5/6/2023 0 Comments Quickplan as soon as possible![]() ![]() They will travel more – pass assets onto their kids more, take more generic drugs, visit doctors, strive for life continuance, eat better, exercise more, start second businesses, form companies to help kids start new businesses, take cruises, go to vacation resorts, board airplanes, visit grandkids, etc., etc., etc. They will get a place of their own, a car of their own, a couch of their own, storage boxes of their own, a pet of their own, TV’s, game consoles, video memberships, content channels, refrigerators of their own and the food to fill it.Īt the very same time – millions and millions and millions of adults, age 63 to 69 today, will pass the baton and move into the next phase of their lives. Here is the deal – millions and millions and millions of kids, age 15 to 21 today, will move out over the next 5 years. (Thanks to Calafia Beach for the great charts as always!) The Bigger – Much Bigger – Picture Treasury yields are very low from an historical perspective, but the market cap of equities is not out of line with historical trends, being roughly the same today as in the early 1960s. The market cap of equities (using the S&P 500 as a proxy) should therefore tend to track the inverse of risk-free Treasury yields (because they are the appropriate discount rate). Stock prices are theoretically driven by the discounted present value of future after-tax earnings. It is easy to forget that in the very long run, corporate profits tend to track the growth of nominal GDP over time. Were the “energy collapse” anything more than a huge gold mine for upcoming M&A, you and I would be paying for it dearly already. Rest assured–the bond boys don’t play nicely. and the eurozone is low – so far, there has been no contagion from the energy sector to the broader economy…even though the experts swear to us otherwise. The chart above suggests that systemic risk in the U.S. Notice they have felt this way in an increasing trend way back to 2002!īy this measure, stocks offer attractive valuations for those who believe that earnings are unlikely to fall.Įuro-zone swap spreads remain relatively low as well. They fear that earnings are going to decline, and so they demand an unusually high premium for holding stocks instead of Treasuries. My read? Pretty clear that investors today are not very confident that corporate profits can hold at current levels. LOL! That was when the DOW was about 550. Investors always have a choice between owning risky stocks or risk-free 10-yr Treasuries.Ĭurrently, the earnings yield on stocks is about 350 bps higher than the yield on 10-yr Treasuries.įrom an historical perspective, this is a relatively rare occurrence. Note the last time we saw these erratic waves was in the mid-70’s. ![]() Soon, the political and adminstration change in the near future – and the election for it – will take center stage. I suspect this chop remains for a bit longer to quell any remaining good feelings. See our video reviews from last week and you will note the markets are hovering in the new trade range noted at the time – having leapt over and washed out the lower regions of the old trade range. Who would have ever thought that launch day for new Apple products would become a yawner? These products, which have changed our lives in a matter of a single digit number of years, are now so “normal” we expect them to change things always.Īre we sure there is something wrong with the sys tem? Our could it be our perspective of and/or gratitude for it? Times are a changin’ – and quickly.Įven more quickly than before. It is my humble opinion we are witnessing a slow but steady “passing of the baton” as our barbell economy continues to forge ahead and reshape the landscape before us. ![]() If you feel a bit jostled around – don’t fret – even most of the pros do and the “experts” as one can readily see, don’t have a clue either. ![]()
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