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 $10/hr or less pay rate and everyone else scale up from that. To achieve this goal government requested a sell off to wipe the market of retail traders, to force them back into the working economy. As the economy adjusts to new labor, pay rates will drop until their eventual return to expected normal. This will take many months, maybe a year or two. The social protest will lead government to "punish" market makers by requiring a return to trading fees (remember those?) and return the market to a more conservative veneer of professionalism. So when do we know when it is time to return to the market? Look for higher employment numbers, lower pay packages, lowering inflation, a fall in the used car and the real estate markets. These are all precursors to a swamp being drained, just not the expected one. While none of this matters to the hardened pro or post pro traders who make money either which way, investors will be in the dumpster for possibly a couple of years, although America has always shown to be dynamic and able to rebound faster than expected. But don't be fooled by fake rebounds.
The gigantic reset is about to unfold, anyone who believes any of this pricing in any and all asset classes better wake the fu$k up because the reset is going be truly spectacular, it hasn't even begun to unwind just yet. But when it does its going to be a major milestone in economic history.
i agree with your prediction, however, i think there's one important caveat; you're focused almost entirely on US markets. Savvy stay-at-home traders can look for whichever asset classes are headed back up. for instance, the long sell-off/correction/crash of chinese tech stocks may already be over and start to head up again. or oil, commodities etc. everyone will be looking for a safe place to put their money while US equities correct, and once that trade is identified, money will be made. I'm sure there will still be some highly profitable investments this year.
Keep something in mind - if the Fed's mandate is now to effectively "crush the stock market to force unemployed dishwashers back into the workforce," the fallout from that destroyed stock market wealth may kill those dishwashing jobs altogether....so then you are left with a crushed stock market and a depressed labor market. Any Fed official who thinks were are going to have a stock market -40% lower and still have 4% unemployment is kidding themselves. I think the major problem lies in the fact that our policymakers mistakenly thought the economy was something that could just be flipped on and off like a light switch, and that we could smoothly transition from lockdown to back open. Making this worse, is that most of the world has been in some form of rolling partial lockdowns for the last 2 years.....when does it end? We are not told. In Europe you still cannot walk into a grocery store without a mask. Christmas markets were not allowed this year. In the USA, my two nephews have *both* been sent home 3 times over the last year since their school re-opened, because one of the two of them had a cold in the classroom. They were required to be home for 4 days each time, and could not return to school without a negative PCR test. Let me ask you....how many parents in America can leave their homes and go work a job with that much uncertainty about their children's school status? And to do it to make $12 per hour a dishwasher? Forget it. There is no point in leaving the house with that type of uncertainty. And these types of COVID micro-disruptions are still occurring every single day, in nearly every industry, in every country in the world. Sure, things may seem completely back to normal in Florida, but that is not the case globally. You want normalcy? Get a 500 million doses of a working COVID anti-viral drug shipped globally, and lift every single restriction and let people live their lives.
I don't think the economy would be affected much by a transfer from gambling wealth to paycheck wealth, particularly if it helps reopen businesses that can't find labor. When your payroll cost drops 30 to 50%, your profits margin increases and /or you can add labor to payroll, both good outcomes.
Dishwashers are being paid $30/hr because nobody is working because Biden is paying them more money to stay home and watch NetFlix or this new show on Youtube which is awesome: and there is no robotics to replace them. What needs to happen as I have said again and again and again and again and again and again in other threads is 1) stop the stimulus payments for people to get off their a$$ to go back to work and 2) invest in the development of robotics as much as the country can asap. Hiking up the interest rate without the increase in productivity is going to just create a huge liquidity crisis and produce possibly a recession.
Memories of how some traders posted on here in 2009/2010. Here's the reality the "problems" of today are far less daunting then they were back then and markets and the economy came out fine.
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.
Like in 2009 right ? Almost 13 years later you still post the same shit. There was a major reset in March 2020.
Time for a Biden tax cut and reopen that pipeline too. Ceiling of opportunity is too low. Just say NO to communism this November.