Are the recent highs in the DOW just a sign of inflation?

[AdamLanes 1]

Does anyone else here think that the record highs in the Dow Jones Industrial Average are directly related to the falling US dollar? The Dollar hit record lows against the Euro this past week at the same time the Dow Jones Industrial Average is reaching record highs. It seems to me that inflation is the leading cause for the current "run" in the stock market.

[Remster 30]

Huh?

The value of the US$ vs other currencies doenst have any direct relationship with inflation. Sure, it may affect end user pricing on imported goods, but overall, the inflation in the US has been under very tight control for the last few years. It has gone up and down slightly lately, but is still quite low. http://inflationdata.com/Inflation/images/charts/Annual_Inflation/annual_inflation_chart.htm

Now, the low seen in the US$ would effect how companies do. Their goods become very cheap to overseas consumers, and may help sales.

Remster

[SkyChimp 0]

I'm not sure what the cause is for the DOW recently. All I know is that the only inflation I'm sick of paying for is the gas prices. Can somebody please do something about Exxon's management living in the Ivory towers?!?!

Does anyone else find it funny that we made a SPORT out of an EMERGENCY PROCEDURE?!?!

[AdamLanes 1]

So would you say by the same logic that the relationship between the falling Zimbabwe dollar against the US dollar has nothing to do with inflation (in Zimbabwe)?

[Remster 30]

Again, the inflation in the US is low. I'm not saying things are rosey in the US economy wise, but to pin anything down to the current high inflation makes no sense...

I've never looked at the Zimbabwe economy lately, so I'm not sure I want to start analysing it! lol

Remster

[Gawain 0]

Quote

I'm not sure what the cause is for the DOW recently. All I know is that the only inflation I'm sick of paying for is the gas prices. Can somebody please do something about Exxon's management living in the Ivory towers?!?!

Please don't tell me that you fell for the "oil companies" are manipulating prices line...

As to the OP, I don't believe so. Many of the indicies have resisted inflation. Part of that is due to currency factors I imagine, but I've been quite surprised at how the main stream consumables haven't gone through the roof with energy costs being so unpredictable.

So I try and I scream and I beg and I sigh
Just to prove I'm alive, and it's alright
'Cause tonight there's a way I'll make light of my treacherous life
Make light!

[joedirt 0]

I don't think it's directly related. It's certainly not the leading cause. If you want to bet on inflation buy gold. Our money system is designed for inflation. Better inflation than deflation.

[tbrown 26]

Quote

Does anyone else here think that the record highs in the Dow Jones Industrial Average are directly related to the falling US dollar? The Dollar hit record lows against the Euro this past week at the same time the Dow Jones Industrial Average is reaching record highs. It seems to me that inflation is the leading cause for the current "run" in the stock market.

I wouldn't know about that, but the last big round of inflation in the seventies was brought about by the debts and deficits run up in the Vietnam War. The expenditures of the Iraq War, coupled with additional tax cuts (I mean who the hell cuts taxes in time of war ?) are going to kick in pretty soon and I'm not looking forward to it.

Your humble servant.....Professor Gravity !

[joedirt 0]

Quote

I mean who the hell cuts taxes in time of war ?

People who understand that taxation revenue runs on a curve with a peak. Taxes have been cut but tax revenue has gone up.

[kallend 2,112]

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

...

The only sure way to survive a canopy collision is not to have one.

[NCclimber 0]

Quote

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

Got any proof to back up that claim?

[Channman 2]

Quote

Does anyone else here think that the record highs in the Dow Jones Industrial Average are directly related to the falling US dollar? The Dollar hit record lows against the Euro this past week at the same time the Dow Jones Industrial Average is reaching record highs. It seems to me that inflation is the leading cause for the current "run" in the stock market.

Its a sign that I'm raking it in
You just got to love the American economy, its big, its massive and its global and its available and open to the little fellas of the world with as little as $25.00 per month.

[kallend 2,112]

Quote

Quote

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

Got any proof to back up that claim?

We already beat it to death on here, which is why I wrote "here we go again"..

...

The only sure way to survive a canopy collision is not to have one.

[lawrocket 3]

Quote

It seems to me that inflation is the leading cause for the current "run" in the stock market.

Actually, I would probably attribute the bull stock market to the bear market that is real property. The stock market suffers when the property market booms because people invest in property instead of stocks. When the property market starts to fall, people invest money in stocks instead of property.

Makes sense, doesn't it? Follow the money...

My wife is hotter than your wife.

[NCclimber 0]

Quote

Quote

Quote

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

Got any proof to back up that claim?

