With everyone cheering the US economy finally completing its first lost decade, and likely the first of many, it is worthwhile to compare the top ten Dow Jones stocks by market cap today and ten years ago. What is notable is the rotation out of pharma companies, with both Merck and Pfizer dropping out of the ranking, and their replacement with taxpayer capital proxies, in the face of JP Morgan (#4) and Bank of America (#9). As both of these companies have achieved phenomenal profitability (and a resulting stock price appreciation) almost exclusively courtesy of the inverted yield curve and numerous other boons from the Fed, their market cap contribution should be carefully considered for whether it is sustainable or is one-time item (assuming the QE 1.0-xxxx.0 liquidity pump ever runs out). Also notable is CNBC parent GE's fall from grace, and its over $200 billion loss in market capitalization. Lastly, over half a trillion in market cap (21%) has been lost by the top 10 companies, even with the Dow at the same level.
Lastly, over half a trillion in market cap (21%) has been lost by the top 10 companies, even with the Dow at the same level.
That's not wealth, it's collateral.
In terms of who's dropped form the top 10 and who's taken their place...
Losers: Intel, Cisco, Merck, Pfizer.
Winners: JP Morgan, Johnson & Johnson, Procter & Gamble, Bank of America.
Interesting how after a banking crisis there are two banks among the top 10 companies whereas there weren't any at the peak of a technology bubble. But not unexplainable. At the peak of the bubble the banks have lent bucketloads of money to people to buy speculative stock, whereas after the banking crisis 1) investors have taken their money out of stocks; 2) the banks that have survived are the ones that were in better shape (or, in this case, the ones that were bailed out).
Also, Merck and Pfizer are pharmaceutical tech stocks whereas J&J and P&G sell consumer staples. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
2009 may be the trough of the subprime crash
Or it may be the peak of QE/bailout bubble.
Does anyone see a return to normal finance after this?
The banks are running on public cash without public ownership. When the cash runs out, they crash.
The only way they can avoid a crash is by lending some of that public cash back to the public, with the full understanding that a higher-than-usual proportion of those loans will go sour, because most of the public aren't particularly creditworthy.
If they demand more cash, public finances will crash.
How do we get from here to a happy ending?
No, but it's extraordinary the extent to which this presumption holds, even amongst otherwise well-informed commentators. It's as if they dare not admit, even to themselves, the depth of the problem. keep to the Fen Causeway
Which is, what? exactly. Perhaps it is some twist upon where the US was heading in that flukey time of single working parent families (though without the implied sexism), union jobs that paid well enough for a real middle class rise (but without using the backs of the lower classes), the hope of the Freedom Marches, the trend toward personal computers (I'm thinking of the high enabling quotient of both the last two), and inexpensive education for all from a variety of different techniques to reach into a variety of different groups. Such a group in such a condition would naturally trend science based, not invisible-god based, would trend world-view, not nationalism-restricted, and even the eye-candy TV would have elevated themes.
People would be educated enough to call bullshit on the Limbaughs and other bent air-raid horns which the corporatists and nationalists use to persuade the drones which they would prefer. People's native respect for the Commons wouldn't allow the conditions that the leaches thrive upon. All would respect the need to care for each others needs.
Good beer, of course. May as well bring in the ponies. And I want a cigar with great sunsets over a sparkling rose sea. (The latter of which I actually often have.)
Ramping down on the rant, the happy financial ending comes after many years of pain, which come many years after the excesses of all the recent past's bubbles are squeezed out. Some research says that the average time for this is 13 years, and we are in year 3. So, just in time for my retirement, Social Security will be ready for me, the dollar will be worth something, and I will be seen whistling down the Promenade...in my skates...with my pony. Never underestimate their intelligence, always underestimate their knowledge.
