Stock market is a "fully-fledged epic bubble" and will burst
Discussion
DaveA8 said:
What possesses any rational investor to buy into these types of companies, no moat, easily replicated, over priced yet for some reason people still think they can grow. Approx 20% left. The company Victorian Plumbing,
Edited by DaveA8 on Thursday 16th June 08:35
You mean trillions of £$€ worth of investment money wasn’t rational?
(Thinking all ipo/spac money for last 3 years)
Aren’t these participants also a big chunk of the driver behind the market ‘pricing in’ values?
I think I can see the issue here
Anyhow, Victoria Plumbing, someone made a load of cash. That’s good business for them.
This is all enabled by cheap money and yield seeking.
We’ll see a hell of a lot more solid results in future if interest rates remain higher as capital is allocated more considerately.
But before then we’ll all have to enjoy a ride on the slide of falling stock valuations as everything has been bid to excess.
Yes P/E look quite favourable *now*, but shortly the impending recession will tamp down E a fair bit, soooo…
While UK and EU drag their feet, holding strong currency stocks seems preferable to weak currency stocks, assuming stocks at this point are broadly equally over-priced.
I get a feeling BofE are going for 75bps, otherwise they’re just baking in more inflation on energy.
Rock and hard place.
I get a feeling BofE are going for 75bps, otherwise they’re just baking in more inflation on energy.
Rock and hard place.
Mr Whippy said:
While UK and EU drag their feet, holding strong currency stocks seems preferable to weak currency stocks, assuming stocks at this point are broadly equally over-priced.
I get a feeling BofE are going for 75bps, otherwise they’re just baking in more inflation on energy.
Rock and hard place.
Thought they might do 50 but no , a mere 25! I get a feeling BofE are going for 75bps, otherwise they’re just baking in more inflation on energy.
Rock and hard place.
Madness , inflation is already a huge problem.
Mkt has last confidence. Both bond and stock mkts down the pan .
Pension fooked !
Edited by GT3Manthey on Thursday 16th June 13:11
GT3Manthey said:
Thought they might do 50 but no , a mere 25!
Madness , inflation is already a huge problem.
Mkt has last confidence. Both bond and stock mkts down the pan .
Pension fooked !
Debt is the biggest problem, there is too much everywhere. Inflation is the safest way to reduce the debt liability.Madness , inflation is already a huge problem.
Mkt has last confidence. Both bond and stock mkts down the pan .
Pension fooked !
With the amount of debt, inflation is much preferred to a recession and this is the way I see them navigating this going forward.
Who knows if there will be any unintended consequences?
You know we could just allow the rest of the world to increase interest rates, pay off our debts on low interest, and then after everyone else raise rates a bit to rebuild the currency value. If US and others demand for goods goes down due to rates that will have a big enough effect on the demand and coats without us getting involved.
Ashfordian said:
GT3Manthey said:
Thought they might do 50 but no , a mere 25!
Madness , inflation is already a huge problem.
Mkt has last confidence. Both bond and stock mkts down the pan .
Pension fooked !
Debt is the biggest problem, there is too much everywhere. Inflation is the safest way to reduce the debt liability.Madness , inflation is already a huge problem.
Mkt has last confidence. Both bond and stock mkts down the pan .
Pension fooked !
With the amount of debt, inflation is much preferred to a recession and this is the way I see them navigating this going forward.
Who knows if there will be any unintended consequences?
It’s an emergent property of human greed and speculation.
Mr Whippy said:
Digga said:
bmwmike said:
Mr Whippy said:
A global recession will kill the demand side and inflation.
God knows what comes out the other side of all this but I think it’ll all be clear by Christmas.
Which Christmas? God knows what comes out the other side of all this but I think it’ll all be clear by Christmas.
Ashfordian said:
Debt is the biggest problem, there is too much everywhere. Inflation is the safest way to reduce the debt liability.
A student of the Argentinian school of economics? Countries with persistently higher inflation, tend to have lower rates of investment and economic growth. Higher inflation leads to lower international competitiveness, leading to fewer exports and a deterioration in the current account balance of payments.
Inflating away debt works but only when the obligations are in fixed dollar amounts, like a mortgage. Essentially, all of our long-term fiscal problems are entitlement commitments that grow (are "indexed") with inflation. When inflation rises, spending on Pensions and Healthcare rise at the same rate.
If you let inflation run over the longer term you un-anchor people's inflation expectations, they stop trusting currency, so you get hyperinflation which is near impossible to stop. That's the main concern of the Federal Reserve, and other central banks, they don't want to let inflation run for another year and end up trashing their currencies like Argentina.
Conversely the PIGS school of economics - stagnated economies with interest rates set too high and little chance for your populace to have jobs. Would you rather take a pay cut (some inflation) or not have a job (depression)? Of course either extreme isn't good - but 10% inflation might be manageable even if it's painful for a year or two. We also have quantitative easing / tightening to control the money supply, or kick the bucket down the road if you want to view it like that!
Edited by fido on Thursday 16th June 22:19
speedy_thrills said:
A student of the Argentinian school of economics?
Countries with persistently higher inflation, tend to have lower rates of investment and economic growth. Higher inflation leads to lower international competitiveness, leading to fewer exports and a deterioration in the current account balance of payments.
Inflating away debt works but only when the obligations are in fixed dollar amounts, like a mortgage. Essentially, all of our long-term fiscal problems are entitlement commitments that grow (are "indexed") with inflation. When inflation rises, spending on Pensions and Healthcare rise at the same rate.
If you let inflation run over the longer term you un-anchor people's inflation expectations, they stop trusting currency, so you get hyperinflation which is near impossible to stop. That's the main concern of the Federal Reserve, and other central banks, they don't want to let inflation run for another year and end up trashing their currencies like Argentina.
The problem for the UK is we already had lower rates of investment and economic growth when inflation was low. We just started from a high base.Countries with persistently higher inflation, tend to have lower rates of investment and economic growth. Higher inflation leads to lower international competitiveness, leading to fewer exports and a deterioration in the current account balance of payments.
Inflating away debt works but only when the obligations are in fixed dollar amounts, like a mortgage. Essentially, all of our long-term fiscal problems are entitlement commitments that grow (are "indexed") with inflation. When inflation rises, spending on Pensions and Healthcare rise at the same rate.
If you let inflation run over the longer term you un-anchor people's inflation expectations, they stop trusting currency, so you get hyperinflation which is near impossible to stop. That's the main concern of the Federal Reserve, and other central banks, they don't want to let inflation run for another year and end up trashing their currencies like Argentina.
speedy_thrills said:
Ashfordian said:
Debt is the biggest problem, there is too much everywhere. Inflation is the safest way to reduce the debt liability.
A student of the Argentinian school of economics? A year or two of 10% inflation and government debt, mortgage debt, etc are much smaller relatively. Put interest rates up to say 3%, maybe 4%, and we get an immediate recession as too much money and taxes is then directed towards servicing the debt.
I don't like it but the government wasting £100bn's on Covid and 14 years of historically low interest rates means the economic levers are dictated by debt this time and not inflation.
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