On crappy earnings and lowered guidance, many of these highflyer stocks kathoomphed -70% to -85% from highs last year.
By Wolf Richter for WOLF STREET.
As consumers shift their spending from goods sold by retailers, to services, the miracle-stimulus-fueled demand for goods is reverting to pre-pandemic trends. Demand for services, which had collapsed during the pandemic, has been rising toward pre-pandemic trends. And the stocks of online retailers, after the hype and hoopla for them during the pandemic, are now getting shookalacked.
A slew of online retailers reported earnings over the past 24 hours, and lowered their outlooks, and what had happened to Amazon [AMZN] is now happening to them too.
Amazon had plunged 14% on April 29 after reporting a big loss, the slowest revenue growth since the dotcom bust, and rip-roaring expenses, topped off by nauseating guidance. Today, Amazon dropped another 7.6%, to $2,328.14, back to April 2020, and is down 38% from its high last July, despite all the financial engineering (a 20-for-1 stock split and mega share-buybacks) announced in March in order to stem the decline by then already under way (data via YCharts):
Wayfair released its earnings today. Revenues plunged by 13.9% from miracle-stimulus Q1 last year to $3 billion, after having already plunged 11% in the prior quarter. The count of active customers plunged by 23.4%, it said. It disclosed a huge loss of $319 million.
The only year the online retailer of furniture and home furnishings ever made a net profit was the stimulus-and-lockdown-miracle year 2020. Over the past five years, including Q1 this year, it lost a total of $2.0 billion.
Wayfair was one of the mega-beneficiaries of the stimulus-and-lockdown-fueled binge by consumers to buy all kinds of goods online, to load up with stuff and to spruce up their homes, given that they’d spend so much more time in them.
In response to this mess, and in delayed response to the Fed yesterday, and in response to the ridiculous share price during the pandemic, Wayfair shares [W] kathoomphed 25.6% today, and 80% from their high in March 2021, to $67.49 a share, a figure first since in June 2017 (data via YCharts):
Shopify, the Canadian ecommerce platform, reported that its net income plunged by 90% to $25 million, but at least it’s still making money, unlike some of our other heroes here, such as Amazon and Wayfair. Gross merchandise volume grew 16% and revenues at its Merchant Solutions segment jumped by 29%.
But it lowered its outlook for revenue growth, and shares [SHOP] plunged 14.9% today, to $413.09, down 77% from their high in November 2021. And back to August 2019 (data via YCharts):
Etsy, the online crafts marketplace, reported that revenues rose only 5%, and net income plunged by 40%, but at least it had a net income. And it gave disappointing guidance, oopsiespalooza.
Etsy’s shares [ETSY] got shookalacked, -16.8% today to $90.93, and -71% from the high in November:
eBay, which has been mildly profitable for years, last night reported a net loss of $1.3 billion – compared to a net profit of $568 million in the quarter a year ago – driven by a loss in its stock holdings. It reported a 6% decline in revenues, with gross merchandise volume down 20%. And it lowered its guidance. Shares kathoomphed 11.7% today, to $48.04, are down 41% from the high in November 2021.
Other online retailer startups got thackamuffled too.
The Honest Co., which was featured in my Imploded Stocks in March, plunged 10.5% today to $3.85 and collapsed by 84% from its high May a year ago:
Chewy [CHWY], the online pet-food retailer that rode up the pandemic stock-jockey fascination with pets – plunged 10.8% today to $29.00 and by 76% from its high in February 2021:
Stitch Fix [SFIX] dropped 3.8% today, to $10.27, bringing the collapse since the high in June last year to 85%:
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GBTC Bitcoin fund trading at 25 percent discount to NAV…….
How do you interpret this?
SPX breaks below 4000 over the next few weeks. 3850-3950.
Then takes off to 4400-4500 by October, before another correction…then breaches 5000.
Lol. You dreaming.
I expect it will stay around 3500 up to end of year.
I think your both wrong. The SPY will pass through the three support levels on it’s way to 240. Of course I have been wrong for so long that I’m being referred to in negative terms, ie an economic outlook downer.
Lauren, honestly I don’t quite understand the underlying mechanisms well for GBTC, but as I understand it, GBTC is a trust / fund that “solely” invests in BTC.
Which I assume means it is a tossed salad / blended smoothie of BTC purchases over a period of time thrown into a single fund that you can buy and trade on.
They charge a 2% fee.
I don’t really understand why or how anyone would want to invest in this, since it makes more sense to just buy BTC outright (if you are buying) and forego the fund structure and the 2% fee.
It is shocking and concerning that those who bought into the fund would be willing to sell at a 25% discount to get out of the fund.
Smells extremely fishy
When you invest in a fund you own shares of the fund, not the underlying assets directly. The fund shares are a derivative of the assets in the fund. This is how you can own crypto without having to disclose you own crypto.
Petunia,
Thanks for the clarification. That layer of abstraction is weird to me. Why not just own the asset outright? Same with REITs. I don’t get why people want to abstract themselves away from assets AND pay a ridiculous management fee on top of that?
Also Petunia, curious your thoughts on why/how the specific instance on GBTC could result in 25% under NAV. That is bizarre to me?
PG,
In general, funds have many opportunities to arbitrage between the real value of underlying assets and their own share value. They must maintain an orderly market for their shares which means there must always be a bid. The bid doesn’t have to be good but there has to be a price at which the shares trade. This is just one reason, there are many more.
Maybe they hold large positions bought cheaply, are buying in weaker currencies and selling in stronger ones, taking a hit on their fee income, etc.
It’s a whackadoodle dandy
market. It will recover when the kathumping recedes.
A “massacre” indeed. WOW. Easy come, easy go.
Etsy come, Etsy go…
LOL
Will take a bit to remember your new vocabulary, but thanks for the inventive imagination!
Heh.
bismillah no, will not let you go
Enjoying the Wolf neologisms.
Some suggestions:
thunkawompled
smattercrumpled
levaflomped
foompaflounced
schnorgleclomped
neologism – hey, I learned a new word… which means “a new word, expression, or usage.” The English language is so rich. Here are a few of the collective nouns for groups of different animals. So necessary to know. Cannot just say “a group of.” I’ll just go to “C”:
Apes: a shrewdness
Badgers: a cete
Bats: a colony, cloud or camp
Bears: a sloth or sleuth
Bees: a swarm (Hey, I knew that one)
Buffalo: a gang or obstinacy
Camels: a caravan
Cats: a clowder or glaring; Kittens: a litter or kindle; Wild cats: a destruction
Cobras: a quiver
Crocodiles: a bask
Crows: a murder (Hey, I knew that one)
Cats: a clowder or glaring – oops, knew that one, too.
Winston-gotta herd them, first…
and (as ususal) an unrelated query-are we seeing a shift in the relative antidepressant values of goods vs. services???
may we all find a better day.
how about :
a carvana of used car salesmen
a chewey of dog food companies
a wayfair of dying retail companies
…..hey this is fun
Somewhere there is the spirit of some Englishman who is laughing his ass off who made up all these collective names, watching people use or not use these meaningless terms.
