Marc Cuniberti A poll last week indicated 2/3rds of the nation think the economy is being mishandled (Daily reckoning.com).
If we keep going like this, it might soon be 4/5ths.
It wasn’t long ago, when President Trump was in office, half the nation’s populace thought he was our biggest mistake. Many argue his replacement is now wrecking the economy that Trump rescued from certain self-destruction.
It’s probably a different half of the people thinking the economy is now in the toilet, likely falling across the party line. No surprise there.
It’s almost as if it’s left versus right no matter what the issue. Certainly a sad state of affairs if that is indeed true. Seems like half of us can’t agree with the other half.
The economy indeed has some new problems. Inflation, an odd unemployment/available jobs mismatch and a supply shortage issue are the new norm, whereas before, many were complaining about the lack of a living wage and income inequality. Not that those concerns have been solved mind you. Indeed they may be worse than ever, but now with rising inflation and the majority of businesses looking for staff while also looking at empty store shelves, the economy is bending under the weight of it all.
The stock market doesn’t seem to care however, continuing its stratospheric ascent. Not that it hasn’t seen some hiccups along the way. I’ve written more than a few musings about the bipolar back and forth behavior of stocks which is making investors and advisors alike scratch their heads as they try and figure out why one sector is getting creamed while another sector might be rising, all the while reversing directions seemingly the next day or so.
It’s almost like the market is reflecting the general mood of the nation’s inhabitants, which is to saying “let’s go left, no, let’s turn right, no, let’s just stand here and think about it”.
I can’t say this is the only time I have witnessed crazy behavior in the stock market and our economy, but I must admit it’s certainly one of the craziest few years I’ve seen in a long while.
In such turbulent times, where little makes sense and forecasting a future direction of the markets seems impossible due to its irrational behavior, it’s sometimes best to lighten up, take some risk off the table and sit back and watch the show, instead of being a reluctant participant in it.
After all, we’re talking about one’s retirement savings here, and Mr. Market would just love to take some of it given the opportunity.
It is said the markets job is to fool the most people at the most inopportune time when people least expect it.
That said, one certainly gets the feeling, at least right now, that there are many more people wondering what the heck is happening in the markets and indeed the world, then those that feel all warm and fuzzy about what’s in our future.
I don’t know what the new year will bring, and neither does anyone else, but I suspect at least a few things may already be baked into our cake. Inflation will likely not go away. Indeed I think it’s going to get a lot worse. If that happens, it will cause the Feds to have no choice but to raise interest rates, which will then cause the markets to throw a hissy fit, resulting in at least some scary moments for many investors as markets may plunge in response.
Contrary to what some might believe however, the markets, once they have digested the initial rate increases, have historical precedent that reveals some upward trajectories during times of rate increases may be in order. Think of rising rates as a medicine for inflation, which eventually may improve the economy’s overall health and wellbeing. This may translate into higher stock prices in late 2022 or beyond.
Although no one can predict which way the markets will go, like clouds indicating a chance of rain, certain symptoms and events occurring now could lead to changing economic weather ahead, which will likely add even more uncertainty to an already uncertain market.
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 Marc at (530)559-1214.
Photo by Mario Heller on Unsplash
