Our economy is on the cusp of another Roaring 20s, a brilliant time in history when everyone just got richer and richer forever and nothing bad happened at the end. U.S. economy is on the cusp of another Roaring ’20s, says UBS "By early 2025 only the most pessimistic investors will need rose-colored glasses to see a clear path to a Roaring ’20s outcome," a UBS analyst says. https://fortune.com/2024/10/01/economy-roaring-20s-ubs-growth-unemployment-inflation/amp/ A bustling Wall Street in 1923. The American economy is seemingly fairing so well that UBS has signaled a potential return to the glory days. The European finance giant believes Uncle Sam is inching closer to a “Roaring ’20s” scenario, placing the likelihood of an incoming booming economic cycle at 50%. The phrase harkens back to the same decade a century ago, when massive economic growth prompted a construction boom and rising prosperity for families. With the benefit of hindsight, the 1920s had the hallmarks of a strong economic cycle: a wider adoption of electricity and automobiles, as well as a postwar boom in consumption. At the time, the average person may not have realized their luck—and this is the phenomenon the U.S. finds itself in at present, writes Jason Draho, head of asset allocation Americas at UBS. While economists are concerned about a potential rise in unemployment, a recession, or stagflation, Draho argues the balance is only tipping higher toward a period of prosperity for Americans. In a note released yesterday, Draho wrote that by the bank’s criteria the U.S. economy is already in another Roaring ’20s. He said: “It’s no longer too soon nor too optimistic to suggest that the US will experience a Roaring ‘20s economy. It already is by our criteria, with the relevant question being whether these conditions will continue, not whether they will materialize. “The odds continue to rise for this bull-case scenario, with many recent developments on the demand side, supply side, and monetary policy all supportive.” Investors are increasingly coming around to a soft-landing consensus, he added. A September survey of 37 economists from the Financial Times found the majority did not expect to see a contraction in the next couple of years. The survey—and its optimistic outlook—took place ahead of the Fed’s anticipated rate cut last month, which markets have since seen as a rebalancing toward the unemployment side of the Federal Open Market Committee’s (FOMC) mandate, thus ensuring a level of productivity and activity. “The way things have been trending, it’s quite possible that by early 2025 only the most pessimistic investors will need rose-colored glasses to see a clear path to a Roaring ‘20s outcome,” Draho added. Powell’s 2% target Draho outlined UBS’s criteria to officially declare the 2020s a “Roaring ’20s”: sustained GDP growth of 2.5% or higher, inflation in the 2-3% range, a Fed funds rate around 3.5%, and the 10-year Treasury yield around 4%. According to the Bureau of Economic Analysis, real GDP for Q2 2024 increased at an annual rate of 3%—ticking the first box. Following Jerome Powell’s intense wrangle with inflation, the 12-month CPI percentage for August 2024 came in at 2.5%—ticking the second box. The fed funds rate—despite a higher-than-expected cut last month—sits above UBS’s threshold at 4.75% to 5%. And in a bid to foster employment—and as a result productivity and consumer spending—Draho believes the Fed might have to compromise on its target inflation rate of 2%. It’s a notion the likes of JPMorgan CEO Jamie Dimon has already floated, with Draho adding: “The relevance for the Roaring ’20s outcome is that the Fed signaled a strong desire to preserve the soft landing and maintain full employment, even if it means inflation descends more gradually back to 2%.” The FOMC would never publicly admit it would accept inflation above 2%, Draho added but countered: “A 50bps rate cut is not an explicit signal that the Fed is targeting this outcome, but the bread crumbs suggest a policy reaction function that is directionally supportive of a Roaring ’20s outcome.” Unemployment is the sticking point Rising unemployment has been the factor which has caused even the more hawkish members of the FOMC to pause. The Sahm Rule—which in the past has been accurate in predicting when an economy will enter a recession—was triggered back in July. The Sahm Rule looks at two factors: the current three-month moving average of U.S. unemployment and the lowest three-month moving average of U.S. unemployment over the past year. If the current average is higher than the lowest average by more than half a percentage point, the American economy is headed for a recession. Its latest reading for August sits at 0.57 pp. Draho admits that the labor market could prove to be the snag in America’s return to an economic heyday, writing: “Cooling over the past six months has done more than just rebalance the labor market, it has left it looser than it was pre-pandemic.” “The U.S. election and the escalating war in the Middle East are also sources of potential risks,” adds Draho. Of course, the original Roaring ’20s had their end as well. The Great Depression kicked off with the Black Tuesday Wall Street stock market crash in October 1929.
Ed Yardeni has been saying that for a while now. The last 2 supply related inflation shocks led to huge booms -- the roaring 1920s & the slower consumer boom of post WW II. They both ended with massive bubbles, the 1929 debt fueled bubble & the Nifty Fifty bubble. I think margin on stocks the late 1920s was crazy high. Some brokerage houses allowed you to buy stock with 10% down. I think the 1950s boom was slower since the public that got burned in the late 1920s came back slowly to the markets. I think it was the beginning of the rise of mutual funds. If you look at today the public still hasn't fully come back, just look at the 5% & chill crowd who don't want to give up their 5% T-bills. There are still trillions in T-bills. There will be a huge boom into 2032 and then another bubble collapse.
Based an 18 year bull market cycle, this cyclical bull market started in 2009 and the top will be in 2027.
You call that an exit strategy? Here is an exit strategy: Sean ‘Diddy’ Combs’ A-list party guests knew when to leave before things took a turn https://pagesix.com/2024/10/02/cele...*MTcyNzg4MTYxNC4xMS4xLjE3Mjc4ODkzODkuNTUuMC4w
Maybe Israel hits Iran's oil fields and Iran hits every oil field in the region, fun times ahead. Israel is going scorched earth and is depending on Biden to have their back. The market is based on control and where else are you going to put your money.
That Crowd stretches a long distance into the picture, so looks like too many people to be just floor brokers
Of course you can have a repeat of the roaring 20s when the fed is backstopping every down tick in the market. ....