You should have known you had a huge problem when Chewy, an online dog food fot up to nearly $120/share. What a joke.
Law-misread their dogographics…
may we all find a better day.
I’ll be curious to see how the service industries surrounding outdoor rec will do after they got turbocharged by the pandemic. Especially now that people are headed back to the office.
I am a member of the REI coo. And it seems that the last two months, I have been bombarded by email notifications for: Sales, “Outlet store savings,” and “REI Classes and Events”.
There have been three such emails sent to me in the last three days alone.
zots, I think you are onto a trend here.
Speaking of trends, South Minneapolis street-talk for “terminate with extreme prejudice” is, “I had to earth him.”
To these stocks that continue to bleed money and shrink revenue, I say: “Theys gonna be earthed.”
Don’t worry about REI – they’re doing well. I know, because I single-handedly support them with all the camping crap I buy. Plus they have almost 30 million members. They’re opening several new stores, one in my hometown (Glenwood Springs).
Dan R. – pity the poor electrician from the UK who finds himself working in the Twin Cities…
may we all find a better day.
REI may be ramping up its marketing to the underserved soon-to-be-homeless demographic group.
Shopify is down 77%, but Maradona world cup 1986 jersey was sold for $9.3M, the highest ever.
The best dribbler. The best anti parabola kicker. Hand of god.
AAPL, MSFT COST TSLA up next
Valuations matter now.
Have not looked at COST, but good list.
Amzn is a bit oversold now; sold my puts a bit early.
Generally, today felt like capitulation, but the lows from few days ago held more or less. Perhaps temporary local buttom is here. Holding longer term Tesla and Apple puts, among few others. Just for fun bought two calls today on triple-long Nasdaq 100 -TQQQ.
If today felt like capitulation, you have not experienced capitulation.
“Perhaps temporary local buttom..”
Today reminded me of when I had our septic tank cleaned out after 5 years of use. A big hose sucking out tons of crap!
Today neither felt like or was anything remotely close to capit……..I can’t even say the word yet, we are so far from it. When it finally arrives after a long journey full of jagged moves and head fakes, it’s going to be glorious.
No one is jumping out of windows on Wall Street yet. That’s when you know…
Tesla is the only stock not caught back down by gravity of earth
FANGs high flying – are getting back to earth
soon, toonces is the driver
I hope Jeff Bezos doesn’t come back down to Earth from space as fast as his stock is, it might hurt.
let that guy fall
ace: He knew when to leave didn’t he?
He may have to sell that new yacht!
AMZN is still 40% higher than in Mar 2020.
There’s still confetti in the streets. No blood.
A few more marriages and divorce settlements and he’ll be driving an Amazon van for his 5th ex wife’s company.
Eventually fundamentals always matter. The government giveaways masked the zombies for the past 2 years, but they are now swimming naked. Carvana got lucky to sell their $2.5 billion of junk bonds last week at a10% coupon.
Amen. Also, diversification may not be as great an idea as I was told at business school. LOL. I lost almost 25% in EU stocks so far this year. I foolishly thought that the EU did not have prices as inflated as the US, and invested in companies that I only researched briefly. Of course, these stocks may go down even more if the embargo on Russian oil extends to gas later on this year due to even more and worse atrocities.
Some EU stocks may look relatively “cheap” (although when you look under the surface they usually aren’t).
However, even if they were cheap, I always ask myself: “Would these EU stocks really hold up if the US stock market were to crash?”. The answer is: “NO”. Usually when the US market declines sharply, the EU markets simply follow, regardless of valuation.
For that reason I always look to a broad US market (mainly the S&P500) for guidance. If I think it has a lot of downside, I won’t buy EU stocks either, even if they look relatively inexpensive.
I wonder what Jim Cramer will say tomorrow morning on CNBC when he has to explain why every recomendation he has made in the last 6 months has been wrong. He manages a charitable trust and runs an investment club. All you have to do is scan your Iphone to join the club. His charitable trust is off 20 to 30% YTD. Time to get a new manager and fire this clown.
Firing is too good for the squamulous laggard.
Former hedge fund manager,he’s also a growth guy .Worth 500 million he’s smarter than u think ,in a deflating market all assets fall
Then you take the short side of the trade. I think Cramer should know how to do that
During the dot-com bubble when he was running that hedge fund and simultaneously posting about it on thestreet.com, he was surprisingly approachable via email. I had some chats with him.
Except cash.
It is simply survivor bias. In hindsight, everybody who was a permabull in the past 2-3 decades will have done extremely well. It doesn’t mean they were smart.
Buy Buy Buy something. Jim Bob Cramer repeats it in his intro to every show. “There’s a bull market out there somewhere and my job is to help you find it”. So it’s Buy Buy Buy, something.
Of course it’s about what’s easiest and most profitable for them to sell, not what’s the best investment. Mandatory positivity.
CNBC isn’t financial advice, it’s the adult equivalent of storytellers who spin entertaining tales to get the attention of children.
CNBC is a buy platform. Not a sale one.
I get a kick out of watching the main narratives get a massage so as to explain whatever is going down or up!
Tudor Jones says it ain’t necessarily so but I bet he’s buying something. Oh these talking snakes! Must be nice to have a soapbox to send us credulous folk down blind alleys.
this is basically correct IMHO DD,,,
THE challenge is to find out or figure out WHERE.
In the past couple of centuries, JP Morgan and many others had a very clear advantage because they HAD a very clear advantage in ”communications.”
These days, WE the PEONs have at least SOME ”mo betta” communications possibilities, IF WE will do at least SOME mo betta ”work” to follow the now VAST amount of ”information” NOW available.
Clearly, at least clearly in what is left of my ”mind”,,,
OUR WOLF does the very best job of aggregating the ”formal information” available, and I for one encourage Wolf and all folks at all interested in ”investing” to do their best to get the best information formal and otherwise, available BEFORE investing.
IOW, the availability of information is SO,,, repeat SO much better these days.
May the Great Spirits Bless us all.
VVNV-i sometimes think the contemporary speed/sheer mass of ‘mo betta’ comms in delivering the entropic bad news of the world far outstrips the general human ability to process same, leaving far too many to tune out, give up, or worse.
Thanks to Wolf, you, and all the rest of the engaged commenters here for lashing yourselves to the mast…
may we all find a better day.
Every time he comes on I change channels.
Years ago I read online where someone actually tracked his calls. Overall, he wasn’t helpful.
Google search “inverse jim cramer” and look at that performance lol
I watch Mad Money once a week and when the market is highly dynamic.
He is one input of several (Including Wolf, Dave Ramsey, etc). He has been right more times than I have.
I like that he always stresses:
1) Before listening to me or my show, put aside a conservative savings portfolio in an index fund. 10-20% of the rest can be Mad Money.
That is how I handle his advice. He has identified many companies on his show that were great investments. He has a good analysis of these companies.
