Check Out This Bubble

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As of Thursday, January 12, at the open the DOW index was 19954.28 (just short of the 20,000 number). The trailing P/E was 21.76 (up some 42% in one year). The P/E estimate was 18.68 (up some 23% in one year). The dividend yield was, however, down from 2.75 to 2.40. What do these numbers reveal to me?

What seems obvious to me is that our Dow index is living within a huge bubble. Retail sales are declining at Macy’s, Kohl’s, and Dillard’s and lay-offs continue. Consumer debt is a record highs and we now have pundits calling for a 30,000 DOW in 2017. Is any of this reality or is it false emotion and psychological hype?

The entire facade of projections…by many of our pundits is based upon a Trump administration (inflation psychology) which will pump up all these index numbers for 2017 and beyond. Tax reductions and deficit spending will accomplish these results. Is any of this real or is it pure fantasy? What is more likely to happen?

My sense is that the Trump Doctrine, now in the making, is planning to REVERSE much of the Obama hype which created our past Index bubbles. Yes, the Trump Doctrine will not create more inflation and it will not create greater consumer spending. The entire facade of projections by our elite experts is based upon illusion, IMO.

What is surfacing fast is a real estate market which is slowing, a retail market which is slowing, an international trade market which is slowing, and a political marketplace which is in total confusion and chaos. Can these realities lead to a 30,000 DOW in 2017 or 2018? I don’t think so! We will soon head in a REVERSE direction economically and it could start on January 20 – 31.

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Moon Kil Woong 3 years ago Contributor's comment

The real issue is the market recent rise is based on people cashing in their last chips before #Trump not the hopes of Trump. So far I agree that the International market is in turmoil over him. However, there is some hope of him massively increasing the deficit against Republican fiscal conservatives and rolling back regulations and taxes on business. It is doubtful that this will counter the worsening global market and the Fed who will raise rates in response to higher inflation if Trump starts a trade war.

There are lots of hopes and expectations but also lots of trouble, the main one being the Federal Reserve's unsustainable #bubble.

Donald Swenson 3 years ago Author's comment

Yes, the Fed's bubble is my concern also. D