The Buffet Indicator is comparing stocks marketcap to gdp. If the economy as measured by GDP isnt growing, then stock tend to bottleneck until growth returns.
In previous stock peaks, 2000 and 2007, the price action peaked and retraced causing a bear market trend.
To make it memorable, I overlayed disney princess castles, to burn it into memory.
The Buffet indicator uses overall US equities value compared to GDP as a simple metric. Applying this to previous bubbles there are several similarities indicating a potential recession and downward trend. Recently the Buffet indicator was rejected off of the QE bubble trend. Based on long term levels of fair market ratios in a NON QE environment, the indicator...
Stop being blind, USE CHARTS!
US equities are having a hard time keeping it's share of GDP.
So, even if you do catch a bounce, the possibility of upside is limited versus the probability of downside.
It's ALL about risk versus reward.
#fintwit #gold #gdp #inflation #spx
"Blue (color may be incorrect) line generates income to pay interest on red (color may be incorrect) line. See the problem? It's just math. #Weimar #FourthTurning #Gotgold" - Lawrence Lepard Oct. 15 2019 via twitter.
Money velocity after removing government expenditure is still correlated to inflation. It's not the current number, it's the rate of change. Recently, some on Twitter have stated low M2V means there is not a correlation between velocity and inflation; it's the rate of change.
IF you remove government expenditures from GDP, you get a more accurate GDP, and a better correlation to inflation. Notice how the highs line up well. This correlation also exists for money velocity and money supply.
#GDP is in SERIOUS trouble as it hasn't had previously this much difficulty out pacing inflation (momentum loss).
The under performance is historically SEVERE, more that the 1970's.
Previous 2 times GDP stalled like this, #spx went nowhere for thousands of days.
Despite the recent downturn in the equity market, the Total Market Cap over GDP - also known as Buffet Indicator - clearly shows that there still might be a significant market crash ahead.
Assuming the market will reach the " Fairly valued " territory, it means that a further 25% decline is to be expected.
Assuming instead that the market will ultimately become...
Yes, I believe so. The collapse of the Russian economy will hit Europe and Asia a lot harder than the United States. It's hard for the ECB's hawkishness to be taken seriously when Europe can't even get their hands on natural gas, oil or corn. The US is coming off the backs of very accommodative stimulus and Americans consumers are ready to spend. American...
Until U.S. debt loads get to more normalized levels (below 80%) and the 10Y treasury yield has a far enough spread from the short-end of the curve, the Federal Reserve's hand is almost forced in what they can do from a rate tightening perspective.
Will the market just stall for a decade or 2 as we work through the debt and allow the economy to catch up?
at which debt to gdp and sp500 levels will the debt level be healthy? SPY GLD SPX QQQ TLT IEF DIA VTI AAPL
The Ratio Expansion is unprecedented in US HIstory.
A clear pattern emerges after the initial Apex - the
gentle stair-step higher into higher and higher Highs.
Debt itself remains the Life-Support of the US Economy.
The Debt to GDP ratio is the Probability of a Nations
ability to Pay Its Debts.
In contrast to the Wilshire 5000, the numerator in the chart above includes the total value of public and private equities. However, it only gets published quarterly and therefore is always lagging a bit behind. On the upside, it has data going back to the 1940s, thereby providing a more historical perspective.