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November 25, 2019 | Virtual Stock Markets can go UP even as Production goes DOWN!

Donald B. Swenson: Born January 24, 1943, Roseau, Minnesota. Graduated H.S. 1961, Moorhead High, Minnesota. Graduated College 1968, Moorhead State University, Minnesota. Designated member of Appraisal Institute (MAI), 1974. Employed with Western Life Insurance Company, 1968 – 71; Iowa Securities Company, 1971 – 73; American Appraisal Company, 1974 – 81. Part-time teacher/valuation consultant/bartender, 1979 – 2008 (taught workshops at Waukesha County Technical Institute, Wi. and Madison Area Technical College, Wi.). Retired 2008 (part time teacher/blogger), AZ. Self educated economist/philosopher/theologian:

Let’s look at some evidence from our current stock markets. Trumponomics has created record stock markets (at least this is the mantra)! Here are some key parameters showing the evidence:

1. The DOW Index is up some 20.3% year-to-date. We should/could witness 25% YTD by year end (given current trends).
2. The NASDAQ is up some 30.1% year-to-date. We should/could witness 35% YTD by year end.
3. The S & P 500 is up some 25.0% year-to-date. We should/could witness this Index up another 5% by year end.
4. The DAX Index (Germany) is up some 25.5% YTD and this economy is treading water as I write (nearly in recession).
5. The NIKKEI (Japan) is up some 16.4% YTD and Mr. Kuroda may push this up to 20+% by year end. Why not?
6. The HSI (Hang Seng Index) is up some 4.4% YTD (even as the China economy has tanked). Stocks still go up.
7. The Caracas General (Venezuela) is up some 3739% YTD and we could witness a much higher number by year end. This economy is in a depression even as the stock index continues it’s explosive upward momentum.

What do all these indices suggest for 2020 and maybe 2021? I would suggest that these key indices (for our global markets) could experience more upward numbers in the next year or two. We could witness the DOW at 34,000 by the end of 2020 (another 20% increase). Then at 40,000 in 2021. We could witness the DAX at 17,000 by end of 2020. The NIKKEI could be at 27,000 or more by year end (2019). The S & P 500 could be at 4,000 by the end of 2020. The NASDAQ could be at 11,000 by the end of 2020. I do not think any of these key indices will decline if our central banks continue to pump up these markets with more QE policies and lower interest rate policies (resulting in more borrowing to invest in stocks).

But we could witness a general decline in real estate activity, manufacturing activity, and consumer spending activity even as these virtual stock indices go UP and UP. Why this paradox? The reason has to do with the ‘nature’ of these markets. We now live with virtual money, virtual stock prices, and virtual assets. Also, this concept called ‘value’ (which measures all these indices) is virtual/subjective and with no tie to production. For the first time in recorded history our markets are mostly virtual (within our consciousness). All of our markets are living within cyberspace (see my prior missive). This means that decisions of our central planners (who now control all our computer trading) can continue this upward bias for some time. Why not?

Today, central banks like our Fed, the ECB, the Bank of Japan, the Peoples Bank of China, the Bank for International Settlements, and a host of other banking institutions control our markets with their trading strategies. This is obvious, to me. The markets are manipulated daily and virtual prices are what our central planers manipulate. Who has all the virtual trading digits to manipulate these markets? Investors  could care less about production and the profile of a company when the reference point for success is the PRICE of a stock. Their real interest is the PRICE of their stock and the general stock markets. Investors follow prices and as long as prices go UP and UP, this is favorable for investors and also our banking institutions.

So we could witness a much longer BULL MARKET than anyone expects. Today’s virtual money, virtual currencies, virtual assets, and virtual prices can go up indefinitely (it’s all math) if our central planners (who control most of our trading strategies) decide that this outcome is necessary. I would suggest that we all sit back and watch what our Fed, the ECB, the Bank of Japan, the Bank of England, and the Peoples Bank of China DO going forward. If these administrators desire for stocks to continue to go UPWARD and UPWARD, than this could happen. Algorithms can be the tool for this upward explosion.

Mr. Trump certainly wants this to happen so he can get re-elected. Most of the 1% who control our wealth will desire for this to happen. The central planners will likely also desire this to happen. Why not? So let’s sit back and watch our central planners as they continue all this MANIPULATION an RIGGING. It will only END when these administrators WANT it to END (not before). The market over in Caracas, Venezuela is my reference point for all this upward bias and this central planning. The DOW is another reference point for investor sentiment. Virtual money and virtual markets have no tie to material reality. The BUSINESS CYCLE may be invalid (not relevant)!

Think for yourself and let’s all WATCH these central planners as the PONZI SCHEME continues. It’s fascinating to watch this paradox in real-time. I am:

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November 25th, 2019

Posted In: Kingdom Economics

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