2) He has been promoting profitable dividend earning companies since late last year. He sees what could be coming. However, he does not do the incredible job that Wolf has been doing to point out the irrational exuberance of many stocks in the market. ie Cramer may recommend a profitable company that is up 1000% from 2019 but never points out that being up 1000% in 2 years, and investing in it, is just extreme Madness with your Money. If he has a recommendation, I also look at PE and where they were in 2019. If the PE is over 60, they are clearly a pandemic stock, and they show irrational stock growth, then I won’t invest. Wolf does an incredible job on pointing out the underlying irrational exuberance in the market today.
3) Cramer agrees that increasing interest rates is desperately needed to reign in inflation. He made several negative comments when the last President was beating on the Fed when interest rates were dropped to 0 in 2019.
He was famously wrong in 2008 and sometimes admits it.
He has been admitting more mistakes with his travel trust this year.
He reluctantly admits that he can be wrong and doesn’t shill for companies that don’t have good numbers. That is better than the thousands of get-rich-quick pop-up ads that I experience.
Completely agree
Chewy is the reincarnated Pets.com. I see a lot of their product in the mail room where I live. I also see no possibility where their business model can be profitable at any scale. It’s a business that might (key word) be financially viable power catering to very narrow demographic segments. Otherwise, I don’t see how they can make money with the shipping costs for such low value product.
Hard to believe that even after a 78% collapse, market cap is still over $13B. A more reasonable number is zero.
I used to sell occasionally on eBay, when their fees were much lower. They are still among the cheapest options for what I have sold but too expensive. At least with the alternatives (full service public auction), the seller doesn’t have to do all the work.
It won’t surprise me if they get bought and disappear.
Augustus, totally agree with the comments about eBay fees. I used to sell old electronics and junk with each spring cleaning, but now with all the various fees, shipping costs, and having to direct link a checking account it’s hardly worth it the effort any more. I am not sure how anybody not selling fenced goods on the site is making money.
Side note: love the lingo, Wolf, for the tanking stocks. I was laughing out loud and had to read them to my wife who was wondering what I found funny.
I still sell on eBay. But it is tough to do.
-Their fees are high (13% including on shipping payments which forces you to overcharge)…
-They are VERY slow to pay (now that they don’t use Paypal)…
-They try to use their metrics to punish you at every turn…
-Plus their technology is stuck back in the 1990s… no clickable buttons to turn on/off different product categories (even Craigslist has THAT).
I can see why people are abandoning the platform.
That is what monopolistic power does (and why it is so bad)
Chewy is used by everybody where I’m currently living in SE Utah. Every door has a Chewy box about once a week (I have superpowers and know this). Like REI, I help support them with my 3 dogs and 2 cats. I love Chewy and their shipping is really fast. I think they have a huge customer base – everyone I know uses them (I only know a few people). They’re great because I can get quality pet food even in Podunk Montana and BF Utah. Their customer support is fantastic. I left a 4 star review on one of their dog foods because my dog didn’t like it (not the food’s fault, I even said in the review that my other dogs loved it) and they gave me a refund w/o my asking (why would I ask?). My friend’s dog died and they sent her flowers.
I agree that Chewy is a reincarnate Pets.com from 2001. Pets.com didn’t end well. I don’t know if shipping costs or bad management killed Pets.com.
However, pet food and supplies is a huge business. Fur babies are expensive and seem to be more pampered these days compared to 2001
I go to PetsMart or Petco and I am shocked at the prices.
You can get better deals on sale at Walmart or a grocery store.
If I notice that I am running low on cat/dog food at night, We have used Chewy for orders from the comfort of my couch. The shipping is fast and I save gas money (PetsMart is 8 miles away) and time.
The question is whether shipping individual 50 lb bags of dog food can be profitable compared to PetsMart or Petco brick and mortar stores.
Chewy knocks it out of the park with consistently excellent customer service. It’s become my online shopping benchmark. For all categories. If they sold vacation packages or tires or prescription eyeglasses or anything else, I would give them gobs more of my discretionary dollars. I mean I’d probably buy a human casket if they sold them. The market cap may be utterly ridiculous but the customer service model should be sold in courses, marketed and distributed, trademarked, stolen, copied, and studied in biz school. Even if it’s a case study of how to fail best while trying.
“ but the customer service model should be sold in courses, marketed and distributed, trademarked, stolen, copied, and studied in biz school”
So was Amazon until they got so big and popular… then the customer service was farmed out to the Philippines saving them billions at the cost of what they used to be…
On a side note, I was talking to a CSR girl in the Philippines ( not Amazon) yesterday, early am their time… she was obviously working from home because her rooster was letting the morning have it and would not shut up… she was embarrassed but I thought it was pretty funny…
Time to start another summary table…
Met the new neighbors moving off grid into the woods. It seems they will do well. The down side? Its a bad tick season. Our blood suckers are easier to deal with.
Be careful, it is not just lyme’s disease that you can get. Last July I got babeseosis, a parasitic microoranism that invades with a tick bite. It is a malaria cousin that eats your red blood cells. I was in the hospital on quinine drugs intravenously for 3 days. It is specific to the northeast and upper midwest.
I have had lyme antibodies for 10 years, and my symptoms, fortunately, were never too bad with the help of doxycycline , but babesiosis almost killed me.
I like to garden, and I have a cat, two probability raises.
My late wife had a terrible several years with Lyme plus babesia, along with several other co-infections from a tick bite in her garden here on the Maine coast. No one should have to deal with these infections.. I had malaria way back in RVN, and very unlike babesia – when they finally had a positive blood test I felt OK (if trashed) in about a day..
Ya, and not many people know about it. I didn’t before I got it.
They hide out in your liver and come back too. I had a second bout, not as bad. I had started taking a bunch of herbal remedies recommended by a MD that had wrote a book after suffering from it. Chinese skull cap, cryptolepis, bidens pilosa, andrographans
Reverting to the long-term normal is not really the same thing as a massacre.
You misread it: consumer spending is reverting to normal, stocks are getting massacred.
Amazon is also big in Europe and the UK… Try delivering parcels at a profit using UK price for diesel of $9.93 for an Imperial Gallon….(or $8.31 for the tiny US gallon.)
Tis ouch time……
So, a way to help FORCE a return to fundamentals would be for everyone to be a bit more frugal and, even better, use those savings to pay off debts?
It is for investors. And it could be for some retailers if they leveraged their temporary prosperity.
The historic problem of capitalism as practiced is that it can always provide more than can be or will be consumed – and will always need to. As high as their sales and stock prices had been, it is never enough. They will always need more. Grow or die. Reversals like these can be catastrophic. One can only guess at how many retail investors have been ruined by it.
What I’d like to know is if these firms are on the Imploded Stocks list. You’d think 85% would merit consideration. I could come up with my own list based on the concerns mentioned in articles in the IS category but it just wouldn’t be official.
“Reversals like these can be catastrophic. One can only guess at how many retail investors have been ruined by it.”
I wonder what some of the explicit stories of recent retail losses have been like. It’s very hard to come by a good sampling of these horror stories to help instill healthy fear and discipline for others.