We already beat it to death on here, which is why I wrote "here we go again"..

You mean you actually produced inflation-adjusted numbers? Or are you talking about your previous claim (that was never backed up), which just happened to be in a thread that had other topics that got beat to death?

It's real simple - you make a claim... a claim that is pretty cut and dried... either it's correct or it's not.

Now, instead of doing the kallend two-step, you could just provide proof of it being correct.

[joedirt 0]

The bulk of tax revenue comes from the wealthy and the corporations. If you think an increase in tax revenue is due to all the newborns and recent fence hoppers you should study economics. If you can't recognize this very simple economic principle of taxation revenues in relation to an elastic economy you just sound like a sucker being fed a line of bullshit by pundits.

[kallend 2,112]

Quote

Quote

Quote

Quote

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

Got any proof to back up that claim?

We already beat it to death on here, which is why I wrote "here we go again"..

You mean you actually produced inflation-adjusted numbers? Or are you talking about your previous claim (that was never backed up), which just happened to be in a thread that had other topics that got beat to death?

It's real simple - you make a claim... a claim that is pretty cut and dried... either it's correct or it's not.

Now, instead of doing the kallend two-step, you could just provide proof of it being correct.

Having a little reading problem today, are we?
We already beat it to death on here, which is why I wrote "here we go again"..

...

The only sure way to survive a canopy collision is not to have one.

[NCclimber 0]

Quote

Quote

Quote

Quote

Quote

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

Got any proof to back up that claim?

We already beat it to death on here, which is why I wrote "here we go again"..

You mean you actually produced inflation-adjusted numbers? Or are you talking about your previous claim (that was never backed up), which just happened to be in a thread that had other topics that got beat to death?

It's real simple - you make a claim... a claim that is pretty cut and dried... either it's correct or it's not.

Now, instead of doing the kallend two-step, you could just provide proof of it being correct.

Having a little reading problem today, are we?
We already beat it to death on here, which is why I wrote "here we go again"..

That was a different horse.

Duck and run,

duck and run...

Let's all two-step

[kallend 2,112]

Quote

Quote

Quote

Quote

Quote

Quote

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

Got any proof to back up that claim?

We already beat it to death on here, which is why I wrote "here we go again"..

You mean you actually produced inflation-adjusted numbers? Or are you talking about your previous claim (that was never backed up), which just happened to be in a thread that had other topics that got beat to death?

It's real simple - you make a claim... a claim that is pretty cut and dried... either it's correct or it's not.

Now, instead of doing the kallend two-step, you could just provide proof of it being correct.

Having a little reading problem today, are we?
We already beat it to death on here, which is why I wrote "here we go again"..

That was a different horse.

Duck and run,

duck and run...

Let's all two-step

Well, duck and run if you must.

If you want yet another debate on tax rates and revenues, start your own thread.

...

The only sure way to survive a canopy collision is not to have one.

[NCclimber 0]

Quote

Quote

Quote

Quote

Quote

Quote

Quote

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

Got any proof to back up that claim?

We already beat it to death on here, which is why I wrote "here we go again"..

You mean you actually produced inflation-adjusted numbers? Or are you talking about your previous claim (that was never backed up), which just happened to be in a thread that had other topics that got beat to death?

It's real simple - you make a claim... a claim that is pretty cut and dried... either it's correct or it's not.

Now, instead of doing the kallend two-step, you could just provide proof of it being correct.

Having a little reading problem today, are we?
We already beat it to death on here, which is why I wrote "here we go again"..

That was a different horse.

Duck and run,

duck and run...

Let's all two-step

Well, duck and run if you must.

If you want yet another debate on tax rates and revenues, start your own thread.

No duck and run, here.

I'm not the one make unsupportable claims and then ducking requests to back it up.

It's not the first time you've done this.

[kallend 2,112]

Quote

Quote

Quote

Quote

Quote

Quote

Quote

Quote

Quote

Quote

I mean who the hell cuts taxes in time of war ?

Taxes have been cut but tax revenue has gone up.

Here we go again. Yours is only a meaningful statement if the value of the $ and population growth are accounted for. When that is done, real revenues have NOT gone up.

Got any proof to back up that claim?

We already beat it to death on here, which is why I wrote "here we go again"..

You mean you actually produced inflation-adjusted numbers? Or are you talking about your previous claim (that was never backed up), which just happened to be in a thread that had other topics that got beat to death?

It's real simple - you make a claim... a claim that is pretty cut and dried... either it's correct or it's not.

