About That Stock Market - Policy has gone mad; why aren't stocks down? Paul Krugman
excerpt:
First, the long version of Samuelson’s quip: Stocks are not now and have never been useful predictors of the business cycle. Even when there were good reasons to be worried about a coming downturn, it’s very hard to find cases in which the stock market gave advance warning.
The way I see it, during any given period the market is driven by a narrative, positive or negative. The current narrative is strongly driven by optimism about AI. And it takes a major shock to change a market narrative. Nothing in history suggests that we should expect a really strong stock market reaction to the kinds of warnings we’re getting so far about Trumponomics.
Speaking of which: While Trump’s tariffs are very bad, there is — as I wrote in Sunday’s primer — a tendency, among both economists and other observers, to exaggerate the damage done by protectionism. Uncertainty about tariffs is definitely depressing business spending in the short run, but in that primer I estimated that Smoot-Hawley 2.0 will reduce long-run U.S. real GDP by 0.4 percent. The Yale Budget Lab, with a more elaborate model, comes up with very similar numbers:
link to full article
https://open.substack.com/pub/paulkrugman/p/about-that-stock-market
= new reply since forum marked as read
the rich getting richer and increasing numbers of private equity and hedge funds taking otherwise stock exchanged companies private, an it has been on my mind that there are fewer places to invest and more money looking for a place to grow and invest in (with the eception of crypto which is growing like crazy). So I added my two cents.
I'm not say investment in AI is not a factor. Quite the opposite: it is an example of how the rich are in a separate economy than the poor if the stock market is rising while the job and inflation markets are getting bad.
