I can’t.
Ok, I can, but it’s really, really hard.
Suffer Wall Street strategists’ pretensions to concern for inequality born of financial asset inflation, I mean. That sort of thing’s difficult to entertain.
If you work on Wall Street, even in the research department, you’re making multiples (many multiples) of the median national income. The very existence of your profession — the profession of getting paid half a million dollars a year to “strategize” about asset prices — is an insult to regular people, who get paid a tenth of that to put out fires, teach school children and pick you up in a hospital wagon when you have a minor heart attack after overdosing on red meat.
That’s the way we’ve decided society should be ordered in America, though, and in case you haven’t noticed, it ain’t really workin’ out. Not anymore. People are furious about inequality, and about a lot of other things besides. Donald Trump says he’s going to fix it, but so far in his second coming it’s fair to suggest the people who’ve benefited the most financially from his return to office are people whose last name is “Trump.” (Imagine that.)
So I don’t know. I guess if I worked on Wall Street I’d shy away from allusions to the plight of firemen, teachers, EMTs, nurses and the like because it’s going to come across as disingenuous even if it isn’t — kind of like a guy who doesn’t vote lamenting the degradation of American democracy. (I never said I wasn’t a hypocrite. We all are in one way or another. I just said I’ll tell you when I’m being hypocritical.)
With that preamble (and let’s face it, if you’re still here after 10 years, you’re reading mostly for the preambles, the punchlines and the postscripts, not for the charts and the quotes, most of which you can get anywhere), BofA’s Michael Hartnett rolled out his inequality chart again this week.
There it is. The ratio of Wall Street (i.e., him) to Main Street (i.e., you). He’s virtually never been better. How are you doing?
I’m kidding, Mike. Not really, but we can pretend I’m kidding in the interest of keeping things collegial. We are colleagues after all. In the racket which monetizes out-of-control financialization by adding an “analysis” layer to a pile of bullsh-t.
The implication from the chart is that QE was instrumental in exacerbating inequality. That’s obviously accurate. But the QE era ended a couple of three years ago, and here we are looking at a Wall Street to Main Street ratio that’s on the verge of printing a new inequality high mark. It’s almost as if inequality’s destined to spiral regardless. If only there were a simple equation to explain this phenomenon we might be able to address it. (Narrator: There’s an equation.)
Fortunately for Main Street, it’s never been easier to participate in the casino, which is by now wide open to the general public. You don’t even have to wear shoes anymore. Just show up at the door and tell them YOLO sent you.
Traders are “positioned to front-run 2026 booms and bubbles,” Hartnett said, in this week’s edition of last week’s “Flow Show.” (There’s a joke in there. Don’t miss it. All the “Flow Shows” tend to run together after a while.) Market participants, he went on, are “confident” that the “Fed put, the Trump put and the Gen Z put” will “limit downside” for stocks and risk assets in general.
You know what the “Fed put” is. And you know what the “Trump put” is. What’s the “Gen Z put”? It’s simple. And you can think of it two ways.
One way to conceive of a “Gen Z put” is by reference to the above-mentioned “YOLO” mentality and the related notion that for Americans under 30, the odds of attaining any version of the traditional American dream are quite long, so better to spend on lottery tickets, entry-level Louis bags and “experiences” than save money for a future you don’t have.
Another way to conceive of a “Gen Z put” is… well, I’ll let Hartnett explain it:
Investors remain long risk and [that] won’t change unless and until asset allocators see inflation moving toward 4% ending 81 expected rate cuts in 2026 [or] job losses stymie the Gen Z bid for risk. Stocks and crypto are seen as their only way to maintain their standard of living.
In that formulation, young Americans aren’t gambling because they want to, but rather because they have to.
As discussed at some length here over the summer, for Gen Z the choice is increasingly binary: It’s either buy the dip or hustle. The figure below, for those of you who haven’t seen it, gives you a sense of the side hustle ventures Americans are pursuing these days to augment (or even replace) their pitiable incomes.
