Almost ten years ago, Seth Meyers and Amy Poehler, did a segment on SNL’s Weekend update entitled “Really”. Always seeking a sarcastic basis to understanding the irrational reactions of trading today’s markets, over time I’ve collected a few recent gems verifying that insanity remains prevalent. At times, how the markets react to published news is not just irrational, it’s ludicrous. Given the influences of the newly minted on-line traders in conjunction with the algorithms of the “big boy” traders I’ve succumbed to the belief that what’s expected is more than likely not to happen. In other words, if you think a normal reaction to what you observe is logical, take the opposite position.
Realizing that few people have my historical background, or memory leads me to believe that everyone is living in a “karma” driven world; “don’t worry, be happy” seems to be an inherent theme reverberating between their ears. Maybe they’re right and everything I’ve experienced and learned should be thrown out but . . . REALLY . . . I don’t think that’s the case. So for at least the next few paragraphs, sit back and let me ramble like Seth and Amy did in what I call . . . “REALLY”.
Apple released it’s earnings last week. Apple missed on revised lower estimated profits, revenues, iPhone sales, issued no guidance and more. Apple’s stock price rose 4% . . . REALLY . . . What’s next, production increases to exacerbate decreasing demand? Face it folks, in order to buy Apple’s newly introduced portfolio of products you’re going to need to dig into your IRA, something that people are actually starting to do . . . just to buy a dozen eggs . . . REALLY . . .
The Non-Farm Payrolls number beat, it tripled estimates and the markets, after a short lived dip rallied. This one is a double . . . REALLY . . . An increase of this nature is only going to fuel the Fed continuing to raise rates then keep them higher for a prolonged period of time . . . REALLY . . . does anyone think that higher rates for longer periods of time will spur growth? I guess the market does; I don’t. In addition, how can a governmentally bolstered estimate be so wrong? Are they “cooking the books” to make Biden look better when he issues his publicly incoherent statements having no veracity as well . . . REALLY . . . Is Hunter putting these estimates out using his painting straws and a Ouiji Board . . . REALLY . . . you’d think there was better basic information available but I guess not.
Unemployment is at 3.4% and wage increases are not keeping up with inflation. What’s going to happen when China comes back on line and oil prices increase. Worse, what is going to happen when trade and tariff fallout from the “Balloon” incident further depletes the supply of everything from over-the-counter drugs to fertilizers from China flowing into the US? Do you think prices are going to go up or down? . . . REALLY . . . we have an administration that doesn’t know its left foot from its right. . . . REALLY . . . inflation and subsequent interest rate increases are deeply embedded in our economic system; hope you realize our actions, or lack thereof are to blame but remember, “saving the planet” is at the forefront of today’s executive branch . . . REALLY . . . let’s hope their decisions leave us with something viable to save.
Earlier this week, digging deeper into the monetary flow of capital revealed a precipitous drop in real disposable income. REALLY . . . it fell over $1 trillion in 2022. This is the second-largest percentage drop in real disposable income ever, behind only 1932, the worst year of the Great Depression. Consumers are depleting their savings. They’ve already burned through their “stimulus” checks received from 2020 to 2021. . . . REALLY . . . credit card debt continues to grow while savings plummeted $1.6 trillion last year, falling below 2009 levels . . . REALLY . . . and only a few noted economists even took the time to report the data. Like mentioned above, it’s time to hit your 401k and related retirement plans . . . REALLY . . . it’s a good thing people don’t have access to managing their own Social Security assets . . . they probably would have lost that money buying Bitcoin . . . REALLY . . .
As consumers continue depleting cash reserves, borrowing costs are rising. The growth in consumer spending keeps slowing. Since consumer spending accounts for roughly two-thirds of GDP, this doesn’t bode well for the economy. . . . REALLY . . . Just how much pain is the consumer feeling? . . . REALLY . . . The average family has lost about $6,000 in annual purchasing power under Biden as prices have risen precipitously; far more rapidly than wages. . . . REALLY . . . increased annual borrowing costs have increased by $1,400. . . . REALLY . . . how long can the average family survive with effectively $7,400 less in their pockets? . . . REALLY . . .
Don’t pay attention to that man who doesn’t even remember what Top Secret Documents he has and where they are. . . . REALLY . . . transparency no longer exists today other than what’s disappearing from your paycheck; that is if y9u’re working . . . REALLY . . . if you were an illegal immigrant you wouldn’t have these problems . . . REALLY . . . you could just order room service at a swank New York City hotel. . . . REALLY . . . The last thing America needs now is more taxing, spending and regulation by the federal government. We need to follow the winning formula laid out by President Ronald Reagan, Paul Voelker and Donald Regan. . . . REALLY . . . they brought the economy back from stagflation. Leave Powell alone and he might do it as well but it’s going to take years.
Unfortunately we don’t have the ability to reduce taxes as Reagan did but we do have the ability to keep interest rates high for an extended period of time. The street thinks interest rate increases have ceased and will soon be coming down . . . REALLY . . . that’s what Miller thought several times in the 1970s. How did that work for you . . . REALLY . . . the result was stagflation.
Damn, it’s good to rant and rave every now and then . . . REALLY . . . While these inflated markets may head higher don’t get trapped in what some are predicting to be a soft landing. If the Congress cuts too much out of the budget, and they probably will; it’s political . . . we’re going to have an even bigger problem . . . REALLY . . . there might not be enough money in circulation to continue growing the military industrial complex so Ukraine can defend itself . . . REALLY . . . what about defending ourselves . . . from “balloons”.
Seth and Amy deserve a spot in today’s rant . . . REALLY . . . https://youtu.be/P4d-yBkrmsM . . . REALLY . . . Hope you enjoyed this post. I’m just a young 67 years old; my Dad became a broker when I was 13. It’s time for me to ‘give back’ to all of you what’s in my head. It’s not always pretty but while it’s usually based on history today it’s the future I’m worried about and there are some historical reasons . . . I’m a student of The Depression . . . Allen Meltzer was too. If we’re not careful that historical period could become our future . . . economically the worst has yet to come so hang in there and continue to sit on your hands; and your money.
Remember, learning how to trade is not a sprint; it’s a marathon. Everyone learns at their own pace. If you pick everything up the first time through, great but if not email me at firstname.lastname@example.org so we can further help.