DOW below 30,000! Is this a breakthru? How far down to the bottom?
I've never been one for techincal analyses... but YIKES!
Replies to: DOW below 30,000! Is this a breakthru? How far down to the bottom?
The investment environment remains absolutely terrible.
There are some very significant headwinds:
-Inflation is almost out of control. The one thing we have not seen yet is significant wage pressure. That is what creates an inflationary spiral. I don't think it is a good bet that it won't happen. Train workers in the UK are on strike right now demanding an 11% raise. The same thing likely to happen here.
-The Fed is hiking rates from extremely accommodative levels. More importantly, it is shrinking its balance sheet. The spreads on mortgage securities have blown out as a result. The Fed has been the biggest buyer of that stuff for over a decade.
-Powell basically told us yesterday that nothing that has happened yet is particularly worrisome to him. 20%+ down in the S&P, mortgage rates exploding, etc are not even on his radar. The Fed is going to continue to hike rates aggressively to try to get this situation under control. In the past, the Fed could be counted upon to bail out the stock market. This will not happen with inflation at these levels.
-So far, the decrease in stock prices has made forward P/E ratios look less insane than they did before. This is an illusion. Given the backdrop discussed before, it is only a matter of time before the estimates of future earnings get slashed by Wall Street. When you lower the denominator, it has a huge effect on the ratio.
- Russia and Ukraine are at war, impacting energy and food production.
- China's zero covid policy means that there is always a risk that significant parts pf that country will shut down randomly and inconveniently.
On point. The equity market for some of these stocks don’t match their balance sheets or future
orders. A reconciliation is long overdue. Say goodbye to companies like Robinhood and Carvana and others. And all SPACS are likely history. And let’s not forget Bitcoin, they are history. Billions lost with that investment.
So many businesses have no business potential. They exist only 'cause of cheap money of 0 rate. But
They're just relatively small bubbles this time. The bigger issue is in that Fed paper.
We are about to pay a terrible price for Profligacy and corrupt mismanagement by the Deep State
My advice (take it or leave it): Sell your equities and put the proceeds in 2 yr US Treasury Notes (Yielding about 3.4%) and hold onto your Hat. There will be unbelievable bargains before this carnage is over.
I think we would all do well in following your advice.
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Cramer is blaming the unvacc'd and Ukraine. In other words, the Fed/D.C. are never wrong. They are
Wall Street's best friends. The stupid unvacc'd flyover rubes and Putin caused this.
The geezers we saved from COVID may wish we hadn't.
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Link: https://www.cbsnews.com/news/stocks-drop-retirement-savings-401k-ira-3-trillion-2022/
Maybe but there are companies that will sustain through this recession. Invest in what you buy.
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Going to be brutal. Any serious posters here, left or right, if you understand this new paper,
You'll know what's going on with our economy. This paper is driving Fed's policy change. The MSM is too stupid to understand this paper.
Link: https://www.federalreserve.gov/econres/feds/the-great-inflation-of-the-1970s-and-lessons-for-today.htm
The first COVID relief was bad but necessary. The second was abominable.
The second is fully on the Dems. The BBB would have been End Game.
You can’t print that kind of money without causing this type of inflation. You can’t.
This is ALL on Biden and the D’s. Biden has been consistently on the wrong side of decisions his entire pathetic career. He outdid his incompetency here. Bless JoeManchin for saving us from even worse.
The pandemic and the war in Europe, gave the president’s, Trump and Biden, orders to congress to
print money to get us through this mess. Both parties are to blame. So now the debt is due. We are in a space we haven’t seen before. It will take leadership. Unfortunately our president is too feeble to explain how we got here and how much suffering we must endure to get us back on track.
But I’ll say this. We have discovered that we need to make vital goods and manufacturing in the US. So through the struggle to get back to balance we have learned that. Including major companies. It’s no longer cheap labor it’s about supply chain.