The S&P 500 stock market index in the USA went above 7,000 for the first time yesterday.
It only happened briefly, but it is worth noting because a week after markets wobbled over Trump and Greenland, they hit a record high again.
The short term natiure of investor thinking is revealed as a result. They can see a threat and then forget it almost immediately, but Trump and his fascism have not gone away.
Instead, look at that chart again. Since the likelihood of Trump returning became part of the zeitgeist in mid-2024, markets have risen by around 2,000 points, or 40% from that base.
Now ask, who does Trump serve? And, of course, like all facists he serves wealth, and so far they are very happy with him.
Will that last? I doubt it.
What will happen then? I do not know.
But, amongst the many things that a crash will deliver - almost all of which are negative - a realisation that fascists cannot really deliver anything of value, even to investors, will be of benefit, because right now the wealthy will put up with all else that they do because they believe that Trump is good for the value of their share portfolios, and so their well-being as a whole. When that myth is broken, as it will be, there may be a reappraisal. Getting that message out will be amongst the key messages of that moment.
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“Markets can remain irrational longer than you can remain solvent” (Keynes).
In a world that fears dollar depreciation and/or inflation, stocks can do well. Best performing markets in 2025 (local currency terms) include Iran, Venezuela, Egypt etc..
The surprise (for me) is how resilient the dollar is. Sure, it is cratering versus Gold but against other currencies the declines are modest.
I agree: this is bizarre.
Everyone buying and selling stocks should mutually agree to trade at lower prices to bring some sanity back to this situation. Not compelling them to do would be neoliberal if I’ve understood the definition right, but they should still do themselves a favour and trade at lower price levels.
That is not how markets work.
My suggestion is to argue, educate, persuade but not compel participants to voluntarily agree to trade at lower prices because the current index level is insanely high.
How do you propose to bring back sanity to the markets?
Markets do this themselves. They crash. Unfortunately, they have never done it any other way.
Where is the money for these price increases coming from? Presumably the book value increases are happening because some people are actually buying significant numbers of shares at really high prices? Are they buying these financial assets with cheaply borrowed money? Pension funds? My great fear is that the pension fund losses will be what is used as an excuse to force governments to bail out all the coming losses from the tech and overall stock crash…. Instead of admitting that private pensions are a disastrous hostage situation vis a vis the stock market…. And that we would be better off collectively agreeing that governments are the best people to pay pensions directly. It seems so evident that there is an abundance of people with more money than they know how to handle and we should be taxing them all down to safely disposable levels of wealth as a matter of National and global security.
Pension money is part.
So is borrowing.
It will end in tears.