Frank Delaney ~ Ireland
the 1% whose interest is to remain in denial will be on a shrinking floe, and the fact that they own the tradmedia will gradually count less, as more and more formerly comatose corn-sumers connect the dots and fel their gorges rising at the necessarily more absurdist arguments to buttress the Big Illusion, think berlusconi levels all over.
i'm betting on a few major strikes and/or uprisings similar to paris '68 or the thatcher era, as services are cut, and the best case scenario is that very few will be enough to make governments quake, and even rule of law quail.
at this point cool heads intervene to avoid massive bloodshed, and that is the moment when folks like those here at ET will be there to redesign capitalism from the ground up.
the worst case, well better not to go there...
as long as there's a chance of the former emerging from incipient chaos, i'll bet on that, long odds it would seem, lol.
the majority of people are reasonable and would like nothing more than to get on with their lives of needing, seeding, feeding each other in peace.
they don't need no stinking ideologies that can't fit on one page, understandable by the average 8 year old.
the turning point would be when the media loons like limbaugh are run out on a rail for being frenzy whippers, and right wing corporate attitudes about war, land, capital and privilege are dismantled beyond recognition, cognition kindled in the kind of numbers that presently show up for the lottery, or a michael jackson retro network special.
distractions like that will not suffice pretty soon. ~"When an inner situation is not made conscious, it appears outside as fate." Karl Jung~
That should be saved to the Pearls folder.
It should also be polynomially graphed. The majority which is made up by those who can do, those who fear they can't (and would vote against their class), those who don't care either way but try someother things...
they don't need no stinking ideologies that can't fit on one page, understandable by the average 8 year old. the turning point would be when the media loons like limbaugh are run out on a rail for being frenzy whippers, and right wing corporate attitudes about war, land, capital and privilege are dismantled beyond recognition, cognition kindled in the kind of numbers that presently show up for the lottery, or a michael jackson retro network special. distractions like that will not suffice pretty soon.
distractions like that will not suffice pretty soon.
I suppose you are saying that having a nother few wars aren't distracting enough any more either?
Imagine the profit he makes in order to have a contract for 400 million dollars. Never underestimate their intelligence, always underestimate their knowledge.
Good point, but I think that the smart people use the same criteria for measuring the JapanLostDecadesTM [now coming to theaters near you], which as you point out is a false measure.
The true measure is to look at trends from decades before. In the case of the US it would have to be decades and decades and decades and decades and decades before - for the reason that one has to go back to the 50s/60s to see where the post-war trend was going, but before RunningSelfishDogsTM of the Republic of Reagan began. During that period it was scandal after scandal, liberal use of the country's credit card and the re-amp of hegemony. I would bet that examination would show it as also the beginning of the FalseDrug of The GreatFinanceEconomy TheoryTM probably started.
As usual, I bring up the Heroin Causality Principle; one can always apply "What similarities would we see if we substituted the selling of heroin - would it change or not change this picture?" Exactly as in the case of the last few decades, the US GDP was elevated upon an amazingly lucrative bubble based upon an industry which created a benefit for individuals at a multiple far outstripping the benefit (if any) for the group or groups that they ravaged, polluted and distanced themselves from.
"Also, Merck and Pfizer are pharmaceutical tech stocks whereas J&J and P&G sell consumer staples."
I don't understand Merck and Pfizer (though they rise and fall on the market's view of how their patents portfolio gained or expired), though they could be lurking, only pushed down by Bush'sLastSurge: Financing the financials.
In fact, JNJ reported their earnings a couple days ago. Just like so many companies, they have increase profits (1%) on lower sales (5.3%). If I'm not mistaken, the J&J types did well even during the Great Depression era.
I ran into this while looking that up: It's Already Worse Than the Depression
According to Ibbotson Associates, of the 74 rolling 10-year periods since 1926 (i.e., 1926-1935, 1927-1936, and so on), U.S. large-cap stocks posted negative returns in just three of them. The first two were 1929-1938 (-0.89% compound annual return) and 1930-1939 (-0.05% compound annual return), and involved the Depression. The third loser decade was the most recent -- and the worst. From 1999-2008, U.S. large-cap stocks "returned" a compound annual average of negative 1.38%.
This is a tendentious comparison:
