Earlier this week, we expressed our belief that the bull market is reaching its end. We supported our viewpoint with various historical indicators, though it’s important to note that no one can predict the future with certainty.
In truth, no one knows the actual outcome. However, there are numerous experts far more qualified on this matter than ourselves. We are always open to considering opposing viewpoints, especially when they come from those with a proven track record.
For instance, around the same time we suggested the bull market was nearing its conclusion, Wharton Professor Jeremy Siegel told CNBC, “the bull market is not over.” How can this be?
“I still think the big bull is controlling the market,” declared Siegel. “Sure, we might see a correction—bull markets always have them. However, I don’t believe this will be one, but if it occurs, it could present a fantastic buying opportunity.” Continue reading
Last week, several cracks appeared in what many believed to be the solid foundation of the stock market. The S&P 500 declined by 2.67 percent from the week’s opening to its close. For July, the S&P 500 recorded a loss of 1.63 percent, marking its first monthly decrease since January.
Various factors were cited for this selloff, including the Argentine debt crisis, sanctions imposed by the U.S. and EU on Russia, and the prospect of an interest rate hike from the Federal Reserve. However, we at the Economic Prism have our reservations; these developments should hardly have caught investors off guard.
In our view, the decline in stock prices can be attributed to a more straightforward reason. Stocks fell because that is the natural ebb and flow of the market. The stock market inevitably rises… and it also falls.
After a remarkable uninterrupted rise for the past five and a half years, the market was overdue for a downturn. How significant will this downturn be? No one can say for certain.
However, it is likely to be substantially more than just a few percentage points. As the saying goes, “History doesn’t repeat itself, but it often rhymes,” a quote frequently attributed to Mark Twain. Continue reading
Few areas combine geopolitics and economics as tumultuously as the oil and gas sectors. This week, the situation became even more complex. On Tuesday, the U.S. and the European Union imposed economic sanctions against Russia, restricting their access to capital and technology necessary for oil development.
“These measures signal the beginning of a new phase in the most significant confrontation between Moscow and the West since the Cold War, which escalated sharply after the downing of Malaysia Airlines flight MH17 over rebel-held territory on July 17, attributed to what Western nations claim was a Russian-supplied missile,” explained Reuters.
At the Economic Prism, we are uncertain about the outcomes of these sanctions. Will Russia back down? Will Putin cut off gas supplies to Europe?
We don’t have the answers… but history shows that such situations rarely unfold as planned. What seems like a wise decision today can often turn out to be misguided tomorrow.
Complex systems, built incrementally over the years, often reach a tipping point where they unravel in unexpected ways. Continue reading
Minimum Wage, Maximum Stupidity
By Doug French, Contributing Editor
The minimum wage should be a simple issue for those with economic knowledge to understand. When the government arbitrarily sets a wage floor above market value, it results in job losses. Even the Congressional Budget Office acknowledges that a federal minimum wage of $10.10 would lead to the loss of 500,000 jobs, and the actual number could be even higher.
Yet, we find ourselves in yet another round of “Raise the minimum wage” discussions during a time when unemployment is still wreaking havoc nationwide. Currently, 3.37 million Americans have been unemployed for 27 weeks or more. While this figure is better than the 6.8 million long-term unemployed in 2010, many others have simply given up searching for work.
Sound economics would suggest the solution is to “make employment more affordable.” Lowering costs tends to increase demand. This would entail reducing the minimum wage and removing unnecessary employment regulations that inflate job costs. Continue reading
In summary, the landscape of economic predictions reveals a blend of opinions, from bearish to bullish. As the market evolves, staying informed about various perspectives can provide a more comprehensive understanding of the ongoing fluctuations. Whether facing downturns or proposals like raising the minimum wage, a closer examination of the fundamentals offers insights that can guide future actions.