Maybe combing Reddit threads would be an option, but in general people tend to be quiet about their losses and more talkative with wins.
As a corollary, my dad used to work around casinos and he would always quip, “They drive in fast and they drive out slow.”
“As a corollary, my dad used to work around casinos and he would always quip, “They drive in fast and they drive out slow.””
My Asian friend used to say something similar, “I go to Vegas in a $30,000 car, and come home in a $150,000 bus”.
Fly to Vegas in first class, fly home in economy. Or on a Greyhound bus. Or hitchiking.
u folks have the wrong idea about vegas:
client of dad would call them, vegas folks, at the end of the harvest, and vegas would send a plane, as in ”jet airplane” to pick him up in the vast reaches of ”flyover” where client would have sold approx. half the crop for cash:
“Vegas” would fly him both ways in a private jet,,, and he would ”declare” about half of his cash sales in ”winnings” at vegas..
Nuff said for folks here on the Wolf Wonder,,,
Real retail sales are still 10% above the 2012-2019 growth trend (which was quite linear). It had been 20% above. The huge demand shock, along with copious money-printing and sending cash regardless of need, resulted in inflation with so many more dollars / euros / etc competing for the same goods.
Once demand has settled down, and energy policies revised to remove the Biden-induced artificial scarcity, inflation should become tractable.
Things are happening so fast now. It seems like just yesterday everybody was talking about how Brick and Mortar retail was dead. Now it seems a bunch of the Online retailer’s future isn’t so bright either.
Harvey, with respect to Amazon, we have scaled back a lot of our periodic orders as their pricing is going up to over or at what I can buy the stuff locally at our Walmart. Plus, Prime delivery is not always as stated.
Their “subscribe and save” model is trash as we tried it for two years now and half the time they are out of product and we have to go to Walmart to pick up the item there, where it’s usually in stock.
Taking to my friends and neighbors tells me they are less and less enamored with online purchasing, as a general rule.
If you punch in best price,you’ll usually beat Amazon but shipping kills u
Sounds like Amazon should be sprucing up on product procurement and refocusing on its core competencies, rather than expanding into Exciting New Areas that were never evaluated properly before pursuing them, as Ambitious Managers with Good Hair are overly wont to do.
To quote: “These things must be done delicately, or you hurt the spell.”
una-just run around fast and break things, in other words (sooo much sexier and fun than ‘improving procurement and core competencies’-it allows one to (a.) dispense with actual experience (b.) make a killing in the market (c.) stand as ‘successful’ atop the smoking ruins…).
may we all find a better day.
Not too promising for FedEx, UPS and other delivery outfits too, which made a killing during the pandemic.
The shift to services impacts all durable goods retailers, including brick-and-mortar retailers. Retailers that get a big part from food sales are in a different boat.
1) AAPL. For seven months AAPL is trading in and out Nov 22 hi/ 26 lo TR.
AAPL closed > Nov 26 lo.
2) Twice the size of yesterday bar, on slightly higher vol.
3) Today low might be a test of May 2 low.
4) AAPL is under a papr thin flatbed cloud. On a 30 min chart it formed a small inverse H&S.
5) Can it be breached : we don’t know.
5) But if AAPL reach the $3T planet, SPX Jan 4 is a keystone bar. It sent the market down, tested it today, before making a new all time high.
Apple is going to 90$ my theory
agree 80, to 90 for the Fruit
“Can it be breached : we don’t know.”
You have a gift for the obvious. But somewhat less skilled at the mundane.
Music to my ears
6) May 6 $0.23 Dividend, zets why.
I think the chickens are coming home to roost with the online retailers. Have been doing a bathroom remodel the last 2 months and started out ordering supplies from Amazon, Home Depot and Lowes for delivery, to save time . Every order was messed up, toilet delivered to wrong house, things shipping a week later than promised. I finally told my wife I am done with this nonsense forever. I drove down to the old time ace hardware store and found everything I needed in 15 minutes. Larger than normal hardware store staffed with crusty old guys who know where everything is, no computer needed. As far as I am concerned Amazon and it’s Ilk can go bankrupt and sink back in to the swamp from whence they came,
But where, I ask you, will the looters and pilferers (many of them current employees) be left to shop?
Don’t forget the poor porch pirates. They’re gonna starve.
The digitally remote-scattered model didn’t live up to its promises. It first crashed with things like insurance, instant made-to-algo home sales, then car sales, now it seems little items are getting screwed up? Anything can grow beyond its optimal efficiency.
We are back to 2001 — Walmart thrives, pet.com tanked. Old guys who know things are back! I’ve been teaching business law 37 years in a classroom. The human engagement seems actually to work. The only tech I have liked is the whiteboard and colored marker. Chalk was so primitive!
Back at around 2012, I taught at a 2-year state college where an old guy insisted they keep a room for him with old style chalkboards. His way of teaching history was to:
1. Before class started, write the whole lecture on three walls of large chalkboards (with blank words here and there to be filled in).
2. Have the students copy down the whole lecture on the chalkboard when they entered class each day.
3. Recite the lecture, with the students’ job being to fill in the blanks in their notes as he proceeded with the lecture.
Since he was one of the old boy network, they let him get away with this forever.
In my experience, two-year college institutions were full of long-term folks whose main motive was to protect their job as the became ridiculously outdated through lazy repetition of the same thing they’d always done. There were situations where an older guy directly excluded me from projects out of fear my IT skills would put me ahead of him in the pecking order.
People here have commented on the opposite: ageism, including young guys not wanting to hire older guys for whatever reason. It goes both ways.
been there done that dp:
and, as you comment, many older folks who were most likely in the category of claiming 25 years experience were in fact of the category of ”ONE year of experience 25 times.”
That became very clear to me when meeting up with those folks who had NO idea,,, repeat, NO idea of what was happening in my industry, construction.
Seems like it that is very common in many industries, apparently especially ”defense” where they continue to hope to fight the next war(s) based on the last war.
Ukraine folks appear to not only understand this concept, but take advantage of it, SO FAR…
WE the PEONs of USA and other similar allegedly democratic nations can only,,, really and truly ONLY hope our leaders LEARN A TON,,, eh
There’s a great deal to be said for the Traditional Ways of Doing Things. Juicing them up with tech frequently amounts to unneeded bells and whistles that just get in the way.
Digital systems are fine in their place. The problem is that they won’t stay there. These days they’ve turned into solutions looking for problems that don’t exist so they have to be created.
It took Lowe’s five tries to get my order for cove base tile right when I renovated the master bath, so the store ended up with rather a lot of remaindered cove base tile that took them months to sell off. They lost money on my project. Between the plumbing and the tiling and the painting and the jacuzzi and various clever amenities it cost me 6k to do the bathroom, less than a tenth of what assorted contractors wanted who naturally assumed I had more money than brains. I’m persuaded that bathrooms should be tiled, not carpeted or hardwood, in porcelain tile and not ceramic. I’m a big fan of Italian tile and Mapei mortar: those guys have thousands of years of experience at such things.
