Perspective: This is just the beginning

[RedDuke]

Like in 2009 right ? Almost 13 years later you still post the same shit. There was a major reset in March 2020.

there was no reset for all trillions printed over the period.

 

[Nine_Ender]

Yeah I agree. This “normal” correction feels like a crash because we’ve had none for so long. Fed just wants to deflate the speculative markets, not wipe out 401Ks. Democrats are not looking good either, so we may see political shift to the right as well. This should be a good year for mean reverting strategies is my guess.

It's a mixed market. Even if this was year 2000, anyone avoiding IT didn't do all that badly. And for several fundamental reasons it's not going to be a full dot com like crash anyways. Throw in that we are definitely in a 2009-2014 like commodity bull ( stocks are still lagging the commodities they have a fair ways to go ). Banks are likely going to do well in 2022 which likely means at worst the stocks flat line and pay a nice dividend.

What I see is corrections in certain areas of the market drag the good areas down, then they bounce when value buyers pile in. And the moves in energy are quite lucrative if you can stomach the downside ( or trade out/in effectively ).

ps SPY was -7% in year 2000 and includes some IT exposure.

 

[MKTrader]

I could go on and on about problems with the Fed, lockdowns, bad incentives to keep people from working or overpay them, etc. But in the end the market and economy are two different things. Occasionally the reality of the economy brings the market back to reality....until more fake monetary and fiscal stimulus are applied. How long this cycle and house of cards can continue is anyone's guess, but every 10%+ correction always has lots of permabears saying "this time it's different"....and they're usually wrong. Uncle Fed and Aunt Stimulus come to the rescue.

 

[brightside]

This is an asset bubble that is popping and we have big time wage inflation. The fed will try to calm markets with their usual bs but they are stuck in a corner.

 

[Pricechange]

I wrote in another thread that today's more severe correction boils down to the following: America's economy cannot survive while dishwashers are paid $30/hr.

This perspective doesn't negate other factors leading to this correction, including Fed decisions, government hand-outs, risks of war, covid, etc. I'm simply adding a macro perspective which leads me to believe the market is in for a long cold winter that it won't really recover from until clear signs emerge.

No offense to dishwashers (one of my teen years job), but assuming it is one of the lowest on the hierarchy of jobs, the roots of inflation are clearly identified by the difficulty businesses have in finding labor to fill that job for under $30 per hour, double the recent revolutionary cries for $15/hr minimum wage. Strangely, unemployment is at its near lowest, employers are struggling to fill millions of jobs and the IRS is recording the highest revenues in its history (about $3.8B).

While this may seem contradictory, if we look for income streams we find that covid froze the economy and the government handed out wads of cash; those who could, or were required to, started working from home and saving money (no gas, no lunch, no gatherings, etc.). The covid created stay at home economy suddenly exploded, between millions of YouTubers and Tik-Tokers cashing in on advertising dollars and millions more signing up to Robinhood and other trading platforms, plunging in the gambling den of the stock market.

Why would anyone in their right mind work 8 hours for $106 ($15/hr less taxes) when the stay at home economy can easily double and triple that amount in a couple of hours. There's your $30/hr, to the poor migrants who don't speak much English and are simply trying to stay under the radar of immigration kapos.

Everyone on the socio economic ladder profited from this new reality, and when no one suffers, it has no reason to stop. Except, America is no longer competitive in the global market when everything it sells is 3-4x more expensive than that of the competition. Inflation came roaring in and suddenly all economic indicators started looking like the gauges of a falling aircraft, and the market is crashing.

I believe government and market makers have devised a plan to remedy this situation on a national security basis, to control and return inflation to its pre covid era. The goal is for dishwashers to revert to their $10/hr or less pay rate and everyone else scale up from that.

To achieve this goal government requested a sell off to wipe the market of retail traders, to force them back into the working economy. As the economy adjusts to new labor, pay rates will drop until their eventual return to expected normal. This will take many months, maybe a year or two. The social protest will lead government to "punish" market makers by requiring a return to trading fees (remember those?) and return the market to a more conservative veneer of professionalism.

So when do we know when it is time to return to the market? Look for higher employment numbers, lower pay packages, lowering inflation, a fall in the used car and the real estate markets. These are all precursors to a swamp being drained, just not the expected one.

While none of this matters to the hardened pro or post pro traders who make money either which way, investors will be in the dumpster for possibly a couple of years, although America has always shown to be dynamic and able to rebound faster than expected. But don't be fooled by fake rebounds.

I agree it will last a while.

reading your post and looking at what's been done so far.. it kinda looks like a shift toward socialism in the USA. And the market has been figuring this out. Plus, they may think they (central banks) need to invent a pretty big war...they may think this will help reset things...particularly the HUGE US debt. Losers of world wars get bailed out by the victors completely after the lessons of WWI.

 

[Pricechange]

I agree it will last a while.

reading your post and looking at what's been done so far.. it kinda looks like a shift toward socialism in the USA. And the market has been figuring this out. Plus, they may think they (central banks) need to invent a pretty big war...they may think this will help reset things...particularly the HUGE US debt. Losers of world wars get bailed out by the victors completely after the lessons of WWI.

By the way...when I said war and the outcome, I was speaking of what Joe may be trying to pull off. A socialist Joe Biden going to war with a quasi communist country and a red communist country whom are allies would suggest that he may be ushering their help in trying to sweep full socialism into USA. A war that he would not even try to win (an Incursion?), knowing that he is of the same mind set. This is what was trying to be prevented on Inauguration Day with the capital protest I suspect.

 

[SunTrader]

Everyone is a genius in a bull bear market.

 

[albion]

I wrote in another thread that today's more severe correction boils down to the following: America's economy cannot survive while dishwashers are paid $30/hr.

I think there is a major reality bubble on this list; people really need to get out more. Dishwasher's are being paid more because those kinds of jobs suck, and nobody wants to do them when they have better opportunities in other jobs. In my neck of the woods the teenagers who used to do dishwasher type jobs are now all working (and being paid more) at the local supermarket. That's partially because the older workers have thinned out due to retirement or not wanting to get exposed to Covid. It's also because a lot of people are having to move out of the area because of rent inflation. No low wage workers can afford to live in the area. This is all basic supply and demand. Workers have opportunities to make more and are taking them. Isn't that the American way?

 

[Specterx]

America's economy cannot survive while dishwashers are paid $30/hr.

Nonsense. If this were remotely true, how do countries like Norway, Switzerland, Denmark etc. manage to function?

What's true is that people might need to start cleaning their own houses, tending their own gardens, and watching their own kids. God forbid that 6,000sqft houses will go out of fashion.

 

[SteveM]

Nonsense. If this were remotely true, how do countries like Norway, Switzerland, Denmark etc. manage to function?

What's true is that people might need to start cleaning their own houses, tending their own gardens, and watching their own kids. God forbid that 6,000sqft houses will go out of fashion.

I think you are making a great point.....over the last 30 years there has been an explosion in square footage devoted retail and fast food.....how many of these places does the USA really need? I would argue that every single need is met, and then some in the USA.....some downsizing wouldn't be the worst thing in the world.