The Joe Biden Economy Is Good
For Bears
CPI comes out hot this morning and the sunshine on the market faded away awful fast didn’t it? Did you believe the bull that was being fed to you by the mainstream media? Did you believe the bull that the investment bank researchers on Wall Street served up?
Old dinosaur traders like myself know that markets always go down a lot faster than they go up. Today proves it no? Or, would non-believers of that adage like another example? Good traders will know where the circuit breakers are.
Regular readers of this blog know my number. 320 on the $SPY. That’s 16x earnings and a good place to sniff for buys. Don’t listen to the people on television that talk about 390. The best charts wind up at the bottom of the ocean in bear markets.
I saw the Wall Street analysts before they typed up their report and sent it to clients.
I think they were more accurate when they were all dwarf tossing.
You have to understand that Big Media, and Big Banks are in the tank for GOPe and the Democrats. They don’t want to face the truth. They can’t handle the truth. It pays to be super cynical in times like this.
When you kill small businesses deliberately with a terrible policy it stings. When you kill big corporate and worldwide supply chains with terrible policies, it leaves a mark. When you deliberately destroy the energy industry, and helicopter money to people, it destroys an economy and cranks up inflation. That’s where we are today.
The only reason gas prices are lower is that Biden is emptying the Strategic Oil Reserve as fast as he can, and the economy is in recession. Biden is not a serious person and no one that works for him is a serious person either. They are dolts. We would have eaten them for breakfast and disposed of them by lunch if they were on the trading floor back in the day.
How’s that “equity” working out for everyone? I’d rather have people in charge that actually earned their way there by merit. Equity is something you purchase. You don’t get “equity” simply by being born or by being different. You earn it.
The other reason for a drop in crude oil prices is as the US dollar gets stronger, oil goes lower since all the world trade is basically done in USD.
Europe is totally screwed. By totally, I mean totally. We might see the end of civil society in certain places this winter when they can’t get heat, and can’t get food. They are going to find out that global warming is a helluva lot easier to deal with than cold snaps.
The Fed was behind the curve but they are always behind the curve.
By the way, simply raising interest rates doesn’t stop inflation. You can raise rates but you need to do two other things at the same time:
Cut government spending
Cut all taxes on investment
Gaze across the Pacific at China. China had incredible double-digit growth according to their data if you believe it. They had inflation, but their growth outpaced it. Today, the worm has turned. China is screwed in more ways than one. Their debt to GDP ratio is somewhere between 250% to 350%.
No growth means big trouble in China.
The US has rapidly increased its debt in the last three years. It’s unsustainable and if the government continues on this course, we will continue to have high single-digit or double-digit inflation no matter what interest rates are.
Anecdotally, I am already seeing people posting on their LinkedIn’s that they need a job. They have been laid off. Their effort to form a consulting company might have failed. I know companies in the tech industry are laying off, or freezing hiring.
The cost of capital is significantly higher as VCs become risk averse and the ability to raise it got arduous.
This gets a lot worse before it gets better. The midterm elections are here in a couple of months. No one cares about abortion when they can’t afford food or gas and they can’t find a job.
All these issues are Joe Biden and the socialist Democrat issues. Getting rid of them is the first step but we have a very deep hole to climb out of and a very dicey future in front of the world for the next fifty years. More on that tomorrow.
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I believe that the biggest problem right now is labor. Everywhere I look, and in my own business it is extremely difficult to find people to work -- let alone good people. In some positions I have doubled my wage rates -- yes, DOUBLED, and I'm still getting people who are getting more in competing offers. And these are hourly positions. This started for me in January, 2021. I'll never forget that feeling I had, like the labor world had vanished overnight.
We would post a job, and get perhaps 20 applicants. Ok, not bad. Then we would start phone screening, and 10 wouldn't answer or return phone calls. Weird. 10 would answer, but only 5 would schedule an onsite. Of those 5, 1 or 2 would show up. The other 3 or 4 would just either ghost us or say something catastrophic happened (car accident was a popular one). Of the 2 that we would extend job offers, sometimes 1 would show up to work. Within a month or so, that person would move on to another job, paying 20% to 30% or more than this one.
I figured out later that these people were simply applying to meet their unemployment requirements, and never had any intentions of accepting a job. A few openly admitted it.
I literally cannot run a business in a labor market like that. So I found that I was doing triple the work, and my managers were stressed out and exhausted. I still to this day have not recovered mentally from that exhaustion, as the beat goes on. I can only write a comment here, because I take a mental break during the day to think about something else. And, the situation has gotten a bit better. This forum has some "venting" benefits for me. Thank you Mr. Carter!
But back in January, 2021, I knew that inflation was going to be really, really bad, if only because of the wage rates that I was offering. Everyone is doing it. Things are slowing down, and for that I can only be grateful. We need a normal economy, not this.
When repairing my home, I cannot find contractors. I just had some plumbing work done, and now they want to charge you JUST TO COME OUT AND QUOTE THE JOB. This has never been this way.
So, the very first thing that has to be fixed is the government getting rid of the incentives to not work. At all levels.
But my fear is that they've already killed off much of the potential rebound of the economy, and that killing off the "demand" was much worse than just trying to increase the supply.
We are in for it, and we're going to get it good and hard.
Someone needs to start a “Bidenville” meme. (Like Hooverville) I wish I was the guy to do it!