Reminds me of when I was in line at the mall a while back. Girl in front of me just had to use ApplePay or whatever it is. Took forever. When it was my turn to pay I pulled out a $10. I was out of the store in seconds.
Credit card with wireless payment option would have been even faster :)
Isn’t that ApplePay?
Not exactly. You don’t have to register anywhere to have your card read contactlessly.
SC : Ace Hardware has a thing called a human. I ran into one of them in the next county buying a duplex receptacle for a repair on a chlorinator system. I have done all types of electrical work for 40 years but did not know that the annoying slotted metal pre-pinched corners I removed on the receptacles were a device gauge specific wire stripper. The human told me about it. Humans can be real helpful.
The problem (at least here) is that the good ol’ Ace Hardware is more expensive and it is my gas that I am burning.
I was in Hell-A this past week and went to my favorite lumberyard to pick up some bits for a project I was doing for a friend. Just for grins and giggles, I walked through their cabinet hardware department and found their prices frightening…. 2 – Blum 1/2″ overlay soft close hinges in a bag (no screws) were on sale for $17.29 (I paid about $3 each on the Jungle website with screws) and their price for two 18″ undermount drawer slides was (drumroll please) $189.99. I bought those for $36 a set from my ripoff cabinet shop a few weeks ago.
Those are probably dumbenough prices, but still…. (dumbenough = if you’re dumb enough to pay that price, we’ll gladly take your money)
Some of the Dollar stores are doing quite well. What with inventory build customers returning to brick and mortar, this could be a very good season for them. RTH is outperforming the SPY last five years. Fact Set put a target of 5000 on the S&P with consumer discretionary projected to be up 28%. Whew
Except that my local Dollar store (now actually $1.50 store) has many empty shelves as the junk (no pun intended) hasn’t arrived from China.
Those selves may be empty for a while. China appears to be shutting down their economy to try to stop omicron that is so contagious that it can’t be stopped. Some scientists in China must know this. Could Xi being doing this to help crash the global economy? just a “conspiracy theory”? Maybe but who knows what’s going on.
Argus-down the same lane, Charles Shaw is now ‘Three-Buck Chuck’ (my 99-yr old live-in m-i-l’s evening solace…).
may we all find a better day.
Still mostly articles that say “the important thing is to have a strategy and stick to it”. Once I see articles telling me that “this time is different” I’ll push all my cash back into the market.
Casinos love a guy with a “system”.
I honestly can’t emphasize how many people took advantage of PPP, extended unemployment, and stimulus checks. Why the stock market thought they could ride that gravy train forever is beyond me.
I remember many times standing in line at Walmart and seeing all those “disadvantaged” people with $200 Nike shoes and the mom pushing a shopping cart full of expensive items. Some families with too many kids were getting so much money from uncle sugar that they bought cars and other items that used to be luxury to them. On top of that, they were not paying mortgage or rent but their trash was full of Amazon boxes on recycling days.
Those of us who continued to work got nothing and financed the excess. The fed is killing the worker bees–they are the ones who are quitting in mass and saying to hell with all of this.
Yeah, yeah, can’t let anyone else lower on the ladder share in the windfall profit?
I work in IT and could easily wfh. I was the most productive I have ever been in my career and I probably saved over 100k – 120k. I still have that cash ready to deploy as well.
That PPP money was chump change. I made out like a bandit with my stocks, house and car going up in value. If some poor folks got a few grand and bought some trinkets, I think the overall tradeoff was fair.
Azani,
“That PPP money was chump change. I made out like a bandit with my stocks, house and car going up in value.”
PPP was legit, not chump change. Most got 10-1000x more than the stimmy checks. I know some who got millionS. Didn’t need it. So it bought Lambo-like stuff. As for your stocks, house, car…. unless you sold ’em and moved down to cheaper and drive cheaper, well, let’s just say their value is not exactly locked in.
Or did you forget the /s?
Reading the OP I’m pretty sure he meant the stimmy checks, and that was indeed chump change. Imo it was a dividend to the working class.
When it comes to PPP I also read that large franchises, hedge funds and other big companies who didn’t need PPP essentially committed fraud by applying for the program using loopholes to make it appear as if they were a “small business” on their application.
IMO the PPP was reckless and unfair beyond belief. Some small companies raked in record profits and used the PPP for huge bonuses. The stimies were chump change. It’s the PPP money that took things to WTF, and the “most reckless fed ever”.
A) Yeah, yeah, can’t let anyone else lower on the ladder share in the windfall profit?
B) I made out like a bandit with my stocks, house and car going up in value. If some poor folks got a few grand and bought some trinkets, I think the overall tradeoff was fair.
Pot and kettle meet again.
“That PPP money was chump change.”
You call almost a trillion dollars chump change? WOW. No wonder we have a math problem in this country.
Not only was the PPP program not chump change, as others have suggested it is what threw gasoline on asset and durable goods prices.
How low can it go? At some point these become a good deal. If you are going to try and time things, I guess the question is what needs to happen before the fed reverses course?
Once that happens, my guess is that all these stocks will shoot back up.
Right now commodities and commodity stocks are high on the horse, but eventually they will crash like the tech stocks.
So hopefully people have brains to take some profits before that happens….
At the end of the day, ETFs are where it’s at if you want to buy and hold and just buy every month on autopilot. Buying individual stocks as buy and hold is just dumb….
Azani,
Yes, there will be some deals, somewhere. And for day-traders, tomorrow might be a bounce.
But stocks that go to zero don’t make good deals when they’re down 70%. When a money-losing company runs out of cash, and cannot raise new cash, it’s over for shareholders. Creditors will get the company, and shareholders usually get nothing and your stock becomes worthless.
If you buy a stock for $30 that is down 70% from $100, and then it drops further to $10, you lost 33%.
And even if they eventually make money, retailers trade at P/E ratios of 10-20, not at 100. Look at the dotcom bust survivors. A few made it big, such as Amazon. Many of them disappeared and turned into zeroes. And some did 20-1 reverse stock splits to get their shares up to $5 and that’s where they languished for many years.
Yes, many people will be picking up stocks for cents on the dollar and then lose those cents. But some stocks will be deals, that’s for sure. But which? The percentage decline doesn’t give you that info.
I definitely agree with you there! Any IPO stock that isn’t generating profits will need to raise cash by issuing stocks and diluting the current shareholder base.
I guess the question is whether interest rates stay high long enough for these companies to go under or if the fed just lets the market crash just enough to scare the bejesus out of everyone.
ZH just released a very interesting article about the 30yr bond market breaking.
IMO long term treasuries are very interesting now. Everyone is piled on the bearish side of the boat.
I just can’t see how much higher interest rates can spike before serious things start breaking and the fed needs to intervene.
I’m not sure who you hang with but a majority of the middle class professionals and mid Atlantic money managers still have the BTFD mentality and it’s been hard to get my friends and family to see the writing on the wall. Advisors at PNC private client services have advised against selling anything cause “you miss the upswing “. They claim they are conservative and against the concept of even an ETF like PST let alone short selling. “Trying to preserve capital” all while discussing how DASH had a great quarter.
