This page has been archived and commenting is disabled.

What A Permabull Thinks Is The Biggest Threat To The Stock Market

Tyler Durden's picture




 

Echoing the grave concerns of no lesser 'maestro' of manipulation than Alan Greenspan, Wells Capital Management's Jim Paulsen notes that while the U.S. stock market has risen by about 3 times from its crisis low in March 2009; much of this advance has been against a backdrop of disappointing productivity gains... should productivity growth remain subpar, stock market risk seems to be rising.


[ZH: note the major decoupling that occurred between productivity gains and stock market performance in the early 70s... now what else happened then?]

As Paulsen notes,

Since late 2011, the stock market and productivity have exhibited an uncommon divergence. Stock prices have continued to rise despite significantly weak productivity growth.

 

What does this divergence suggest?

  • Maybe the stock market has simply discounted a near-term expected improvement in productivity growth as it did in the mid-1990s (i.e., then, the stock market began to surge at the beginning of 1995 even though productivity did not significantly improve until 1997),
  • perhaps the amazingly low and persistently falling interest-rate structure of recent years has pushed the stock market higher despite disappointing productivity growth (similar to the early 1990s stock market advance),
  • or conceivably, the stock market is simply extended today and is at risk of a correction should productivity growth not soon improve.

 

Read more here...

*  *  *
So just as The Fed waits for the "inevitable" rise in wages... so permabulls wait with breathless anticipation for a resurgence in productivity... which is odd given Greenspan's explanation of just how America's "entitlement" society - which is getting bigger - is nothing but an anchor around the neck of US productivity hopes.

 

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Tue, 03/24/2015 - 18:37 | 5923190 dimwitted economist
dimwitted economist's picture

Big problems IF the Fed stops the FREE Money!!!!

Tue, 03/24/2015 - 19:53 | 5923352 Stained Class
Stained Class's picture

$4 Trillion from the Fed plus $8 trillion in deficit spending from the Treasury since 2009. The Fed's money buys the actual stocks, the Treasury's money ends up buying the products that make the earnings of the companies the Fed's money buys.

One hand washes the other. Balance the budget and GDP goes negative, as well as EPS. 53% of the 70% of GDP is affected. Maybe the Fed's over-rated.

Tue, 03/24/2015 - 20:20 | 5923453 Lets Buy The Dip
Lets Buy The Dip's picture

There are lots of zero-hedgers looking for a crash the last 6 months on the stockmarket, but with the fed, and their BULLSHIT, i doubt one will come. So do not fall in love with the dowside. 

Right now the stock market is very hinged into how the dollar trades – this should be key, THE SPX WEEKLY CHART has an errection …. see here. ==>http://www.bit.ly/1fMcakI

Lets be honest anytime the dollar drops, markets tend to gain. That will key into (markets) until we get better economic reports. and you can see many people looking for a crash which again still has not happened. And we get more bullshit from the fed {yes fancy that}

Tue, 03/24/2015 - 20:55 | 5923468 Stained Class
Stained Class's picture

And anytime the dollar gains, markets tend to gain. If you think ZH'rs have been looking for a crash in the last 6 months, then you have only been a reader for 6 months. 

We've been looking for a continuation of the crash that started in 2007 and was circumvented by elected and unelected officials with highly vested interests. We understand the rigging involved, and accept the daily gains on ANY kind of news with immense sarcasm. 

There's a top secret rumor of a man named Robert Prechter that scored a record short of -800 points on S&P Futures contracts between Oct 2007 and Feb 2009. It seemed at the time, and the 3 years afterwards, the record profit could never be beaten (it was problematic since the index could not go negative). 

At today's levels? S&P and Russell 2000? I think it is very dangerous to charaterize what a " zero-hedger" really is. Yet I welcome you to the club.

When you use the term CRASH, it seems that you do not recognize that a crash already happened in 2007-2009. Are you expecting another? Or do you think this future event will be the first? 