I’ll say this for day trading: It’s not the riskiest venture on that list.
All else equal, most young people are better suited to dip-buying than hustling, and certainly to day trading over any kind of hustle that’s likely to be meaningfully lucrative.
But hey, if you decide to go the hustle route, I can give you a couple of suggestions on how you could finesse it. 1-900-Hustler. Call today. It’s not toll free.
I don’t want Donald trump or anybody fixing inequality. There is nothing wrong with people wanting to get ahead. Ahead of who? Everybody else.
“There is nothing wrong with people wanting to get ahead. Ahead of who? Everybody else.”
Correct. Except the vast majority of people who make that claim only make it in the context of a rules-based system that habitually privileges one group of people over all the rest.
There’s nothing essential about that system. Nor about the rules that govern it. The system and the rules are arbitrary. I doubt seriously that most people who make absolutist claims about the inherent “rightness” of the human impulse to “get ahead” would be willing to make those same claims outside the system which protects them from encroachments by “criminals.”
If there’s nothing wrong with people wanting to get ahead — if that’s the maxim and we’re actually committed to it, as opposed to committed to it as long as we’re in gated communities and protected by the government’s monopoly on coercion — the person who robs you at gunpoint or swindles you with a Ponzi scheme is not only not wrong, but in fact a paragon of rightness.
I’m completely fine with that state of affairs. At least it’s consistent. How about “everybody else?”
Good old scarcity mentality that is foundational for sapiens and buried in our subconscious.
If you’re actually committed to the maxim but not to consistency and truth, you get the human condition: people doing well say the system is good, the poor say a revolution is needed, priests say their religion is best, those who exploit find ways to justify it and the exploited come up with theodicy, and no matter what is said either the elite benefits or is overthrown and a new elite benefits. We humans are great at keeping the process on a semi-conscious level so we can say what benefits us but sound like we speak from first principles.
Reading Sorkin’s “1929”. Sometimes history rhymes.
First of all, I’ve sort of lost count on the number of years, but I still fondly remember your posts in SA, especially over the final 6-9 months when you participated on that site- although, in hindsight, I recognize the inverse relationship between your personal health and the pitch of your excellent work. Was that before or within the ten year timeframe?
Your description of Gen Z is very accurate. I have 3, 20-something children. Fortunately, they don’t have to side hustle, but they are certainly using the stock market to try to financially boost their wealth in order to be able to afford a home. Otherwise, not possible.
Federal government deficit spending is absolutely amplifying the wealth gap. Eventually, the equity owners hoover up a disproportionate benefit from all dollars distributed to all levels of our economy.
Happy Halloween, H.
I started my third full time professor job in 1974. I had no idea how to start a side hustle. They just found me. I started reviewing books for publishers. Then I fell into my first job as an expert financial witness with 20 lawyer clients. Then my boss got me a five year job as a executive educator for a big oil company. That was soon an overlap with other consulting jobs, none of which I sought. Soon I was making more on the side than my wife made in her full time teaching job. The pay for all this work was saved and I live off it today. I had to report my consulting load every two years in a report to the state board of regents, not the income, just the time spent. I never missed a class for a consulting appointment but sometimes I thought I might be getting a bit carried away and I mentioned it to my department head. He said not to worry. The regents wanted to find out if we were collectively doing enough to share our skills with the public. He told me my small side hustle was bigger than the time spent by the entire faculty of the whole rest of business college. Frankly, I did much of this work to learn what others were doing and building my own knowledge base for teaching and consulting. I still consult with non-profits and review contributions to academic publishers even after 20 years of retirement. No money involved. I’ve got two reviews on my desk for the weekend. In the last 14 years I have learned more about India than I ever thought I’d know.
Dr. Lucky – loved the Board of Regents story.
My main takeaway from this piece is I may have sold Etsy too early 🙂