• 678 days Will The ECB Continue To Hike Rates?
  • 678 days Forbes: Aramco Remains Largest Company In The Middle East
  • 680 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 1,080 days Could Crypto Overtake Traditional Investment?
  • 1,084 days Americans Still Quitting Jobs At Record Pace
  • 1,086 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 1,089 days Is The Dollar Too Strong?
  • 1,090 days Big Tech Disappoints Investors on Earnings Calls
  • 1,091 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 1,092 days China Is Quietly Trying To Distance Itself From Russia
  • 1,093 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 1,097 days Crypto Investors Won Big In 2021
  • 1,097 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 1,098 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 1,100 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 1,100 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 1,104 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 1,104 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 1,105 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 1,107 days Are NFTs About To Take Over Gaming?
Market Sentiment At Its Lowest In 10 Months

Market Sentiment At Its Lowest In 10 Months

Stocks sold off last week…

Zombie Foreclosures On The Rise In The U.S.

Zombie Foreclosures On The Rise In The U.S.

During the quarter there were…

How Millennials Are Reshaping Real Estate

How Millennials Are Reshaping Real Estate

The real estate market is…

  1. Home
  2. Markets
  3. Other

DOW 20,000? Part II

with Special Guest Lance Roberts, Principal of STA Wealth Management
& Charles Hugh Smith & Gordon T Long

24 Minutes, 32 Slides

Dow 20,000

In Part II of this multi part series we ask Charles Hugh Smith and Gordon T Long whether they see DOW 20,000 or DOW 5,000 ahead, and when?


Charles Hugh Smith

Charles sees the US economy facing a Willie E Coyote moment! The markets are no longer a 'Buy & Hold" investment as he expects volatility while the markets complete a Megaphone Top. If the markets reach 20,000 it is not a legitimate top, but rather a false one. As the megaphone pattern suggests, the markets will just as likely be followed by DOW 5,000, as excessive mal-investment and mispricing is wrung out of the markets.

Rotating Asset Bubbles

Charles Hugh Smith argues through supporting charts that:

  1. Corporate Earnings & Debt: Corporate Debt has been growing at a much larger rate than Corporate EBITDA for sometime now. Earnings need to be growing faster than debt for a DOW 20,000 to be legitimate.
  2. Full-Time Employment versus Social Security Beneficiaries: Full Time Employment has not been growing as fast as Social Security Beneficiaries. This is unsustainable. The solution will require higher taxes or cuts in benefits. Both will reduce household disposable income in a 70% consumption based economy. How do corporations further increase profits from record levels while facing such a secular shift?
  3. Productivity: US productivity has increased 58% since the mid 90's. Meanwhile government spending is up 300% and financial markets have doubled. This makes rising markets unsustainable.

Without these three metrics being dramatically reversed, any DOW 20,000 is not legitimate. Though in nominal termsthe market may reach these lofty levels, in real terms this will be quite a different matter.


Gordon T Long

Gordon T Long looks at the question from a Macro perspective and argues that we need to analyze the Wiemar Germany of the 20's by considering what would have been different if:

  1. Germany had been the world's reserve currency?
  2. If the rest of the world had not been on the gold standard but were all fiat currencies?

The answer suggests the road we are currently on is a modified form of the von Mises Crack-up Boom.

Steps to a Crackup Boom

Conceptual Sequence of Events

Gordon's market charts will leave you with a different perspective.

Delfationary BUST FistCurrency Collapse


Video: DOW 20,000? Part II


24 Minutes, 32 Slides

 


Listen to Part I - Lance Roberts. In the upcoming Part III John Rubino shares his outlook.

 

Back to homepage

Leave a comment

Leave a comment