Bassman: This Is ‘Let Them Eat Cake’ Economics
This rhymes with our present-day financial aristocracy arguing over which First Cru French Chablis is best paired with the grilled Hiramasa at Le Bernardin while the average American civilian is struggling over the decision between asada or pollo at Chipotle for date night.
A Commentary by Harley Bassman
Much ink has been spilled over the years by the erudite punditry detailing two different types of Inflation. The first is driven by excessive money creation, a concept advanced by the Nobel p
McCullough: When economies slow into what we call “Quad 4,” governments intervene. Quad 4 is when the year-over-year rate of change of growth and inflation start slowing at the same time. Our Quad 4 call this year is for a drastic slowdown in earnings growth, which is driven by growth and inflation slowing at the same time. One hundred percent of the time when the Federal Reserve tightens in Quad 4, the U.S. stock market goes down by 20% or more. We’re expecting that to happen in the S&P 500 SPX
Mr H., If my tech stocks keep plummeting I reckon I will end up in the back of the Mountain Dew and Chicken Nuggets line while Ur enjoying the Beaujolais and Cru Chablis at Le Bernardin 🙂
“But the “Great Resignation” so penned by pundits is eye candy to distract one from the real source of our labor shortage — specifically, declining immigration.” Yep. Nice to see this cited.
I would personally venture that our current immigration policies are limiting new home construction just as much as inflated lumber prices are. At least in the Southwest.
I noted on the news tonight that seniors who had retired and now, because of inflation, realize they can’t afford retirement are going back to work and figure they’ll be working until they drop dead. But i doubt if they’ll make a dent in home construction.
and the answer for the below average 7 figure investor is…. cash?
i-Bonds. But you can only buy $10K/yr.
I don’t thinkany of this should come as a surprise. The one unknown is whether our proxy war with Russia expands to other countries, and whether we have higher and longer lastiong inflation- which would come from supply chain disruption, ag issues, and yet higher energy prices. I think the only argument we should have about immigration is who do we need to come here- do we need more knowledge workers, do we nee young people for construction, etc. Don’t forget we have oligopolies in a lot of industries, and that is a factor too. Last comment- financialization of the company optimizes things to benefit asset prices and the financial industry. So that plus the tsunami of money since 2008 explain a great deal.
It may be a chart-crime interpretation, but when I squint at that first graphic from Bassman, starting around 2010 I think I see a little more than a 5:1 relationship between global stock/bond values and combined central bank balance sheet assets. The most recent peak in total assets on the US Fed Reserve’s balance sheet was April 13th at ~$8.965 trillion… the downhill ride may start to get rough
“stocks and bonds will move in the same direction. This will hurt the standard 60/40 portfolio and totally crush levered Risk Parity strategies. You have been warned”, he seems a bit late with this warning.
A combined 185,000 more deaths in 2020 and 2021 in the 25-54 age groups are contributing to the labor shortage.
https://www.calculatedriskblog.com/2022/04/lawler-more-on-demographics.html?m=1