The stock market isn't the economy, but it does represent a big part of the economy. And it's going gangbusters:
Even after accounting for inflation, the S&P 500 is 25% above its level when Donald Trump left office and is growing at a faster pace.
48 thoughts on “The stock market just can’t quit”
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Cue Kai Ryssdal
Kai Ryssdal does not impress me with the depth of his knowledge.
Wait, I thought we were in a recession with high inflation, falling wages, massive unemployment and a tanking stock market? Fox News told me so.
I heard it was the worst economy ever. Buzzfeed and TikTok told me so.
Makes you wonder why the Billionaire class is so pissed. They are doing better, but they want more. The peasants should genuflect before them on a daily, nay hourly basis?
Why yes, as it turns out, you hit it on the head. What use is a billionaire's money, when the hoi polloi also have money, and don't need to bow and scrape for a pittance to stay alive, keep their kiddies alive? It's almost not worth the trouble of gathering those millions in, almost.
Status is a rivalrous good: for me to have it, you must be deprived. It's the way it works. That's why ridding our mortal coil of billionaires is a win for all off us.
Didn't you REALLY mean "That's why ridding our billionaires of [their] mortal coil is a win for all of us"?
Lower taxes. They think they're doing great because of their own genius. They see taxes as the government robbing them.
Right. What I don’t understand is why the billionaires (and lots of lesser comfortables) are willing to break so many pieces of the system that has made them rich. (Chevron and consequences, a trustworthy government, and the rule of law itself).
The only thing I can think of is that it’s short term thinking: “get me some tax cuts and out from under an inconvenient environmental rule or two”, without ever wondering what happens after. Or do they just not see how much of the chance to get rich in America happens because we’ve built this structure over 100 years of adjustment? Maybe they really believe the “I built this” bullshit. Incredible.
They don't care because they figure they'll be insulated from any consequences by either death or wealth.
They're probably not wrong.
This is the end game for Capital itself - insulation from suffering.
Makes you wonder why the Billionaire class is so pissed.
Most of them aren't the least big angry. Bill Ackerman isn't very representative, I think. They're just greedy, short-sighted* fucks, same as always.
*They should ask Jack Ma what the end of the rule of law means for billionaires.
Good point Jasper. I know I've been hammering you on the Biden front but on this issue we both agree. I suppose it's time to start eating the rich?
"The stock market isn't the economy, but it does represent a big part of the economy. And it's going gangbusters"
Someone at the NYT is already busily engaged on a story about why that's terrible for Biden. Or something; AND,
why it's great for Trump. Somehow or other...
Someone at the NYT is already busily engaged on a story about why that's terrible for Biden. Or something,
Unlikely. But it does underscore the ineffectiveness and unpopularity of the Democratic Party's presumptive nominee when you look at (1) the state of national conditions, and (2) contrast that with, say, The Economist's and Nate Silver's models, both of which have Trump at about an 80% favorite.
This should by rights be an eminently winnable race for the Democrats. Fortunately there's still enough time for a reset.
But at Nate's OG site 538 they are going with a model that has Biden favored, it weights the economy more heavily than messy stuff like favorability. I'm a fan of Dr. Alan Litchtman's theories that economy matters more than personality in elections.
In the NYT, the single mention of the Dow at 40,000 remains a Paul Krugman column from May. Now that mark has been passed again and ... crickets.
(In case you're wondering, the Dow passing 20,000 and 30,000 were worth a few stories at the time.)
Half of America has either forgotten or never experienced the Great Recession.
For those who've never experienced it, pray that you never have to go through something like it.
For those who have forgotten, Trump was the cause of it. [wink]
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Taxes. If the stock market goes up a lot you only have gains on paper. Until you sell the stock you don’t have real money. When you sell the stock you get charged capital gains taxes which depend on income. If you sell millions of dollars in stock to buy something really cool then you pay something like 30 or 35% tax.
I don’t think all of them are pissed about this. The problem is it only takes a handful to make trouble. You just need a couple of greedy bastards willing to kick in a billion or so to buy off enough judges and reps and senators to pass laws to lower your taxes.
If you "hold" the stock for just one year -- just ONE STINKING YEAR, and it has to have some time to go up anyway -- you only pay 20%.
20% is the MAXIMUM long term capital gains tax rate: you can have up to $47,025 in long term capital gains (... plus qualified dividends) with ZERO federal income tax on them, and then up to $518,900 taxed at 15%.
But the real tax dodge with capital gains is that you pay no tax at all on them until they are realized ... and even then they can be offset by capital losses.
So you can make sure to sell your losers in order to offset any taxable capital gains ... and I think the story is that if you borrow against your investment holdings, you can deduct the interest on your borrowing and leave your unrealized capital gains unrecognized in taxable income.
We burden wage income with taxes far more than we burden property-based income.
That's 20% IN ADDITION to what you were already taxed on the amount you invested.
Wait a sec here-- Let's say you've saved up 20 grand from wages and wherever that you've already paid your taxes on, and then you invest that in a rising market and sell for 30 grand. You're going to pay capital gains tax on the 10 you netted, not the whole 30. The 20 that you originally put in is your basis, and it's specifically deducted from the total sale price. What you pay the capital gains tax on, at the special low rate and if you pay any at all, is the difference between what the asset cost you and what you got when you sold. It's definitional.
And it's also why you see financial advisors say it's important to keep good records on improvements to houses, say, or to keep track of reinvested dividends in asset accounts. Anything that increases your basis will reduce the gains you end up with, so it keeps the taxes on your gains down.
