The Dow Is A Measure Of Inflation

[JAMESBJOHNSON]

http://www.foxbusiness.com/markets/2015/01/12/what-market-correction-would-really-look-like/

When the FED sets interest rates rather than the market, then prints boatloads of paper money for Hillary and Chelsea to borrow for free, inflation takes hold of the DOW as other investors compete for the stocks. Get ready for your ass fucking.

 

[Curmudgeonly]

The same people...that blame Wall Street...for the last bubble that burst...praise the wise, benevolent State for this one...and will continue to do so...until it crashes...

...They hate Wall Street...distrust it as a steward of their Social Security money...yet point in ignorance to the artificially inflated market...as proof the stimulus worked...when the bulk of that money went to prop up state and local public sector unions...

 

[JAMESBJOHNSON]

Stocks aren't undervalued with investors chasing true worth, its cheap money chasing inflation for imaginary gain.

 

[Que]

The investors all realize it is illusionary gains, but the point of equities is to keep pace with inflation, manufactured or not. They hope to grab a safe chair in cash when the music stops.

The subtle creep of inflation in the things consumers actually spend their money on versus the stacked CPI, together with the flat to deflationary direction of wages portends some very painful things. The administration apologists keep singing the praises, undeterred.

More Americans are jobless now than ever before, and they point to less people applying for the first time for unemployment as if that is a meaningful number. They point to weeds in the sidewalk cracks of a dystopian economy and announce that the State is having a bumper crop.

 

[KingOrfeo]

The Dow Is A Measure Of Inflation

Do economists agree with that?

 

[Que]

Do economists agree with that?

Real ones do. Why do you think "equities are a hedge against inflation" is included in ever prospectus you ever failed to read?

 

[Adre]

Stocks aren't undervalued with investors chasing true worth, its cheap money chasing inflation for imaginary gain.

It ain't imaginary if you bought DOW7000 and sold DOW17000, Professor.

 

[RobDownSouth]

http://www.foxbusiness.com/markets/2015/01/12/what-market-correction-would-really-look-like/

When the FED sets interest rates rather than the market, then prints boatloads of paper money for Hillary and Chelsea to borrow for free, inflation takes hold of the DOW as other investors compete for the stocks. Get ready for your ass fucking.

The "market" has never set rates. It reacts to interest rates. Don't be stupid. That's query's job.

 

[RobDownSouth]

Do economists agree with that?

I'm sure query could find an outlier economist somewhere. He's good at fringe research. Damn them mainstreamers, #FullDerpAhead!

 

[KingOrfeo]

Real ones do.

Any names?

 

[unregistered]

 

[KingOrfeo]

Don't you think the market will go down if interest rates go up?

That would make the Dow a reverse measure of inflation, wouldn't it?

 

[Adre]

Don't you think the market will go down if interest rates go up?

I'm pretty sure the equities market has often done okay during periods of rising rates.

 

[RobDownSouth]

That would make the Dow a reverse measure of inflation, wouldn't it?

Bee Eye En Gee OH!

Actually, the bond market is a measure of inflation, not the stock market.

 

[Que]

That would make the Dow a reverse measure of inflation, wouldn't it?

No. The Dow is among other things, a reflection of alternatives; when you hold interest rates artificially low, it makes stocks a better choice by comparison.

Also why do you think the Fed uses interest rates to try to curtail anticipated inflation? Interest rates, not the DOW are inverse to the inflation rate.

 

[JAMESBJOHNSON]

Don't you think the market will go down if interest rates go up?

Of course, its why the FED resists raising rates, the deflationary pressure will pop the bubble.

 

[Que]

Any names?

Ones that do not start with the letter Krugman. The ones that write the verbiage in the prospectuses you do not read. The ones that write for the WSJ, Barons, Business Weekly, Fox Business News, some of the ones that write for Bloomberg excepting the agenda driven political hit pieces, CNBC....

But you go ahead and make your decisions based on Krugman.

 

[unregistered]

 

[unregistered]

 

[KingOrfeo]

Ones that do not start with the letter Krugman.

He does hold a Nobel in economics, you know. (FWIW; so did Milton Friedman.)

The ones that write the verbiage in the prospectuses you do not read.

Why would I? I never play the market, I've never seen a prospectus. But I would naturally suspect the neutrality of an "economist" who wrote one; he's trying to peddle stock.

