This is why the s$p is NOT sitting pretty under 1000

Because of the $7 trillion fed balance sheet and ever growing


Fed’s balance sheet nears $7 trillion mark
By Sunny Oh
Published: May 14, 2020 5:20 pm ET

https://www.marketwatch.com/story/feds-balance-sheet-nears-7-trillion-mark-2020-05-14

 

I knew who started this thread before I even clicked on the title

 

You forgot to mention the buybacks.

Buybacks’ drain on corporate treasuries has been massive. The 465 companies in the S&P 500 Index in January 2019 that were publicly listed between 2009 and 2018 spent, over that decade, $4.3 trillion on buybacks, equal to 52% of net income, and another $3.3 trillion on dividends, an additional 39% of net income. In 2018 alone, even with after-tax profits at record levels because of the Republican tax cuts, buybacks by S&P 500 companies reached an astounding 68% of net income, with dividends absorbing another 41%.

Why have U.S. companies done these massive buybacks? With the majority of their compensation coming from stock options and stock awards, senior corporate executives have used open-market repurchases to manipulate their companies’ stock prices to their own benefit and that of others who are in the business of timing the buying and selling of publicly listed shares. Buybacks enrich these opportunistic share sellers — investment bankers and hedge-fund managers as well as senior corporate executives — at the expense of employees, as well as continuing shareholders.

https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy

 

I think I'll have to start making it a bit more challenging. My style has caught on...

 

Didn't seem to make much of a difference the last 10-12 years

 

I am no economist, let me ask you smart guys these questions:

In a closed economy (a reasonable assumption consider import and export are only a small % of the economy) when the government owes money to its people, isn't it like taking money from the left pocket and put it into the right pocket?

So, all those new printed money is in the pockets of its citizens? If most of the new money is in the hands of the 1%, they are not spending on essentials, there will be no inflation on essentials?

Conclusion, there should be no impact when the federal government keeps printing money?

My head is spinning.

 

Prorating w-o-w change 7T will be hit sometime Saturday. On to 8T I say. That should be the following Saturday.

 

We have China to thank for low inflation for a while. Phony fed calculated inflation anyway.

 

As an asset class, what do you find more attractive than US securities (say with SP500 around 2500)?

 

Food