Bond market sentiment is bearish now but just because the FRB doesn’t want something to happen doesn’t mean it won’t anyway. I see a short-term trading opportunity too but since I see this as the start of a long- term bear market, expect any surprises to be on the downside.
FRB “put” and QE contributed greatly to this asset mania. 40YR high price inflation risks more social and political “blowback”. Neither is cost free and FRB is not going to ignore it.
FOMC has somewhere in the vicinity of 33 points on the DXY to work with in the FX markets, but they aren’t going to voluntarily trash the USD to bail out the asset markets. I read a lot of this sentiment here and its nonsense.
Many things can blow up elsewhere in the world that neither the FRB nor anyone else in the US has any control over.
Neither the FRB nor the government actually create any real wealth, so they can’t prevent declining living standards for the majority of the US population. no matter what either tries to do.
Where can I find a dictionary with such words as Woonsocket,etc.? :-)
I like woonsocket. Not sure what it means, but that’s OK. This stock literally turned into a woonsocket, LOL
A woonsocket comes in handy if something goes awry with the Thinga-ma-jigger.
Falcon, there’s a Spanish word for thinga-ma-jigger: chingadera. A bit spicy but gets the point across.
Woonsocket is a town in Rhode Island…..
Woonsocket sounds like some places I have fished in Maine in my younger years. Has to do something with the Indians that were there before we killed them all or let them build casinos.
Woonsocket, RI is the home of CVS. It is a run down mill town where the residents speak a particularly ear-shredding patois.
Back in the day it was called “catching knives”. I admit I’ve caught my fair share of knives, each one twisting my understanding of my prospects.
Thankfully I live in a neighborhood of families of reasonable means, mostly acquired by hard work.
The Trump sign doesn’t dissuade me. If the SHTF in the hood I would gravitate towards him.
The merit of our American experiment, freedom, probably lies in the ghetto.
As does the inspiration.
I was musing about history, regrets are limited to an a statistically significant slice of the current population, people that think what they are doing is normal.
Oh. we have to expand our sample size because it includes the entire population.
My personal opinion, the SPY isn’t a buy until it hit’s 2400.
But I’m definitely old school. Foolishly declining to participate in the Fed’s economic experiment in concentrating wealth which worked. I’m pretty sure that the constitution or the declaration of independence do not support the degree of incompetence, not only the Fed, but, it seems, our entire government.
In 1970 I awaited the result of the national draft lottery. Would I be drafted and sent to Vietnam to fight the commies to make the world safe for democracy.
My number was high, casting me into a lifelong guilt. Why them and not me.
The only, dumbest thing we can think of is, probably, the one that will save us, love.
A word that carries the weight of many interpretations.
But in it’s base state, it explains the reason for so much sin.
Wolf wrote: “If you buy a stock for $30 that is down 70% from $100, and then it drops further to $10, you lost 33%.”
Shouldn’t that be a 66% loss from the $30 price ?
Yes it should be :-]
If a stock drops from from $30 to $10 isn’t that a 66% loss?
Or did you mean to say it drops a further $10 from $30 to $20 a share?
That would be a 33% loss.
Just a little confused.
Regarding Honest Co, Jessica Alba’s ownership is worth less than double what the CEO got paid in 2021.
When will C-suite compensation be right-sized?
“However, thanks to volatility in Honest Company’s stock price (it closed Thursday at $4.52 per share, down from $23 per share the day it IPO’d), Alba’s stake in the company declined in value to just over $27 million, from about $130 million in the IPO.
Honest Company CEO Nikolaos Vlahos was the company’s highest-paid executive, taking home $13.8 million, including nearly $9 million in stock awards.”
Zillow just gave a dire outlook on the housing market. It’s OVER.
I noticed new listings on Zillow coming every 10-20 minutes today. For the reference, absolute numbers jumped like 5 times for the same area. Interesting.
Because Spring is the best time to sell, so the greedy ones did not sell in Winter hoping to make a killing.
Spring is over soon :)
I’ve been following for 2 weeks already out of curiosity and it really jumped only today.
Noticed more today as well. I also noticed something for the first time today. How many homes sold without ever being listed for sale and sold about a week or 2 ago. Could not figure out why one area had more sold than for sale for the two weeks- dug in and found that. Then compared to other areas. The area with more homes sold than coming on the market had the most not listed, and most of those were the same sort of tone of colors on newly painted exteriors. Looked like maybe a larger owner sold some to another investor. But also found quite a few in other areas. Just a tip in case you compare sold to for sale numbers.
How do you track that?
Their API is ptp so I’ve always skipped it.
I just use the same URL (from browser history) and do not change the browser window size. So it shows all that is visible in the same area of the map. And sorting by Newest first. Not exact, but simple and good enough to spot the huge difference today.
Do you have a link?
All over the financial news. Go to any financial site, or google it.
My little town has tons of new listings (6 in a couple of days) – the thing is, there’s usually only one a week, if that, and they sell immediately. Now, they’re starting to stack up. One even dropped the price by 50k (originally 300k, worth about 75k).
Their winderbuster’s busted.
“ One even dropped the price by 50k (originally 300k, worth about 75k).”
Do you think somebody discovered the hand pump for water out back?
It’s a crap shack, so that wouldn’t surprise me one bit. But it’s more likely they discovered the mummified body in the basement.
It went under contract today. Someone’s going to have serious buyer’s regret. I suspect there’s more to the story than I’ll ever know because it’s way way overpriced, even among the already overpriced crap here. A house down the street that’s still on the market has photos showing some kind of bird cages and reptile tanks in literally every square foot of the house. That one’s overpriced, too, but not as much, and it’s still not the market. This is a dying ex-coal mining town.
Paging Wolf, add Zillow to you list.
On Thursday, Zillow plunged as much as 13% in late trading Tuesday after a dismal outlook stoked investor fears that rising mortgage rates will spark the next crash in the US housing market.
Housing affordability therefore tends to lead the trajectory for existing home sales, by roughly half a year. According to BofA, the rates shock suggests affordability will be down more than 25% yoy by March – a record decline – with additional downside from higher home prices! If demand follows a similar trajectory, existing home sales could fall below 5mn saar by 2H 2022.
“Oh, but my home went up 20% since January according to Zillow.”
Listen to Wolf, nothing goes to heck in a straight line. All those who bought in the last two years and looked at homes as an investment (not a place to live) will be very very sorry.
Zillow is one of the original denizens of my list :-]
But in dollar terms, the 10% drop afterhours amounts to only $4, and given how far the shares have gotten powwoozzled (-83% from high), it doesn’t even show up, that’s how brutal this has been:
You can probably add lightspeed to the list as well. Lol
All these companies would be otc penny stocks under normal circumstances. The only reason they were high flyers is because deep pocket venture capital funds and big banks did a pump then IPO.
If these companies just listed on the otc and venture exchange, they’d be down 99% by now.
Anybody read Ben Graham and the concept of “Average Earning Power”?