The ones that write for the WSJ, Barons, Business Weekly, Fox Business News, some of the ones that write for Bloomberg excepting the agenda driven political hit pieces, CNBC....

Fine, fine; now please provide a linked cite for one of them saying "The Dow is a measure of inflation" or words to that effect.

But you go ahead and make your decisions based on Krugman.

None of us have to make any personal decisions based on whether the Dow is or is not a measure of inflation -- do we?

 

[Que]

Bee Eye En Gee OH!

Actually, the bond market is a measure of inflation, not the stock market.

Since you obviously know nothing about Bonds or how they are priced:

Short-Term, Long-Term Interest Rates and Inflation Expectations
Inflation - and expectations of future inflation - are a function of the dynamics between short-term and long-term interest rates. Worldwide, short-term interest rates are administered by nations' central banks. In the United States, the Federal Reserve Board's Open Market Committee (FOMC) sets the federal funds rate. Historically, other dollar-denominated short-term interest, such as LIBOR, has been highly correlated with the fed funds rate. The FOMC administers the fed funds rate to fulfill its dual mandate of promoting economic growth while maintaining price stability. This is not an easy task for the FOMC; there is always much debate about the appropriate fed funds level, and the market forms its own opinions on how well the FOMC is doing.
Central banks do not control long-term interest rates. Market forces (supply and demand) determine equilibrium pricing for long-term bonds, which set long-term interest rates. If the bond market believes that the FOMC has set the fed funds rate too low, expectations of future inflation increase, which means long-term interest rates increase relative to short-term interest rates - the yield curve steepens. If the market believes that the FOMC has set the fed funds rate too high, the opposite happens and long-term interest rates decrease relative to short-term interest rates - the yield curve flattens.

You have it backwards. Interest rates impact inflation and as a result Central banks adjust the rates in order to impact inflation. The concerns with future inflation with regard to a bond you are considering purchasing is that future inflation concerns could impact future rate decisions. If rates are raised the value of your low yield bond drops even further as the income stream from a low yield bond is, of course worth considerably less than the income stream from a high yield bond.

Go Fish

 

[Que]

He does hold a Nobel in economics, you know. (FWIW; so did Milton Friedman.)



Why would I? I never play the market, I've never seen a prospectus. But I would naturally suspect the neutrality of an "economist" who wrote one; he's trying to peddle stock.



Fine, fine; now please provide a linked cite for one of them saying "The Dow is a measure of inflation" or words to that effect.



None of us have to make any personal decisions based on whether the Dow is or is not a measure of inflation -- do we?

No...people that write prospectuses are not "selling you" anything. They are "warning you" as both required by law and to prevent their employers from being sued for not disclosing the risks involved with a particular investment vehicle. By the time you receive a prospectus it is because you have already bought the sales pitch and are now being given the opportunity to decline.

So you have no interest at all, personally, now or in the future in an form of investment, but you wish to weigh in here?

If you actually want to learn any of this start with basic economics then I would recommend a subscription to the WSJ. For economics: start with Henry Hazlitt's excellent Economics in One Easy Lesson. I used to link the Amazon listing but here you can read it all for the economical price of free.

If you just want to argue for argument's sake about an area you have no actual training or experience in, I am not interested.

/discussion

 

[Adre]

"A September 2013 study by Rob Brown of United Capital Financial Advisors illustrates this. Brown found that historically, rising interest rates haven't necessarily caused stock prices to drop.

In his research, Brown looked at stock performance in 12-month periods since 1920 when interest rates had gone up the most. He left out periods during recessions to make the study more applicable to current economic expansion.

Brown found that stocks declined in only three out of the 16 periods of rising interest rates. What's more, the average return for the S&P 500 when rates climbed the most was 12.62% – slightly higher than the 12% return for all periods."


Facts are better than opinions in most cases.

 

[RobDownSouth]

Fine, fine; now please provide a linked cite for one of them saying "The Dow is a measure of inflation" or words to that effect.

It will be interesting to watch queerbait spin his way out of this.

 

[Que]

It will be interesting to watch queerbait spin his way out of this.

Be interesting to see you address what I already addressed...Or are you busy with your 'research" on the politics of Renaissance Italy, a special area of interest for you?

It is 'interesting' to watch as you look for "gotcha" moments in a field you know nothing about.

Ever going to get back to explaining which policies of Obama had the stated intent or effect of increasing oil production?