 "The Beatings Will Continue..."“The beatings will continue until morale improves!” In normal times, Captain Bligh’s quote is pretty funny. But these are not normal times… The S&P 500 has lost $5 trillion of value since the February highs. Yep – one month. When the low was hit back on March 13, the sell-off held the dubious distinction of being one of the fastest in American history… It also holds the even dubious distinction of being almost entirely self-inflicted. No planes were flown into buildings by terrorists…no subprime time bombs blowing up banks…no global pandemic… Just a strange plan to level a playing field that already tilts America’s way. There’s a reason that the U.S. is the wealthiest country in the world, there’s a reason that U.S. corporate earnings are the envy of the world and the S&P 500 is worth several multiples of any EU index… Even though that $5 trillion wipeout has narrowed the spread of American exceptionalism a bit… Today’s beating is courtesy of a seemingly intractable promise of 25% tariffs on auto imports, which is to say, all cars sold in America. It’s as if no one is aware that jobs in American auto manufacturing are at a 34-year high… If car prices rise from the current average sale price of +$49,000(!) to account for the added costs of tariffs, demand will fall and jobs will be lost. If GM and Ford are not “allowed” to raise prices to protect the bottom line — as is their prerogative as members of a capitalist system — jobs will be lost. Not sure how this leads to improving morale… The administration has said openly that its economic plans will cause some pain. I guess that means the beatings will continue… It’s dangerous to mess with the economy’s on/off switch, flipping it back and forth on a whim. The American economy is fundamentally leveraged to spending, to interest rates, to lending, to investment and 401k plans, to supply chains, to earnings growth, and to confidence. Start shaking those leveraged foundations, and there will be the equivalent of margin calls… Morningstar estimates that through funds, direct investment, and retirement plans, the Baby Boomers own 80% of the stock market. They’ve obviously had a great run. I wonder what their pain tolerance for the beatings is? At what point does a person think the best thing they can do for their own morale is to ditch stocks for a money market fund? There’s no flipping the switch on that margin call… Cheers, Briton Ryle X/Twitter: https://twitter.com/BritonRyle You Might Also Like: SILVER! https://www.outsiderclub.com/silver-breaks-out-3/ This Starts on Tuesday https://www.outsiderclub.com/is-the-fed-pumping-gold/ Housing Market Bad https://www.outsiderclub.com/housing-prices-down-inventory-up/
|
Jumat, 28 Maret 2025
"The Beatings Will Continue..."
Langganan:
Posting Komentar (Atom)
Tidak ada komentar:
Posting Komentar