It's the low super-favored rates and exclusion of basis together that make cap gains such a sweet deal for a select slice of people. Most people don't have much free-and-clear cash, or assets they can borrow against, to use as a basis. ProbStat's point about being able to time when gains are actually realized also can be a big deal.
Nope.
Capital gains are only whatever you have in excess of your original investment.
If all the rich people sell their millions of shares all at the same time, it generally causes a crash. But I’m sure each one of them has thought about that when scheming how to get even richer. /s
Are you saying it's only rich people that want more money? Don't think there's anyone alive that wouldn't want more money.
And don't forget the stepped up basis loophole.
"The stock market isn't the economy, but it does represent a big part of the economy. "
How? Last time I checked, except for IPOs (investments), the stock market (savings) is not a part of GDP which is generally represented as THE economy (not that that isn't confusing as well). Has something changed?
Nobody said that stock market prices are part of the GDP calculation.
I wonder how much of the stock market's elevated level is directly related to the huge federal debt we've accumulated since the economic crash of 2007-8, much of it due to tax cuts for corporations and owners of corporate stock: you can own a $200,000 house with no debt or a $400,000 house with a $200,000 mortgage.
Either way, its contribution to your net worth is $200,000.
I think we've averaged over $1 trillion in annual deficits for 16 years -- subtract $16 trillion from the value of the stock market and where does that get you?
A quick look suggests that $16 trillion is almost a third of the stock market's total value.
"I wonder how much of the stock market's elevated level is directly related to the huge federal debt we've accumulated since the economic crash of 2007-8..."
I think you are on to something here.
The US is running huge deficits with China, and has been for many years, because China is not a fair trading partner. Normally, running deficits results in either high unemployment in the States, or the US government running huge deficits to spend enough to keep employment up. They correctly chose the latter.
However, that money which we are shipping to China has to come back here somehow. China isn't buying Ford and GM cars to return the dollars, which would help US employment, but they are instead buying US assets. This bidding war for US assets is raising the price, not the value, of the stock market.
This is not a sustainable situation. The US needs to limit foreign investment in the US, which will force China to buy things that Americans make, which will raise US employment and remove the need for the US government to run deficits.
Is Buick still a big seller in China? The Chinese market was a reason why GM kept the Buick brand around when they went through their bankruptcy.
Thanks, Joe!
The Republicans say the Democrats are just focused on Donald Trump -- Trump Derangement Syndrome. They say they'd love a good policy debate. But, it's things like the politicization of the courts and everything they touch, which IS one of the policies we dislike. They say we're deranged and that there was no collusion with Russians or that Donald Trump never lies. That is the deranged view of things when the evidence clearly shows otherwise.
So, in the policy debate, the Democrat's number one disagreement with Republicans is that Donald Trump has been trying to destroy America. He has tried to politicize everything, lie about everything, talk up hatred and division, lead the January 6th attempted coup, and generally be a bad man.
In fact, all his attempts to serve his narcissism by becoming a dictator is a policy which Democrats dislike.
Are Democrats divisive? No more than any campaign does that. Is Trump and the Republicans divisive? Yes, since the 1980s it's been their policy to divide America for political gain, and it also happens to have the effect of harming America and leading Republican voters to hope for a Revolution, a second Civil War. Think I'm just over the top? That was one of the first things that a Trump supporter said after the shooting ("an inch away from Civil War" was what he said).
The desire for civil war is not at all uncommon on the far right. We've had multiple mass shootings (and planned attacks that were thwarted by law enforcement) where the shooter's intention was to start a war. Usually it's a race war, which they think they can start by killing a lot of Black or Latino people. No one takes that bait.
Wasn't a race war the goal of Charles Manson? Wasn't a race war the goal of Dylann Roof?
I just saw a video done at a T rally., asking people why they support him. A small business owner said it was the economy. Unemployment is so bad that he can’t find anybody to hire for his growing business.
He probably doesn't realize how it all flows downhill. Housing is so expensive that people need a higher wage to keep a roof over their heads.
This small business owner wants trump to make more people unemployed so the guy can find somebody to hire? Do I have that right? If so, wow-- all I can do is smfh.
The US stock market in 1924 was part of a significant bull market that lasted until 1929.
With Trump everything is great and wonderful when he was the president. and everything is???? when he isnt. Contrary to facts and reality of course. The fact that the race is so close tells you his tactics of hate and division works. I find this the most disturbing thing about him. His ability to make people disregard their own interests in favor of a politician and a party actively working against them.
Trump is a Haterade vendor. So is JD Vance.
He's a phoney just like Trump. Apparently humble beginnings don't necessarily produce a humble human being.
A lot of commenters are talking about billionaires and "rich people". But about 60% of American families have money invested in the stock market in some way. People who scrimp and save to put away a few hundred thousand for retirement are impacted (either positively or negatively) by market changes as well. It's silly that a post about stock market performance brings out vitriol from lefties towards the rich.
The rich have most of the disposable money and a lot of that money is not being invested in "creating jobs", it's going into speculation, things such as cryptocurrency as well as the stock market. When this goes too far, the bubbles collapse and the entire economy suffers.
The less-affluent also participate in asset bubbles, but they just don't have as much influence. They don't have the tools to create bad bubbles, such as leverage.
Thank you for your kiss of death, Kevin. My IRA is currently down .14% on the day. (Dow is up, NASDAQ and S&P are down.) Now where the hell am I going to come up with the down payment for my brand-new Lucid Air, hmmmmm?