The Joe Biden Market
But At Least We Don't Have Mean Tweets
If you are a chartist, you are looking at this and thinking we are on a precipice. I recall looking at a NASDAQ chart in 2001 and thinking it would trade down to 1500, from 5500.
Every day you wake up, you lose another .5% or more thanks to “10% for The Big Guy”. That’s before you add in inflation which is costing you double digits right now.
Funny, but during the Trump administration, do you know who had the largest percentage gains in income? Minorities. Want to know why? Energy was cheap and we had no to low inflation. Taxes were lowered. Democrats keep tripping over each other’s tongue trying to tax billionaires.
The S+P climbed a wall of free money from 2009-2022. It also climbed a wall of increased government spending. That was mostly transfer payments and bullshit Covid spending it didn’t need to undertake. If you understand classical economics, that is inflationary. Lo and behold we got it.
I looked at some other charts and I cannot make a case for the market NOT trading down to 3800. We haven’t seen the whites of the eyes of panic yet, but we are getting there. I could see it trading down to 3200.
Please, bulls enlighten me. What are you going to hang your hat on to buy this market? Stocks aren’t historically cheap. Companies aren’t having blowout profits. Margins aren’t getting increased because underlying costs are stable.
It’s not just traditional companies. Facebook is down over 55%. Most of the old FAANG stocks are imploding.
There is a doofus in the White House and his VP warming up in the bullpen is no shining light of intellect or confidence either. But we don’t have mean tweets. Trump was no saint and no paragon of fiscal conservatism, but he’s 1000% better than what we have today.
Look at the flip side. Mitch McConnell? Kevin McCarthy? Do you have confidence in them? McConnell is more integrated into GOPe than he is in the spirit of the Freedom Caucus in the House. McCarthy has some explaining to do after the Jan 6 tapes were released. Do I want him leading the charge come December 1? Probably not. We tried John Boehner. John’s a great guy. But, it didn’t work out so well.
I remember years ago talking to Dennis Hastert when he was Speaker of the House. I mentioned to him that he needs to stop concentrating on making first downs, and making touchdowns instead. Denny was a big sports metaphor guy before he went to prison. He didn’t understand it.
It’s very important to elect GOP people that are not GOPe people. But I digress.
There is no one in the other party that is a savior. They have been corrupted and taken over by the hard left. Bernie Sanders is their North Star.
I think housing is going to take a bit of a stumble. You can’t get stuff, and labor is super expensive. I have been working on a rehab that should have taken far less than a year, but it’s going to go over a year.
The cost of energy is through the roof thanks to Joe Biden. Spare me the Putin chatter. It’s just to distract you.
This isn’t about the Fed raising rates. We still have really cheap money floating around the US. The problem is the Fed blew it. Their strategy started to blow up way back in 2009 with QE2.
Think of it this way. If you can build a great profitable business the growth in that business will be far greater than your cost of capital at the bank. If you think it’s about the Fed, I have a bridge to sell you.
The biggest problem is all the people standing in the way of people who want to build. They aren’t in the private sector.
For grins, I decided to look at aggregate commodity prices. Commodities screamed higher. Now, look at them. We are headed for a recession in the US and worldwide.
I can’t find one positive thing to hang my hat on to buy this market. Not one. I am desperately looking. It feels like 1974 all over again. Don’t quit your job.
I was born in the early 70's. My parents were working people, and we essentially lived in poverty. Our car was rusty, and was built in the mid-60's. I remember seeing holes in the floorboards on the driver's side.
It felt like everything was unattainable and expensive. Especially energy prices. The 70's and 80's were spent fighting over the thermostat to the point that I woke up in the morning seeing my breath in the air. If I went to raise the heat my dad would get angry, to the point of physical confrontation. The truth is that it made me hungry to go out and get educated and earn later in life, so I don't regret it.
The difference today is that we haven't really "felt" it yet. Young people today are used to having it pretty good -- especially with financing things. Credit cards were a novelty in the 70's and 80's, and you were able to get get something only once you saved up for it. People today have never experienced that, which makes me wonder how collectively cranky the country is going to get when financing gets real expensive, and the real price of goods gets prohibitively expensive.
Remember when families saved just for that one annual vacation? We got three things every year -- A Cubs game, a trip to the amusement park (Six Flags) and a day at the beach. I did not fly on a plane until I was 21 years old.
Will Millennials be bitching about six figure jobs that aren't woke enough, like they do today? What will they do when they have to buy a used car, instead of a new Tesla?
There are some dark clouds out there, and many people have no idea what they're in for. If you are fundamentally mentally sound and you live without debt, you will be ok, and it will be character strengthening. Family bonds might even get stronger, as you get creative in your leisure time with each other.
But I doubt that sales of organic dog food and Starbucks will continue to rise...
The next few years will be character defining for Millennials and Gen Z. Gen X and the Boomers have already seen this movie, and we'll be fine.