Not just Gaza, but our stock and bond markets. 30-year has breached 5% and the 10-year at this hour stands at 4.99%. The selloff each day has been alarming. This isn't a bond bear market. It's a crash that is bleeding into the stock market.
The TLT ETF is now down about 40% relative to pre-pandemic values, and a lot more than that compared to the propped up valuation during the pandemic. Interesting that this is about how much M2 increased during the pandemic. In other words, we are paying for that spending.
I think the stock market is beginning to understand the concept of "Equity Risk Premium." Compared to history, valuations make no sense unless profits rise enormously. This year's equity rise, in my opinion, was driven by AI. Energy is getting a boost from war and high oil prices. Biden can't just draw down the SPR.
Everything looks like a repeat of the 70s except for one thing: Debt. We have far more debt today, so the way out cannot be tax cuts per the early 80s. It's going to be manifested through massive declines in living standards. If you have money it will be taxed away even if you are seeing "growth." There is no other way. No one on Capitol Hill will address the problem, save perhaps the Freedom Caucus. Everyone else is raising your taxes, via the IRS or inflation.
The TLT ETF is now down about 40% relative to pre-pandemic values, and a lot more than that compared to the propped up valuation during the pandemic. Interesting that this is about how much M2 increased during the pandemic. In other words, we are paying for that spending.
I think the stock market is beginning to understand the concept of "Equity Risk Premium." Compared to history, valuations make no sense unless profits rise enormously. This year's equity rise, in my opinion, was driven by AI. Energy is getting a boost from war and high oil prices. Biden can't just draw down the SPR.
Everything looks like a repeat of the 70s except for one thing: Debt. We have far more debt today, so the way out cannot be tax cuts per the early 80s. It's going to be manifested through massive declines in living standards. If you have money it will be taxed away even if you are seeing "growth." There is no other way. No one on Capitol Hill will address the problem, save perhaps the Freedom Caucus. Everyone else is raising your taxes, via the IRS or inflation.