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I had a lot I was going to cover in this week’s Dividend Cafe. I mean, some really fun stuff. We were going to go deep and wide into the .03/17/2021 10:58:52AM EST.
overstimulation risk will far exceed the “output gap” shown in the latest Congressional Budget Office economic projections. What is an output gap? Gross Domestic Product measures (or at least tries to) economic growth. Economists also calculate “potential GDP,” which is how much the economy could grow, if every available worker and other resource were fully employed. Inflation tends to occur when actual GDP exceeds potential GDP because the economy is “running hot.” An output gap is when it goes the other way, with the economy operating well below its potential. That’...
The Case Against Inflation :: The Market Oracle ::
The classic “Buffett Indicator” certainly seems to be in nosebleed territory. Notice that the valuations in 1966, the beginning of a long-term bear market, were also high. Source: CurrentMarketValuation.com Then there is the ever-popular price-to-earnings ratio. Notice by this measure that valuations were not all that stretched in 1966. Yet there still followed a 17-year bear market, as measured from the peak back to where it started. Source: CurrentMarketValuation.com This next one is unusual: valuation as measured by mean reversion. Mean reversion is the fairly unsophisticated ...
Fed Chairman Jerome Powell believes the US unemployment rate, officially at 6.3% in January, is clearly understated. That rate is likely closer to 10%, if they include those who left the labor force because of the pandemic. That isn’t the only data in need of adjusting. Just look at the Labor Department’s business birth/death estimates. Those are aspirational. You can’t know the real number for at least a year, so they make the best estimate they can. However, the “past performance” data the estimates are based on is clearly broken now that 150,000 (if not more) businesses closed ...