Svmuu News: Bloomberg ETF analyst Eric Balchunas posted on X that he released a report today—one he had been working on for several months—suggesting that the U.S. stock market may have become too large and too important, essentially serving as the nation’s retirement fund and potentially even a source of support for Social Security, which is projected to run out of funds in less than 10 years.Currently, 55% of Americans hold stocks, the highest level globally;With “Trump Accounts” bringing an additional 28 million Americans into the ranks of stockholders, the vast majority of people—including the top 1% who hold half of the U.S. stock market, as well as the middle class and low-income groups—will have a direct financial stake in the health of the stock market. Since they are all voters, the political pressure to prevent the stock market from entering a prolonged bear market will be very strong.
Eric Balchunas believes that Federal Reserves are likely to buy stock ETFs to prop up the market during the next major downturn, and that this will become common practice in the future—China and Japan have already done so—with Federal Reserves potentially even buying to target specific sectors or companies with capital expenditures.He noted that this is a major variable, but one that experts tend to overlook—and it is the reason bears have been repeatedly suppressed. Investors have recognized this, as evidenced by continued ETF inflows during market pullbacks and a survey of 1,000 people in which three-quarters of respondents believed Federal Reserve would bail out the market during the next crisis.He noted that this is merely one of the byproducts of the expansion in money supply and debt currently taking place globally—and particularly in the United States—and that it currently appears irreversible.