cycle of TIME and the concentration and flow of capital, which includes long-term divergences within the trend, will setup the next panic.
Chart 1: Large Cap Stocks Total Return Index (LCSTRI), Moodys Yield Spread (BAA-AAA) and BAA-AAA Cycle Z Scores (BAA-AAAC1 & BAA-AAAC2)
Chart 2: Large Cap Stocks Total Return Index (LCSTRI), Moodys Yield Spread (BAA-AAA) and BAA-AAA Cycle Z Scores (BAA-AAAC3 & BAA-AAAC4)
Chart 3: S&P Retail (RTL), RTL to S&P 500 Ratio (RTLSPXR) and RTLSPXR Cycle Z Scores (RTLSPXRC1 & RTLSPXRC2)
Headline: THE RESET: Debt, stocks both up in 1st Obama term
THE RESET: US debt soars during Obama presidency but so do stocks, both due to big downturn
Two things soared big time during President Barack Obama's first term: the national debt and the stock market.
So what gives?
The debt rose from $10.6 trillion four years ago to close to $16.4 trillion now, a 55 percent increase.
The Dow Jones Industrial Average was 7,949 on Inauguration Day 2009. On Friday, it closed nearly 72 percent higher at 13,649 for a five-year high.
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