Thursday, September 13, 2018

The "A-Ha!" Moment -- When Will The Bull Market End? When Will "The Longest US Economic Expansion On Record" End? -- September 13, 2018


September 16, 2018: in the original post, I noted that CNBC anchors continue to try to talk the market down, asking almost daily when the economic expansion will end and/or the bull market will end. It will end this autumn when the GOP loses the US House (and very possibly the US Senate). We may not see the numbers change overnight but once a) taxes are increased; b) regulations are back in vogue; and, c) and the transfer of wealth through global warming scams returns, the gains seen under Trump will disappear. This is not rocket science.

Original Post 

This is really, really cool.

"Everyone" recalls how "everyone" anticipated the market crashing if Trump were to be elected president.

Now, fast forward to September 13, 2018.

I don't know if readers are following the #1 recurring story on CNBC or not, but this is the #1 recurring story on CNBC. The issue comes up almost every day and has been coming up almost every day for the past year.

Quick! What is that issue?

A: this is the "longest bull market" on record. When will it come to the end, and what will bring it to an end.

A: sometimes they call it the "longest economic expansion" on record. But the same question: when and what will bring the "longest economic expansion" to an end?

Every time the talking heads get into the discussion, which is almost every day, the talking heads go through a litany of possibilities, things that will end the "longest economic expansion."

So, let's say the list is made of sixteen items. Not worth going through the list -- it's always the same old thing (s).

But interestingly, the list of sixteen does not include the "elephant in the room."

I'll let you think about it for a day or so, and then if I remember I will provide the "elephant-in-the-room" answer.

Hint: it's not rocket science.

Another hint: once you have the answer, you will know the date the bull market will end; when the "longest economic expansion" will end.

By the way, I feel strongly that technically, this is the "longest economic expansion" on record but that's only because the "interruption" in this economic expansion was so short, it was never seen. It lasted less than 24 hours.

See my comments/rationale at this post.

"The longest economic expansion on record" is a meme, a trope, and is not quite accurate. At least not in the movie I'm watching.

In case you don't like clicking on links, here is that post:

"Everyone" is talking about how long the current period of economic expansion has lasted, saying that it is now the longest on record. Some think the economic expansion still has legs; but others, think it will "soon" come to an end. CNBC is generally tries to talk the market down (my two cents worth). It's my perception that even those who think the expansion will "soon" come to an end, don't think it will be as "soon" as next year (2019).

I have not followed economic cycles. I know nothing about them except what the "average" person on the street might know.

A couple of things from the graph:
  • first, and I was surprised by this, the current expansion is still almost a year shorter than the longest one (the one that began in 1991)
  • most surprising: how short the periods of economic expansion lasted after WWII
    • 1945: 3 years
    • 1949:  3.5 years
  • so much changed after 1933, I don't think it's worthwhile to go back farther than 1945 when considering economic cycles; some might argue going farther back than 1969 is even going back too far
I'm absolutely convinced that the current economic expansion had two (2) periods, both set in motion by entirely different events.

The current expansion is said to have begun in 2009 and has gone on without interruption; it began after coming out the second worst downturn in US history; at some point, the economy had to turn.

Had the pundits been correct, the market (and possibly the economy) would have tanked immediatly after Trump's election (November) and it was going to take two to three years to recover.

Had that happened, the graphic above would show:
  • economic expansion for 6.5 years -- not atypical for for modern-era America -- ending in late 2016
  • the next economic expansion would have begun in 2018; we would now be into our first year of another period of new economic expansion (all things being equal)
  • "all things being equal" -- had the market tanked in 2016/2017, it is unlikely Trump would have gotten the tax cut or the other changes that propelled the economy we are seeing now; he likely would have been impeached by now if the Trump election had put the US into a depression
  • however, assuming that "all things being equal" -- that Trump persevered and his policies went into effect, the economy would have righted itself, and taken off
Bottom line:
  • I would suggest breaking up the red line in the graphic above that begins in 2009 into two separate lines:
  • the first segment would begin in 2009; end in 2016
  • the second segment would begin in 2017 and extend to the present day
If one does and if one considers a typical economic expansion cycle to last six years in the modern era, we still have four years of this economy growing.

My two cents worth.

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