Remember that happy talk about the bear being gone and getting bullish again? Never mind. The Joe Biden Economic Miracle just keeps rolling along. Like a steamroller crushing your wealth.
Tesla ($TSLA) says they will miss earnings though they say in the same breath that demand is strong. My buddy down the street just got one and installed solar panels on his house to charge it. I still have a diesel and a pick up. Tesla is down 41% year to date.
The FAANG stocks which led the entire market up are having trouble this year. Not just a little trouble.
When linchpin companies start to see the bloom on their flower fade, it’s not bullish. Tesla is one of those companies. Meta (Facebook, why did they change their name? So stupid) is another. They are down 60% this year.
Amazon ($AMZN) is down 31% this year. The NASDAQ ($QQQ) is down 32%. Netflix ($NFLX) is down 55%. Google ($GOOG) (Alphabet, another stupid name change) is down 30%. Apple ($AAPL) is only down 19%. They just rolled out new products so let’s see how it sells ahead of Christmas.
When you can’t afford to buy gas or groceries, hard to buy new tech unless you really need it. Instead of using Google, give Freespoke a try.
We have two and a half months left to trade until 2023. Think stocks will make a comeback between now and December 31st? Remember when all of the Wall Street analysts were saying “We are down now but we will be higher than this by the end of the year.” That was back in April and May. Wait until the tax loss-harvest selling gets going in early December.
The elections might be a bit bullish if the Republicans have a tsunami but no one sees that coming unless you spend a lot of time on Parler, Truth Social, Gab, or Gettr. For sure polling is biased and it always is. I suspect leads of 5% or less that show a Democrat “comfortably ahead” are either neck and neck or the Republican is ahead. I noticed a poll in the Minnesota governor’s race that showed the Democrat incumbent up 18 points in August. That’s down to 10. Momentum isn’t in the Democrat’s corner. Still, how bulled up do you want to get with Republican control of legislatures and a majority of governor houses?
How bad is it for Democrats? Illinois incumbent JB Pritzker has had to spend $145MM of his own money on his election so far. Don’t shed any tears for him. He’s a terrible governor and that sort of money is like a trip to Walmart for him. His offshore accounts make more than that yearly.
A lesson to a party that takes control of a state and has one party rule: Be careful. Corruption is easy to overlook and once it takes hold it’s like trying to get rid of a kudzu vine. Oklahoma is a deep red state but its governor is in trouble due to some good old-fashioned corruption. Perhaps Illinois politicians could instruct him how to handle it.
It’s not as if inflation is going away because of an election. It’s not. Like a homeless person that moves in with you, it ain’t leaving until the government truly cuts real spending. Don’t hold your breath you will wind up like this bull.
If a company did a trendy SPAC to go public, you can bet dollars to donuts that it is underwater. We Work set a new low again today. Bird, the scooter company, is delisting its stock. SPACs never looked like a good idea to me. They reminded me of “search funds” that were raised over the past few years.
Search funds were trendy. A bunch of newly minted MBAs from a top school would go off and raise money from people explaining that they were looking for a company to buy and they’d make the investors money by retooling and running it. If you go back far enough you can generate statistics that show a big positive return. I am not saying they haven’t made money in the past, but if you invested in one during the last four years, odds are good you didn’t make money and you won’t get liquidity any time soon. But, you might get a tax write-off.
Search funds are all about the jockeys. Might as well do the work yourself and angel invest.
My friend Brian Lund loves to watch the pot stocks. I saw so many deals in this sector and I rejected every single one of them. I told the entrepreneurs nothing against them, or their idea. I wasn’t going to be the “Joe Kennedy of Cannabis”. Turns out, if you were politically connected like old Joe you did pretty well. Not connected, you lost money. But, the market hates pot stocks. We used to joke on the trading floor that a pot futures pit would always be higher on the day but it looks like engaging in a commodity business where the government picks winners and losers along with taxing the crap out of it isn’t profitable.
I do know enough old stoners that would flock to a “vintage weed” product. I don’t smoke but the stuff today is polio pot. You can’t get off the couch after a few tokes.
I keep looking for a silver lining somewhere but can’t find one to hang my hat on. Technical points will not hold when everyone tosses in the towel. That’s when to look to buy. Not yet. Maybe the election outcome will be to buy the rumor and sell the fact. A bit of a bid a few days before the Jenga tower comes tumbling down.
Bank earnings weren't exactly stellar either.....banks lead...
I sometimes wonder where we are. Is this the beginning of a long, downhill slog for our country with no return?
Is it a repeat of a former era, like the 70's and 80's, where America and its economy comes back? Or is it shorter, like 2008, and then up again from there?
The thing that keeps gnawing at me is the federal debt. 31 trillion dollars. That's absolutely stupefying. I keep thinking about how we come back from that. Then I wonder if the super-elite know something that I don't. Do they know what will happen to us because of this debt? Do they understand that every solution, perhaps with the lone exception of just tightening our belts and paying it off (gulp) ends up in a Venezuelan like downward spiral?
"It can't happen here."
It seems like it already is. I'm just confused as to how this is not on page 1 of our papers every day and isn't the biggest priority of our statesmen, business leaders and politicians? I mean, can people not do math? 5% interest on 31 trillion is...$1.55 trillion. A year! And if no one buys it, then the Fed has to. Well, it's awfully hard to stop inflation when you are just buying your own debt in this vicious circle. I just keep scratching my head on it, because other than some blogs or bear newsletters, I'm seeing nothing out there about it. Like it doesn't matter.
That is all the background of the bear market that you are discussing, Mr. Carter. How does a bull market come back when the government has such a damaging presence in our economy?
Basic macroeconomics teaches you about the National Equation. In it, you see that government spending "crowds out" the private sector. With the interest on the debt how do we ever not crowd out the private sector in one way or another (taxes, resources, inflation, money printing)?
What am I missing?