Don’t tell The Donald, but the stock market doesn’t take him seriously. The market took JFK seriously. In April 1962, Kennedy clashed with steel companies. The S&P 500 plummeted 24% over the next two months as the confrontation continued.
The accompanying chart is a way to visualize real GDP change since 2007. It uses a stacked column chart to segment the four major components of GDP with a dashed line overlay to show the sum of the four, which is real GDP itself. Here is the latest overview from the Bureau of Labor Statistics.
In response to a standing request, here is updated comparison of four major secular bear markets. The numbers are through the Friday, January 20 close, a day that will be remembered in history as the inauguration of President Donald J. Trump. It will be interesting to see how the market fares in the wake of our new President's economic policies.
Five of the eight indexes on our world watch list posted gains for the holiday-shortened final week of 2016. India's SENSEX was the top performer with its 2.25% advance, followed closely by Hong Kong's Hang Seng, up 1.97%. But it was the third place finisher that commands the spotlight. The UK's FTSE rose 1.06% for the week and ended the year with three consecutive record closes.
The advance since March 2009 has just surpassed the bull market of 1990-1998 to become the second longest bull of all time, and it will move into the top spot if it can survive until next March 15th (the “Ides of March”). Intrigued by this market’s similarities with the 1990s, we updated a study that reinforces a point we’ve made for a while: Among the six major measures examined here, the stock market looks least overvalued on the basis of the S&P 500 5-Yr. Normalized P/E.
The results of last night’s election are no doubt worthy of an Economic Update
We’ve annoyed a few media outlets by admitting to having no clue as to which of the presidential candidates would be “better” for the stock market.
Note from dshort: Since the middle of the last century, there have been nine bear markets in the S&P 500 using the 20% selloff of the "bear-market" benchmark. There have been two additional corrections that came within a hair's breadth of the -20% qualification. Here are snapshots of those official bears and initial recoveries. Rather than scrolling down, you can click on a chart for an enlarged version and a slide-show of the series.
Note from dshort: We've updated this commentary in the wake of the Census Bureau's release last month of the 2015 annual household income data from the Current Population Survey.
One of our favorite discussions on APViewpoint, which addressed "The Sad State of Happiness", included an indirect reference to a popular 2010 academic study by psychologist Daniel Kahneman and economist Angus Deaton. Their topic was the correlation between annual household income and day-to-day contentment. They analyzed more than 450,000 total responses to a Gallup weekly survey of households across the 50 states and DC. The survey was conducted in 2009.
Last week we posted an update on the median household income for the 50 states and DC based on the Current Population Survey, a joint undertaking of the Census Bureau and Bureau of Labor Statistics, which includes annual data from 1984 to 2015. Let's now look at the actual purchasing power of those median incomes. For this adjustment we're using the "C2ER Cost of Living Index" produced by C2ER, the Council for Community and Economic Research.