Authored by GoldFix ZH Edit
Good Afternoon.
Michael Hartnett gives further evidence a new bubble is being blown. President Biden’s fiscal spending intends to re-domesticate supply chains and spur domestic manufacturing. If those policies are working, Hartnett asks. why are only 7 stocks—all tech and not manufacturing—leading this rally?
We add that the wrong companies are being rewarded by investors. This all suggests a new mal-investment cycle in stocks again. This in turn implies the current fiscal push (like QE before it), again is only helping boost assets not directly involved in retooling the economy. At least thus far. It stands to reason then that the fiscal side many feel is the savior for stock prices and harbinger for a soft landing may not be what they hope.
This can all end up being a supply-chain-to-nowhere, like those bridges-to-nowhere previous spenders used to build. And the market can implode like 1999 DOT COM did from cost of capital being too high sustain the bubblenomics.
Maybe it will just take time to trickle down..
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Topic Timestamps
- 3:05- Zeitgeist: Union Support***
- Geopol/Fiscal/Unions means inflation
- A.I. actually inflationary
- 6:45- Biggest Picture***
- 8:10- Chart: Major New Observation***
- Notional GDP explosion
- Compared to 1940s, and mid 1970s expansions.
- Similarities: High GDP, high inflation
- Big Difference- which stocks rallied
- 11:41- The Key Comp vs previous “Booms”***
- Stocks up in all 3
- Spending up in all 3
- Inflation up in all 3
- Problem: Wrong stocks rally in 2023
- 16:55- Summarizing Hartnett’s Idea***
- 23:25- Comment: Stocks say it is a bubble right now***
Fiscal Spending GDP Booms Compared…
Bonds Are Not Happy…
Unions Rising,with Geopolitical and Domestic Supply Chain factors are behind spending boom drivers…