The economy continues to give analysts much to dwell on, as it seems like almost daily we get more news, some of it making sense and some of it not so much.
Inflation rages on and is capturing headlines almost daily. Astonishing price increases are causing consumer sticker shock at the grocery store, hardware store, gas pump, and just about everywhere else that sells stuff. Seems like everything is going up in price and by a lot!
In the face of these price increases, Washington continues to churn out more dollars to the order of trillions for a seemingly endless parade of stimulus programs. One would think the government had never heard of monetary inflation (the worst and most common kind) which is a result of introducing more and more currency into an economy. However, the rank and file of economic analysts using the word hyperinflation lately are definitely on the increase. Although detailed in last week’s Money Matters article, if you don’t know what hyperinflation is, it’s inflation on steroids and then some.
Meanwhile, record numbers of people are quitting their jobs. Some news media outlets are reporting that people are resigning to find higher-paying jobs elsewhere. That is all well and good, but likely not completely true. If it were, there would not be a massive amount of job vacancies (over 10 million) while many businesses are still struggling to fill job openings. More likely and also covered widely on the evening news are the massive resignations from vaccine mandates. The mass anti-vaccine protests don’t resemble the BLM crowds just yet, but they are definitely on the increase.
A variety of economic statistics continue to illustrate a plethora of contradictions, puzzling many an analyst. The stock market plows relentlessly higher, seemingly oblivious to any and all negative news on the economy, while supply-side shortages are causing empty store shelves in more than a few supermarkets and big box stores. Scattered reports of consumer hoarding of certain goods are exasperating the problem.
Prognostications of a stock market Armageddon-like crash is offset by other analysts insisting the stock market has a lot further to run. With violent stock rotations whipsawing retirement balances, it’s hard for mom and pop investors to know which way to turn. The buy-and-hold crowd continues to oscillate between fear and greed. One month they are hammered like the 3 week, 38% wipeout of the Dow in March of 2020, while the next 12 months saw the Dow almost double to where it is now.
Meanwhile, the crypto crowd runs amok, trading the hundreds of cyber coin versions that followed in the footsteps of Bitcoin. Stories of overnight zillionaires tempt many a new investor. Trading cyber coin is challenging. From talking with those that trade cyber coins, and in my limited experience, navigating the different exchanges that handle cyber coins are confusing and tricky. Probably a few experienced coin traders might tell a different story, but from most of what I hear, it is like the Wild West in the cyber coin arena.
In summary, the whole trading and investing climate seems a bit crazy right now. Wild speculation seems the order of the day, with IPO’s, SPACS, cyber coin, and many more asset classes bouncing wildly. This insane action is likely reflecting the trillions in money sloshing around, most of it manufactured by the FEDs and other central bankers of the world to minimize the effect of CoVid and the subsequent economic damage it has caused.
I hope it all works out somehow, but I have to admit, I have my doubts it will.
This article is opinion only of Marc Cuniberti, and may not represent those of this news media and should not be construed as investment advice nor represents the opinion of any bank, investment or advisory firm. Neither Money Management Radio (“Money Matters”) nor Bay Area Process receive, control, access or monitor client funds, accounts, or portfolios. Contact: (530)559-1214 or news@moneymanagementradio