Tue, 03/24/2015 - 23:52 | 5924059 one_hundred
one_hundred's picture

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com

Tue, 03/24/2015 - 18:38 | 5923194 Hohum
Hohum's picture

In other words, if business cannot continue to eliminate labor at a sufficient rate, then TSHTF.

Tue, 03/24/2015 - 18:42 | 5923205 heisenberg991
heisenberg991's picture

Terminators will eliminate humans, but who will buy the crap.

Tue, 03/24/2015 - 19:50 | 5923367 devo
devo's picture

Precisely. I guess a few humans will be living on beaches alone. It's still going to take 20-50 years, though. Hopefully we will all be dead.

Tue, 03/24/2015 - 18:41 | 5923201 PirateOfBaltimore
PirateOfBaltimore's picture

I thought Gates/Musk et al said robots be stealin' our jerbz!?

 

Shouldn't we at least be seeing per-worker productivity advances if technology were actually getting closer to that point?

Tue, 03/24/2015 - 18:46 | 5923217 Fun Facts
Fun Facts's picture

Nothing about the CB's being the CME's biggest customer ?

Tue, 03/24/2015 - 18:52 | 5923238 Kirk2NCC1701
Kirk2NCC1701's picture

Q: Why "must" Productivity always rise?

Seems to me that it is a required part/outcome of our fiat monetary system of systemic Usury.

'Babylonian' Money Magic still seems at the core of it.

Tue, 03/24/2015 - 20:16 | 5923420 Stained Class
Stained Class's picture

Productivity can't rise if interest payments are an ever larger component of the balance sheet (assuming that nobody ever pays off the debt principal anymore). It's a ploy to get you to borrow more money. Interest payments are the banksters "product", so to them of course productivity must always rise.

When Henry Ford needed to build a new factory, he raised the price of his cars $100 for a year to pay for it. Then he lowered the price $200 the following year to sell more cars, now that he had the production capacity to fill larger demand. Bankers of the day had no steady income stream from Ford, and Ford owned his factories not the mortgage bankers.

I'm kind of off on a tangent, Captain, but if you search the galaxy you will not find enough money to pay off all the debt plus interest that exists today. Usury has its limits.

Tue, 03/24/2015 - 18:54 | 5923242 Atomizer
Atomizer's picture

When the fiber optic cable gets snipped to Wall Street and CME. HFT will be exposed. Don't forget about low latency microwave snubbed to a halt. 

That is the fear of Wall Street.  

Tue, 03/24/2015 - 19:30 | 5923325 hamstercheese
hamstercheese's picture

"perhaps the amazingly low and persistently falling interest-rate structure of recent years has pushed the stock market higher despite disappointing productivity growth (similar to the early 1990s stock market advance),"

 

BINGO!

Tue, 03/24/2015 - 20:05 | 5923407 scubapro
scubapro's picture

 

 

mid 70's was when OIL started to actually cost the US something.  $2/bbl in 1970 to 100 in 2015......same oil, costs a lot more, equals less productivity.    overlay those charts with log oil chart

Tue, 03/24/2015 - 21:07 | 5923564 Stained Class
Stained Class's picture

It boggles the mind, how the US economy could absorb that much of an increase in oil costs and still show gains. At $100 a bbl, no wondr they went off the gold standard. Hewlett Packard printerz Bitchez!!!

Tue, 03/24/2015 - 20:22 | 5923462 bid the soldier...
bid the soldiers shoot's picture

"But Holmes, what is the biggest threat to the stock market?"

"Same as ever, Watson.  Same as ever.  REALITY."

Holmes looks at wrist watch

"And that won't be dawning on anyone around here for some time to come."

Watson nods in agreement

Tue, 03/24/2015 - 21:01 | 5923552 Stained Class
Stained Class's picture

Blame the invention of the Computerised Spreadsheet for that one.......

Wed, 03/25/2015 - 04:01 | 5924296 CHX
CHX's picture

"..."inevitable" rise in wages..."

 

After company xyz lays off half the work force, maybe they give the bottom 80% of the remainder a 20% increase in wage, and the CEOs... well you know, they worked SO hard... Success ? NOT.

Do NOT follow this link or you will be banned from the site!