David Stockman argues that Trump should be looking at the banks who have bought stks and caused massive valuations far beyond normal returns to stk values. He talks about the 20 trillion elephant in the room but also tells us that world debt is now 450 trillion
Does that mean 20 trillion is the USA stk market and 450 is the sum total of all world stk markets
What I found interesting was his claim that the USA had almost 2% tariffs and Canada had 1.57% In other words he claims tariffs are not so important as the banks actions, aand Trump should pay attention to bank policies. And yet one can look at the trade balance numbers for china and the USA and see a whole different picture
I know many will tell us Stockman is blowing hot air. I suspect that is just a knee jerk re-action and not a study to find out if his theory holds water or not
What say you??
Debt is like most things kind of hard to measure. Most versions have global debt at about $250 trillion, which breaks down about 1/4 governmental, 1/4 financial sector (ie, basically offsetting), & 1/2 private (Household & business).
Within this, it still gets tricky. US government debt is $15T held by the public, and another $6T is between agencies & the general fund. Some people like to hype it by including future unfunded obligations, but those generally get funded.
There are 3 areas of debt that kind of worry me now:
People tapping home equity to pay bills. (Shades of 2007)
Non-dischargable student loan debt
Corporate debt at low rates owed by companies with few sellable assets
These days, corporate bankruptcy is easy, individual quite harsh . The next financial crisis could get bloody.
Tks for the debt explanation
I always hate to read one source of information and then assume it to be written in stone
Of your major concerns I would certainly agree
Corp. buybacks seem a bit troubling to me
We know that nothing of value, goes in a mostly straight line, in this case upward. I am also troubled by the few stks that seem to carry the day [most times]
A major correction seems to have to happen, sometime. I don't mean a small correction but a sustained correction, with small up and down knee jerk re-action. The normal re-action of most traders is to jump in and buy low and wait to sell high. Some day that buy low may not work. Buy low may result in selling even lower. I wonder how many Corp. will survive when the time comes to re-new debt roll over, if the following happens and I think it will happen. Cash flow is not enough, insufficient assets are available to sell for debt accumulation and credit restrictions due to stk devaluation all happen at the same time. All it would take is a major down ward spiral in stk market valuations, to cause this Corp. domino affect.
I think I read some place that most if not all recessions start with a sustained stk market crash.
Your other concerns are as troubling, but too much for this post