Now, instead of doing the kallend two-step, you could just provide proof of it being correct.

Having a little reading problem today, are we?
We already beat it to death on here, which is why I wrote "here we go again"..

That was a different horse.

Duck and run,

duck and run...

Let's all two-step

Well, duck and run if you must.

If you want yet another debate on tax rates and revenues, start your own thread.

No duck and run, here.

I'm not the one make unsupportable claims and then ducking requests to back it up.

It's not the first time you've done this.

There you go again!

Feel free to start your own thread on tax revenues. This one is about the DOW.

...

The only sure way to survive a canopy collision is not to have one.

[NCclimber 0]

LOL

That's new one Kallend.

A thread goes off on a tangent and you make a silly sounding claim. When called to back it up, you say "Go start your own thread... this one's about the topic in the OP... harrumph, harrumph, harrumph"

You do crack me up.

Bottom Line: You made a bullshit claim, you can't (or won't) back up.

[kelpdiver 2]

Quote

Does anyone else here think that the record highs in the Dow Jones Industrial Average are directly related to the falling US dollar? The Dollar hit record lows against the Euro this past week at the same time the Dow Jones Industrial Average is reaching record highs. It seems to me that inflation is the leading cause for the current "run" in the stock market.

The falling dollar is a big part of the reason why international funds are doing so well. But the S&P 500 (The Dow is a silly benchmark imo) is up because earnings are up. Look at the P/E now versus the former peak in 2001.

Earnings increase due to productivity increases, and yes, inflation. It has also increased substantially in recent times as US companies get more earnings from outside our borders.

If you pick a time horizon of the Bush Administration, the gains in the market have been pretty much what inflation is. 1-2%/year. But that misses the big drop that happened, followed by the big gain. Historically, the market gains 8-10% per year, of which 1-3% is inflationary.

[algboy 0]

Quote

Does anyone else here think that the record highs in the Dow Jones Industrial Average are directly related to the falling US dollar? The Dollar hit record lows against the Euro this past week at the same time the Dow Jones Industrial Average is reaching record highs. It seems to me that inflation is the leading cause for the current "run" in the stock market.

Something to consider: the concept of purchasing power parity of the Dow. On a purchasing power basis the Dow isn't even where it was in 2000.

To figure what level the Dow needs to be at in order to achieve the same purchasing power parity as the 2000 Dow just follow this link to the Federal Reserve and find their inflation calculator (left side).
http://www.minneapolisfed.org/Research/data/us/calc/index.cfm

Enter 11,723 for a starting value (2000).
Put in 2007 for an end date. Using the Fed's own calculator of inflation, the Dow would have to hit nearly 14,000 to match the 2000 Dow peak.

Bear in mind, that's assuming the Fed's figure of around 2% inflation. Dubious at best.

Some sharp-pencil guy named John Williams has recreated M3 (since the gov't stopped publishing this over a year ago).
http://www.shadowstats.com/cgi-bin/sgs/data

These "alternative" stats would suggest that consumer price inflation and the M3 money supply are much higher than the "official" numbers. Backing these higher inflation numbers into the mix would give you a Dow of over 17,000 to reach 2000 parity.

IMHO all that excess liquidity (dollar inflation) and the flight from real estate--not to mention the "gold rush" CNBC mentality of the markets lately--have invigorated the equities markets. I could be wrong, though.

FYI: "monetary inflation" is the *cause* of "price inflation". Higher prices are just the *effect*.

[You now know more about inflation than than 99% of your friends]

[kelpdiver 2]

Quote

These "alternative" stats would suggest that consumer price inflation and the M3 money supply are much higher than the "official" numbers. Backing these higher inflation numbers into the mix would give you a Dow of over 17,000 to reach 2000 parity.

IMHO all that excess liquidity (dollar inflation) and the flight from real estate--not to mention the "gold rush" CNBC mentality of the markets lately--have invigorated the equities markets. I could be wrong, though.

Have your living costs really gone up 45% in the past 7 years? Seems like a stretch to me. The average car is still in the 20s, rents in SF haven't jumped $800, only gas is up markedly.

And the stock market was booming along side the real estate world since 2003 as well. REITs didn't falter until the past 6 months. Of course the market isn't booming if you include the 2001-2002 years, but it's been running long enough to find your hypothesis bogus.

Companies used the 2001-2002 depression to assert control over wage growth. People were happy to have their jobs. Some of us sat for a while. Still to this day, the average tech salary is below what it peaked at in 2000. But productivity continued to increase, so that spells nice profits.