Most of the stocks Wolf lists just seem to be “tulips” for speculation with the financial industry supplying plenty of product to steal from the Joe Sixpack.
“powwoozzled” — Somebody needs to compile a Wolf-speak to English dictionary.
Don’t worry, I’m doing it, so I can check the spelling in the future when I use those terms. I wouldn’t want to misspell them :-]
Zillow? More like zilch-oh.
Bumflundered!
Gonglerized!
Powell-ed!
Powell-erized!
In German – Powellen e.g., Ich habe ihn gepowellen or gepowellt.
Diese Aktien wurden gepowellt!
Powlverized?
Well….today I decided I was done with online retail. I mean I still need stuff, but dealing with Walmart, eBay, Amazon and especially Wayfair today…..none of them deserve my hard earned cash. Price increases are through the roof and increasing every day.
Their customer service is beyond awful and if I have to call and find where my packages are again….I am gonna scream.
It’s time for me to venture out into the world and spend my time and money on travel. My house is completely renovated and if I do not have it I do not need it…for a very long time.
Bye bye crappy companies.
Maybe you need to start using aliexpress. It’s basically the dollar store of online shopping. Lol
I got confused with online research regarding the proper and best battery pack for my son’s new RC truck so I drove 11 minutes to the local hobby store to get some advice. They had the right pack for $3 more than Amazon. I spoke face to face with a human. We smiled, joked, traded a few witty remarks, and i also bought a new model rocket launch rod for $1 more than Amazon. It was a great day.
Travel memories you have forever (or until you get dementia) – junk is here today, gone tomorrow.
Billion dollar losses use to be big news, not anymore it’s standard. (South Korea in the 1990’s).Just waiting now to hear all the failure tails. The speaker circuit for big losers must be ramping up:
Soft landing…….sounds about as credible as…….transitory inflation.
First he sits on his butt while the inflation rate skyrockets……now he raises rates when the evidence emerges of a problem……
Was this guy at the beach during economics class?
Thanks, man, for the dose of reality. These stocks were always potential vaporware, thankfully their not trading at zero, or, in Wall Street parlance, they have a parking lot so they’re worth 4 bucks a share.
Earlier, it occurred to me that we are seeing the result of the elimination of the progressive taxation system. Creating an atmosphere that is predatory rather than the collaborative society which is the cornerstone of democracy.
Obviously, the Fed is holding off for what really needs to be done about systemic inflation, to bring us back from 15 years of QE, until after the mid-term elections in November of this very year. Will we forget Bush and Trump, whose excesses we are about to deal with, and reelect the Republican majority or reelect the hapless Democrats who agree with the looming Republican majority.
Thank goodness the mid-west had the good sense to not elect the Democratic candidate, choosing Trump instead.
The Trojan horse.
Which brings me to my next exchange of ideas
I saw a snippet of what makes life fun, today. The simplicity was beautiful, which, in this context, I propose that absurd be recognized as a synonym:
Watching my dog stalking lizards on the fence.
I see the path of asset prices during stage 2, which I guessed would begin now. I have the sense that asset prices will often undergo volcanic volatility on their way down to a 50% loss on the SPY. But I have always been conservative about my stock market gambling except that three years where I made my nut as a day trader, a story that has numerous endings, depending on the state of one’s day.
The world rotates every 24 hours. Knowing what we have accepted Darwin’s theory of evolution
It is unlikely that any point on the earth is likely to be exactly the same, 24 hours later.
Years are comprised of days. Even in my short life I have smallish calamities, as the glorious sunshine of being the reserve currency has wrought.
This Fed seems incompetent. The market, after being comatose for at least two years, are leading the fools at the Fed, covering their ass.
The purchasing power of the dollar is slated to decline another 30% while the fools perform, guessing that systemic inflation will cure itself with a 0.5 increase in your credit card bill.
I agree with you, this is the mostly boldly, using your description, ” the most reckless Fed ” in my experience, at least since Arthur Burns
I would just like too point out an egrecious fluanting of the new rules about not characterizing a population. What I approve of is the universal reference to the collection of my beloved extended family. What I’m talking about the appropriately named, paddy wagon. Who wants to give up that fun for life even though it may be wrong headed thinking it is a credible introduction to a conversation.
My council to the next generation, the one’s that are in charge of our future, is that I don’t have a clue and I may be the last old guy that you should query.
If I were asked, I guess I would suggest one should listen to grace slick and the doors, drop some acid, and suck up the guts,
Like I phantasized life was when I was immortal, like you feel right now.
Growing old is an journey preordained by birth. When it comes, like a giant wave, it is destined to be disappointing due to the conflict between today and yesterday or memories that won’t let you go.
You’re in luck, dang.
After many years, The Dictionary of Obscure Sorrows is now in print.
You don’t have to read it online.
sonder
n. the realization that each random passerby is living a life as vivid and complex as your own—populated with their own ambitions, friends, routines, worries and inherited craziness—an epic story that continues invisibly around you like an anthill sprawling deep underground, with elaborate passageways to thousands of other lives that you’ll never know existed, in which you might appear only once, as an extra sipping coffee in the background, as a blur of traffic passing on the highway, as a lighted window at dusk.
Well….today I decided I was done with online retail. I mean I still need stuff, but dealing with Walmart, eBay, Amazon and especially Wayfair today…..none of them deserve my hard earned cash. Price increases are through the roof and increasing every day.
Their customer service is beyond awful and if I have to call and find where my packages are again….I am gonna scream.
It’s time for me to venture out into the world and spend my time and money on travel. My house is completely renovated and if I do not have it I do not need it…for a very long time.
I want Merriam-Webster to declare “shookalacked” word of the year.
Damn, I know hindsight is 20/20 but imagine putting everything I got and put it into put option back in Nov of last year…maybe then I can make enough return to buy an overpriced house in SoCal…
Wonder if the hindsight bug will bite again and I should put in long call option now if I believe enough in these duds will skyrocket back up…I can’t convince myself that’s the case though.
Those puts were expensive with so much time value. You’d never have bought them. Almost no one did in any size, unless hedged. Don’t kick yourself. Well, go ahead, kick yourself. Just not for that.
Me thinks this might be a slightly bearish site. Most of the market movers have been removed this week. FOMC was dovish (I would have hiked 1% given real inflation is over 10%!) and economic data is weakening so you can expect Powell to stop soon enough. Earnings were O.K and we’re through that. If tomorrow’s jobs data comes in weak I anticipate a rip your face off rally to last until June. Bad economic news is good news for the markets.
A market can’t really go down if everyone has put hedges on! This was the most telegraphed decline in the history of declines. Investors will just buy back the same stocks with profits they earn from shorting. I anticipate the real bear market to begin in the Fall.
You sound like a bond bear. The bond market already priced in all the Fed hikes. So whether they hike 50, 75 or 100 (ha) basis points, we’re already going to get there based on what’s already priced in.
So now we wait to see if the fed gets there by the end of the year or if something breaks horribly, “kills inflation”, and forces the fed to intervene.
