Monday, January 13, 2020

Re-Posting: Longest Uninterrupted Expansion In History -- January 13, 2020

Market: NASDAQ and S&P 500 hit all-time records.

Disclaimer: this is not an investment site.  Do not make any investment, financial, career, travel, job, or relationship decisions based on what you read here or think you may have read here. 

Business news chatter: I'm bedridden, as they say, so watching a bit more business news than usual. Again, lots of talk of "how long can this bull market go on?" Over ten years now, this is the longest uninterrupted expansion in modern history. I would argue that the charts show/suggest something different.

Previously posted:
One wonders if the current expansion actually began in late 2016; if so, this expansion could be just beginning. Maybe the current expansion can be measured from sometime in 2016. It's subtle, but ....

Link here.

Some might argue the boom is just beginning, especially if one sees the graphic below in the graph above:


  1. Now compare a chart of the expanding Federal Reserve balance sheet. Literally record expansion there too.

    I need to expose myself to wider arguments on this boom cycle, suggestions welcome if you have some. It's my understanding a lot of this trajectory has a foundation in unsustainable Fed balance sheet expansion. This doesn't mean the underlying market fundamentals are bad, just that the effect is exaggerated greatly by money printing. The long-term sustainability is bad now, but almost all democrats are buying into monetary theory. I'd bet this practice will get worse under a Democratic administration.

    Then you have stock buybacks on the market side, a practice that was illegal for a majority of the 20th century after the crash of '29. Not all stock buybacks are inherently bad, in many cases it can make sense. If you haven't, you might find stock buyback "schemes"worth reading up on.

    Fedex is a great example. Bought back nearly 14 mil in shares to "add value to shareholders" and specially issued 8 million of them to upper management. ...and I'm for corporate tax cuts, but you're not supposed to simultaneously increase spending or raise taxes elsewhere. If trillion dollar deficits are a boom time norm, wait for the downturn.

    1. I wish I could add something constructive to your note, but I have no background in macroeconomics.

      You mentioned "monetary theory." I'm not sure you were referring to "Modern Monetary Theory," but if so, now that's a really, really scary theory, what little I know of it.

      I'm surprised that Jamie Dimon doesn't seem more concerned.

  2. Oops, must have deleted or forgot “modern.” Yes. Modern monetary theory.