U.S. Inflation Accelerates to Six-Year High, Eroding Wages

Gaius · 2018-06-13T09:38:08.689Z

So, if consumer demand is driving up consumer prices, I guess demand for other stuff could be driving up prices for other stuff too.

CNBC – 6 Jun 18

David Stockman: Stocks will plunge 50% in this 'daredevil market'

Former OMB Director David Stockman says the market is "just way, way over-priced for reality."

Gaius · 2018-06-13T13:01:30.149Z

Yeah the Schiller (CPI-adjusted) P/E is higher now than it was at the Crash of '29.

IOW, consumer inflation may be (only) 2.8%, but the stock market is inflated to dizzying heights.

Hey, what’s gonna happen when retirinh baby boomers start selling their stocks to fund their retirements?

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Gaius · 2018-06-13T16:07:33.559Z

Oh my, and the hits just keep coming. It seems there is a lot of variability from one metro area to the next, but on average home prices are now higher than they were at the height of the real estate bubble.

In fact, while it may mean “bigger homes are selling,” (different than “average homes selling for more,”) the average home sale price today is 6.7% higher than at the height.

CNNMoney

Home prices are on an epic run

Real estate prices posted an annual gain of 6.3% in February, and have been rising continuously for the past 70 months.

lulubee · 2018-06-13T16:50:26.526Z

Gaius:

Yeah the Schiller (CPI-adjusted) P/E is higher now than it was at the Crash of '29.

IOW, consumer inflation may be (only) 2.8%, but the stock market is inflated to dizzying heights.

Hey, what’s gonna happen when retirinh baby boomers start selling their stocks to fund their retirements?

I wrote this on a thread back in late April:

[quote=“lulubee, post:35, topic:336”] …my friend who owns a mergers and acquisition firm, and is also an economist, plus teaches a course at Harvard Business School. She told me everyone in the business (including her) have pulled out of the market and are in all cash because in the next 18-24 months there will be a huge crash (bigger than 2008.) It has to do with the huge gap between the S&P and what’s been bought on margin. Gap is many times bigger than it was in 1929, 2001 and 2008
[/quote]

I had asked her what we should do with all the extra cash we have now since we are no longer paying college tuition.

For now I’m sitting on it, but I haven’t sold anything in my investment accounts.

As for housing - it’s gone crazy where I live. Houses selling as soon as the go on the market and for way over asking. I’ve been here 28 years and I’ve never seen a market like this in upstate NY.

reflechissez · 2018-06-13T16:55:30.960Z

lulubee:

Gaius:

Yeah the Schiller (CPI-adjusted) P/E is higher now than it was at the Crash of '29.

IOW, consumer inflation may be (only) 2.8%, but the stock market is inflated to dizzying heights.

Hey, what’s gonna happen when retirinh baby boomers start selling their stocks to fund their retirements?

I wrote this on a thread back in late April:

[quote=“lulubee, post:35, topic:336”] …my friend who owns a mergers and acquisition firm, and is also an economist, plus teaches a course at Harvard Business School. She told me everyone in the business (including her) have pulled out of the market and are in all cash because in the next 18-24 months there will be a huge crash (bigger than 2008.) It has to do with the huge gap between the S&P and what’s been bought on margin. Gap is many times bigger than it was in 1929, 2001 and 2008

I had asked her what we should do with all the extra cash we have now since we are no longer paying college tuition.

For now I’m sitting on it, but I haven’t sold anything in my investment accounts.

As for housing - it’s gone crazy where I live. Houses selling as soon as the go on the market and for way over asking. I’ve been here 28 years and I’ve never seen a market like this in upstate NY.
[/quote]

I has at an HBS reunion in May, 2007 listening to a presentation by one of the investment management professors. among other things, he said this: 1) all the institutional real estate people he was talking with were terrified; 2) the only investment that nobody wants is cash.

Hellsbane · 2018-06-13T17:57:10.218Z

Perhaps we should encourage the fed to start pumping billions into the stock market again… ya know, just to make the economy look good…

biggestal99 · 2018-06-13T18:13:40.008Z

wiley8425:

You mean a stimulus? When did we get another one of those recently?

You are not serious, right.

You are pulling old Biggestal99’s leg.

you rascal, you actually had me for a minute there

Allan

Gaius · 2018-06-13T19:32:36.953Z

Historically the stock market has NEVER sustained stock prices this high with such (relative) low corporate earnings.

reflechissez · 2018-06-13T21:25:21.532Z

Gaius:

Historically the stock market has NEVER sustained stock prices this high with such (relative) low corporate earnings.

What are you using? price/earnings ratio? If so, that’s not an accurate statement.

Gaius · 2018-06-13T21:38:38.958Z

reflechissez:

Gaius:

Historically the stock market has NEVER sustained stock prices this high with such (relative) low corporate earnings.

What are you using? price/earnings ratio? If so, that’s not an accurate statement.

Shiller (CPI adjusted) P/E.

Although if we use the nominal P/E, I should concede that the market sustained this high a P/E once before. . . . for ten years . . . immediately before the market tanked on George W.s watch.

multpl.com

S&P 500 PE Ratio

S&P 500 PE Ratio chart, historic, and current data. Current S&P 500 PE Ratio is 20.46, a change of -0.15 from previous market close.

Gaius · 2018-06-13T21:39:10.702Z

multpl.com

Shiller PE Ratio

Shiller PE Ratio chart, historic, and current data. Current Shiller PE Ratio is 28.79, a change of -0.21 from previous market close.

reflechissez · 2018-06-13T21:41:29.095Z

Gaius:

I should concede that the market sustained this high a P/E once before. . . . for ten years . . .

When did that happen?

Gaius · 2018-06-13T21:43:56.402Z

Look at the chart.

It hapoened right up until the crash on GW’s watch.

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reflechissez · 2018-06-13T21:55:29.308Z

The PE was not that high for 10 years. It went p and down like it always does.

Gaius · 2018-06-14T00:11:00.976Z

Pretty close to ten. Just look at the chart.

Gaius · 2018-06-14T00:13:47.100Z

I don’t need to remind you that
a. it ended badly and
b. the shiller p/e never sustained current levels.
c. as people (the baby boomers) retire odds are they tend to take their money OUT of the matket.

ImRightYoureWrong · 2018-06-14T00:40:36.225Z

Savings interest rates have been rising too I’ve noticed in my accpunt

reflechissez · 2018-06-14T01:31:43.806Z

Gaius:

Pretty close to ten. Just look at the chart.

which 10-year span are you talking about?

reflechissez · 2018-06-14T01:36:46.599Z

Gaius:

I don’t need to remind you that
a. it ended badly and
b. the shiller p/e never sustained current levels.
c. as people (the baby boomers) retire odds are they tend to take their money OUT of the matket.

the baby boomers span 18 years. They’re not going to be pulling their funds out on the same day. There are millions of people behind them, including the millennials which is bigger than the boomers.

WuWei · 2021-12-12T01:10:45.527Z

fredgraph

Highest since 1975