The stock market is doing alright. Some investors are getting destroyed. And some new investors are receiving a very useful, very painful lesson.
(Full disclosure: I’m mainly a buy and hold index investor)
Still waiting for the first month of negative employment numbers.
That is when things are likely to start getting interesting. Right now we're still in the warm-up act.
We're still only just starting to pop the popcorn here.
Loans will default and we (taxpayers) will need to bail out the banks.
It’s not obvious yet because commercial leases are long and take time to wind down… and building owners are still making payments.
We are in the phase where the coyote has run off the cliff and is still hanging in mid air … soon it will plummet.
There were a few % points drop at times - but most of that was supply dynamics and supply pricing.
so much demand for commercial real estate that prices are up 24%
It's probably a good thing for the market to cool
2006 was nothing but four quarters of constant decline in housing.
We haven't seen quarter after quarter decline yet and leading up to 2008 it was ~3 years of quarter after quarter declines.
What we have seen is huge market corrections and we're now seeing healthy price corrections in real estate and a slowdown in home buying/selling. Job market still showed growth, retirement savings are down over peak, but still largely doing well over trend.
I'd be fine with consumer confidence shrinking to force pricing back down. I see gas is < $4.00 a gallon here in Austin now (yay).
Corrections are great...
The only way we'll see another 2008 is if it turns out the market was fake to begin with. The only fake market i've seen is crypto. If people back out of that, that won't hurt USD much (it could help) and if people re-invest in crypto well then they re-invest in USD for everything necessary to support crypto (markets, electricity, GPUs/ASICs so on and so forth)
They're not worried about high gas prices because they're economists and they understand that commodities prices are cyclical and act as their own brake on the economy.
They're worried about the wages.
Those aren't going to come down without significant pain.
I'm voting against any of my Congresspeople who vote for the bailouts. Let them fail.
I don't see any areas of the economy where there will be wide spread layoffs besides crypto markets and even then, those people will be swallowed up elsehwere.
oil was over $100/bbl from roughly 2010 through 2014 but the economy kept on going just fine.
if people have jobs and have some discretionary income they can ride out the pain of higher prices through deferring spending. the middle class certainly can do this. its the people who are quite literally paycheck to paycheck who fall behind and wind up making poor choices like payday loans who are really going to be feeling substantial pain right now.
and i don't want to sound like i'm entirely discounting that, but crank unemployment up to 10% and it is going to be those people who wind up even worse off and possibly unemployed and homeless. it can get a whole lot worse for everyone right now.
and yeah, the already comfortable people still feel pretty comfortable at this point and aren't feeling a lot of pain, other than maybe the family has to stick with old iphones this year or something. the economy is objectively much worse when those people are losing their jobs and houses than when they're not. which does not deny the existence of people at the margins of the current economy that are being more severely hurt by prices.
Depending on what stat you look at, the % of people living paycheck to paycheck is actually pretty large, and only getting larger as prices go up, especially in rent/homeownership space.
But...the labor market is showing some great resiliency, so if that initial domino never falls, we might be able to skirt through with minimal damage by keeping confidence high.
The third sentence I think is wildly optimistic. The whole problem is the overhang of jobs and the labor market. What they're really worried about is baristas being able to job hop to find better wages just like SWEs have been able to. The Fed have openly talked about this, the business pages talk about it openly and Musk and Zuckerberg are both almost cheerleading the effort to start punishing workers that they think have had it too good lately.
And that is just going to take economic pain and negative employment numbers. And all the talk of a soft landing for the past few weeks is the same language that was used in 2007. They don't actually have any kind of surgical ways to cool off the economy, what winds up is that they crash it. When they do the proverbial "tides goes out and we see who has been swimming naked" -- which means that structural issues in residential and commercial real estate will be exposed. We never really regulated the banks with any teeth in 2008, so we can assume that people out there are making stupid bets on the economy again which are going to go against them (the 2008 crisis actually proves that the people making those stupid bets will not suffer any personal consequences, so it's reasonable to assume that will happen again).
The Fed will have to continue to raise rates until the labor market fails. At that point shit should get very interesting.
I remember a time in the late 90s when “bad news was good news” - which is to say, bad economic news portends looser monetary policy… which has been the driver of higher equity prices.
Not saying it will work that way but …
Zoom is still 80% higher than it was at the start of 2020.