Socionomics Suggests Stock Market Way Overvalued

Socionomics uses the stock market as an indicator of social mood. Mood tends to peak with the stock market and bottom with it. That said, the graph I put up yesterday of the S&P 500 Index versus the Fed's balance sheet indicates the level of the stock market may be artificially high.
Social mood is in a rising trend (at least as of January), but it is a bear market rally. Furthermore, the level of stock prices is elevated because of Federal Reserve intervention. It follows that the bear market could be extremely intense as both Fed supported overvaluation tumbles along with social mood.

Here are a couple of stories to consider.

CNN: Almost half of US families can't afford basics like rent and food
The economy may be chugging along, but many Americans are still struggling to afford a basic middle class life.
Nearly 51 million households don't earn enough to afford a monthly budget that includes housing, food, child care, health care, transportation and a cell phone, according to a study released Thursday by the United Way ALICE Project. That's 43% of households in the United States.
The economy is not doing well and it hasn't been doing well for a decade. The election of Donald Trump was clearly a negative mood indicator, not a positive one.

Fertility also points to negative mood. Fertility gives us a report on social mood with a 9-month lag. Stocks went nowhere for 2-years into the November election, hence a dip in birth rates in early 2017 wouldn't surprise. But instead there was a relatively large downturn in fertility.

CBS: U.S. births hit a 30-year low as fertility rate drops in most age groups
A decade ago, the estimated rate was 2.1 kids per U.S. woman. In 2017, it fell below 1.8, hitting its lowest level since 1978. "That's a pretty remarkable decline," said Dr. John Santelli, a Columbia University professor of population and family health and pediatrics.
A drop in fertility isn't a big shock, but it also comes with the economy doing relatively well and stocks near all-time highs. It's possible there will be an uptick in 2018 births thanks to the rising market and slightly better economic data in 2017. Either way, if the bull market has peaked or is topping, the economy will soon follow. If this is the fertility rate at post-2008 social mood highs, the low will shock demographers.

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