I am more inclined to think that inflation has been here all along. But from a different angle. If prices stay the same and wages go down, it has the same overall effect
True, but we don't call that inflation. Just adjustment of extravagant tech salaries & bonuses :-)
And the phenomenon does not seem to be shared by the overall population in the US, judging by the spending frenzy that continued.
As far as the translation lag, I am in the school that the market is forward looking by 6 to 12 months.
Well, no school registration is necessary for this one. Just compare stock prices with PPI. You will see that there is no immediate effect.
The market is forward looking, naturally. But that foresight is one fixed on the earnings of a company. If the earnings of the company will be affected waaaaaaay in the future, it would be unrealistic to expect stock prices to reflect that from today.
There is something called being "too early", after all :-)
Example: You know it, I know it, and so does everyone else that the rates are not going down any more and that means the end of the refi boom and hence the homebuilding spree. Even if there's no crash, there is no way homebuilders & mortgage lenders are going to do as well as the past year or so going forward. We've known this for over half a year. But we would have been wrong to sell short the homebuilders & mortgage lenders, because their stock prices kept going up on the back of the good results they were publishing.
bigcharts.marketwatch.com
At the end of the day, expectations are great, but if the most recently announced quarter and the one we are in point in a different direction, that's the way the stock price will go. |
