MV=PQ Revisited
Historical data can be hard to compare against modern ones.
The longer back an analyst goes, the better the results of their analysis.
100 years of yield rate analysis may seem enough...
5000 years of interest rates however is a whole new story.
Money has been as cheap as it has been for the past 5000 years. Incredible numbers...
Source: trustnet.com/News/13396043/the-history-of-5000-years-of-interest-rates-in-one-chart/
Fun Fact: Banks have existed since the early days of humanity!
Unsurprisingly, trading is not a modern invention.
Many agree that yield rates have been too low and equities too high.
Some go against the flow and suggest that the stock market bubble has yet to come.
I have been looking here and there, trying to find the reason the .com bubble was created in the first place. With that in mind I hoped that I would find when the next one will come...
Price has just skipped through the previous ceiling, and is now in a new territory. The drawn channel suggests that SPX hasn't reached the top of its channel.
There are many more comparisons that may suggest that equities haven't peaked.
By comparing DJA with one of its subsets (DJI) we have concluded that the DOW hasn't saturated yet. This analysis above is as classical as it gets.
While many thought equities would die ...
... the Bane of Traders has trapped many of us, myself included.
Big-Tech dominance inside Nasdaq Composite suggests that a .com bubble may be brewing inside IXIC, just like we saw in SPX/CPIAUCSL in 1994.
Onto the basics of financial now.
MV=PQ is one of the foundations of how economies function.
For more information read my previous idea:
For simplicity reasons, we merge PQ. I don't have financial data for each one of them.
PQ for the US is considered as the GDP. Another example of GDP can be SPX, which extends beyond the limits of US soil.
GDP has been slowing down...
USGDP is the total cost of all products produced in the US. A slowing GDP means a slowing net-production of the US market. If productivity hasn't changed significantly in the past decade, a slowing GDP may be due to falling prices. And with yield rates nearing zero in 2020, we can safely say that inflation has turned negative in the US.
A slowing GDP may also mean that equities have slowed down. This gives more importance to the incoming-equity-bubble scenario. An equity bubble may come for some, but not for all.
The tide has turned in favor of NDX against IXIC, and DJI against DJA. Charting suggests wealth accumulation in a smaller part of the main idices.
GDP may be breaking out.
With money velocity (main chart) in record-low values, we can expect faster money flow in the years to come. That means increased productivity/inflation/GDP.
As expected, long-term inflation may also be breaking out of its decreasing trend.
Don't forget: High inflation may be a problem for some. An increased GDP growth caused by high inflation will certainly help the chosen big-ones. There cannot be high GDP with nobody profiting from it.
To get rich you must inherit or steal. -Aristotle Onassis
In the end, trading hasn't changed at all in 5000 years. There are still pirates, kings, queens, emperors and peasants. Markets will march upwards with or without us.
Tread lightly, for this is hallowed ground.
-Father Grigori
The longer back an analyst goes, the better the results of their analysis.
100 years of yield rate analysis may seem enough...
5000 years of interest rates however is a whole new story.
Money has been as cheap as it has been for the past 5000 years. Incredible numbers...
Source: trustnet.com/News/13396043/the-history-of-5000-years-of-interest-rates-in-one-chart/
Fun Fact: Banks have existed since the early days of humanity!
Unsurprisingly, trading is not a modern invention.
Many agree that yield rates have been too low and equities too high.
Some go against the flow and suggest that the stock market bubble has yet to come.
I have been looking here and there, trying to find the reason the .com bubble was created in the first place. With that in mind I hoped that I would find when the next one will come...
Price has just skipped through the previous ceiling, and is now in a new territory. The drawn channel suggests that SPX hasn't reached the top of its channel.
There are many more comparisons that may suggest that equities haven't peaked.
By comparing DJA with one of its subsets (DJI) we have concluded that the DOW hasn't saturated yet. This analysis above is as classical as it gets.
While many thought equities would die ...
... the Bane of Traders has trapped many of us, myself included.
Big-Tech dominance inside Nasdaq Composite suggests that a .com bubble may be brewing inside IXIC, just like we saw in SPX/CPIAUCSL in 1994.
Onto the basics of financial now.
MV=PQ is one of the foundations of how economies function.
For more information read my previous idea:
For simplicity reasons, we merge PQ. I don't have financial data for each one of them.
PQ for the US is considered as the GDP. Another example of GDP can be SPX, which extends beyond the limits of US soil.
GDP has been slowing down...
USGDP is the total cost of all products produced in the US. A slowing GDP means a slowing net-production of the US market. If productivity hasn't changed significantly in the past decade, a slowing GDP may be due to falling prices. And with yield rates nearing zero in 2020, we can safely say that inflation has turned negative in the US.
A slowing GDP may also mean that equities have slowed down. This gives more importance to the incoming-equity-bubble scenario. An equity bubble may come for some, but not for all.
The tide has turned in favor of NDX against IXIC, and DJI against DJA. Charting suggests wealth accumulation in a smaller part of the main idices.
GDP may be breaking out.
With money velocity (main chart) in record-low values, we can expect faster money flow in the years to come. That means increased productivity/inflation/GDP.
As expected, long-term inflation may also be breaking out of its decreasing trend.
Don't forget: High inflation may be a problem for some. An increased GDP growth caused by high inflation will certainly help the chosen big-ones. There cannot be high GDP with nobody profiting from it.
To get rich you must inherit or steal. -Aristotle Onassis
In the end, trading hasn't changed at all in 5000 years. There are still pirates, kings, queens, emperors and peasants. Markets will march upwards with or without us.
Tread lightly, for this is hallowed ground.
-Father Grigori
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