Juggling Dynamite

John Hussman does an excellent job this month in highlighting how richly-valued stock prices compare with the central bank’s much smaller ‘put’ power in Ground Rules of Existence:

One has to remember that the current market capitalization of U.S. corporate equities now stands at $40 trillion, twice the level of U.S. Gross Domestic Product – the highest multiple in history (the multiple peaked at 1.9 in 2000). Investors are vastly overestimating the effectiveness of monetary policy if they believe that the Federal Reserve buying a few trillion in Treasury bonds can reliably stop “sudden efforts at escape” among investors holding $40 trillion in securities that the Fed cannot buy, and that even the U.S. government could not buy without a vote by Congress to effectively nationalize U.S. corporations.

He also includes three vivid charts showing the intermittent rallies (in blue) within the overall bear market declines (yellow to red) of the 2007-09, 2000-03 and 1929-32 cycles, which are our present cycle’s closest historical relatives.  Below is the 2007-09 chart along with Hussman’s reminder of the upside coming for value-conscious buyers who can stand clear of falling assets and then buy once the bear market restores investment-worthy prices in the months ahead.

“In summary…we expect dismal consequences for the U.S. stock market over the completion of this cycle, and over the coming 10-12 years [for those holding stocks at present levels]. Yet the historical reality is that once speculation shifts to risk-aversion, a period of just 18-30 months is typically required for valuations to revert to average or below-average levels, creating fresh opportunity for value-conscious long-term investors.”

Danielle was a guest with Jim Goddard on This Week in Money, talking about recent developments in the world economy and markets starting at 11:30 on the playbar.  Here is a direct audio link.

Ever since the Cambridge Analytica/Facebook abuse of personal data was revealed to the public in 2016, there has been an explosion of “agree” and “accept” buttons we must now click to move through the internet.  But what are we actually agreeing to?  And how can we give informed consent without non-predatory alternatives to choose from?  Abusing trust has become the dominant model, and the costs of this are evident everywhere that we look.

Shoshana Zuboff is Professor emerita at Harvard Business School and author of the new book, The Age of Surveillance Capitalism: The Fight for a Human Future at the New Frontier of Power.  Big tech may have stolen our data while democracy slept, but a new awakening phase has arrived and anti-trust actions are an obvious next step.

Corporations have created a new kind of marketplace out of our private human experiences. That is the conclusion of an explosive new book that argues big tech platforms like Facebook and Google are elephant poachers, and our personal data is ivory tusks.  Here is a direct video link.