So you are forecasting Powell just gives up on fighting inflation and says “we’re just going to let it rip?” Wow, that’s quite a take. I have a totally different take, which is that if the inflation print worsens, the FED may be forced to do an emergency rate hike, and perhaps of the 1% variety. Inflation will destroy a currency and a country. When push comes to shove, the FED will destroy the stock market before they allow inflation to destroy the country.
Now China is not buying U S company computers,all parts made and constructed in China,the rich corporations,sold this country down the road. While becoming stupid rich .Hope they figured out there will be consequences
“So you are forecasting Powell just gives up on fighting inflation and says “we’re just going to let it rip?”
“So you are forecasting Powell just gives up on fighting inflation and says “we’re just going to let it rip?”
Yes. The Federal Reserve created the inflation for the purpose of inflating away the debt. It is hell bent on keeping it as high as possible for as long as possible. I’ve heard it called ‘Project Zimbabwe’ somewhere. Right now (And my opinion may change), his slow motion rate hikes tell me he is waiting for the eco data to come in bad and then he’ll stop. GDP of many countries is slowing, China is a mess so if anything he’ll be cutting by fall-winter. You want me to sell my good ( solid earnings and balance sheet) tech stocks for that?
Filed under: Delusional speculator.
“ Filed under: Delusional speculator.”
Correct…
The Fed is political now…
Inflation is political now…
When Powell opened his speech by wanting to directly address the American people stating inflation is too high and they ARE going to bring it down, some people should be paying attention… or not…
“FOMC was dovish (I would have hiked 1% given real inflation is over 10%!) and economic data is weakening so you can expect Powell to stop soon enough.”
Lol at being this delusional. Wolf debunked the “Fed is dovish” claims in the last posting, the Federal Reserve never had 0.75% or 1% hikes on the table for May, that was just idiotic rumoring in financial press to pump a sucker’s rally on Wednesday to drag in dumb retail investors as bagholders before the collapse yesterday (it worked). The Fed said exactly what they were going to do–a 0.5% rate hike and preparing QT. In fact the only possibility was the Fed pulling back on those hikes (which would have been dovish), which they didn’t do–the Fed made good on its plans. If anything they’re ramping up QT a bit and getting more hawkish, making it clear 0.75% and higher hikes are on the table if inflation isn’t controlled. Even Lael Brainerd is now hawkish, as is JPow openly invoking Paul Volcker. Like Depth Charge says uncontrolled inflation wrecks a currency, country and banking system–Saudi Arabia and other oil producers are already taking renminbi and other currencies as payments and the rest of the world won’t hold dollars if they depreciate from inflation. The Fed has to protect the dollar and esp the banks, that’s the priority and the speculators and bubble investors will pay the price unless they pull back.
And also of course a recession is in the cards, that’s the only thing that breaks these ridiculous asset bubbles and brings valuations for equities and esp real estate and housing prices back down to earth. How do you think young Americans can start families with a housing bubble like this? The US birth rate was already getting crushed before, and now with inflation and these home prices it’s plummeting down to Japan levels. (Canada, Australia and the UK even worse than we are.) You only normalize these prices and bring them in line with incomes through a recession, that’s the lesson from Volcker’s tenure, and it’s not something you can avoid–it’s unpleasant medicine, some short-term pain in return for preserving at least some respectability for the dollar, solvency for the banks and buying power for the large majority of Americans. The alternative is raging inflation for an already bitterly divided country, bank collapse, and unaffordable goods (such inflation a bad thing for a country with such a trade deficit) and then social unrest, political collapse and all the wild and wonderful things that come with that.
Interestingly Wolf has alluded to cash not being all that trash. If you had bought some stocks last year and put your money in Zillow, PayPal, Lyft, Facebook, etc. look how much you would have lost than just leaving it in a Savings account.
Same will be true for home prices coming to a place near you–you can count on it. Right now I keep seeing some people say on this site”… before the Fed has to intervene.”
Inflation is out of their hands this time since it is a global issue for a country that has offshored so much and is no longer in control of its own destiny.
I bet you’ve never seen a stock market or stock valuation you ever liked. It was all the same overly bearish nonsense back in March 2020.
At the end of the day, you need to know your risk profile. If you loaded up on these stocks after the market recovered from the March 2020 lows, then you get to learn a lesson in valuations and PE ratios. :)
I’m just glad that you aren’t talking up gold, silver and the commodity equities.
Those things are more volatile and guaranteed to lose you money compared to the general markets.
“I’m just glad that you aren’t talking up gold, silver and the commodity equities.
Those things are more volatile and guaranteed to lose you money compared to the general markets.”
Losing 75-90 percent in a year in stocks is not volatile? OK, stay in denial phase all the way to the bottom.
Yep, I figured your a gold bug. Selective memory when it comes to the last cycle when the whole commodity sector was massacred.
The SP has barely retraced over a 5yr timeline. (still way above pre March 2020 crash highs)
I truly hope that SP and Nasdaq drop another 30%,but I don’t think I’ll be so lucky.
Stocks weren’t even close to historically “reasonably” priced at the March 2020 low.
P/E ratio is one of the worst value metrics, especially Wall Street’s forward P/E.
Not a metal bug either if that’s what you are thinking. Gold is historically relatively overpriced too. Don’t own any of either.
Long term actual fundamentals in the US are awful. Valuations are the result of an unprecedented mania.
Wolf, I’m not sure if it’s a problem with your site or something on my end (using Chrome browser mostly), but earlier today I only caught your good blog post once analyzing Fed’s rate hike/ QT plans yesterday.
Now I can’t find the post anywhere, having only seen it once and despite the blog entry having 200+ comments. I checked the ‘Federal Reserve’ section, not there. Not on the front page anymore, either.
I ended up posting a comment about Bill Fleckenstein musing about the Fed losing control of the bond market on your Uber page out of sheer necessity.
All your other blog posts seem accessible.
This one? Second from the top at the moment, and if I can get my next article finished tonight, it’ll be the third from the top: Do a hard refresh on Chrome, and you should see it. It’s there.
https://wolfstreet.com/2022/05/04/powell-confident-in-softish-landing-for-the-economy-but-we-may-keep-inflation-markets-can-figure-out-their-own-landing/
Wolf, yes that’s the one from May 4th I referred to. When I look at the far right column with the “FRONT PAGE” header it lists every single blog post you wrote since May 2nd except the one you linked.
It’s only that one single blog entry which seems more difficult than normal to access. Every other blog entry updates normally.
UPDATE: Wolf, OK now I see the May 4th Fed blog page again, but it was only accessible when I click on the ‘Home’ tab. Not showing on front page or ‘Federal Reserve’ tab yet for some reason.
Nothing hugely urgent, just thought it was worth mentioning.
In Chrome, do a hard refresh by clicking on the little circle in the upper left of the browser. This will pull up the page as it actually is. Chrome is pretty bad about showing you old stuff it has in memory. While at it, delete the browsing history (hamburger menu on the right top, click on “history” and follow through, delete all line items, for “all time.” You should do this ever day or so. This takes care of this stuff too.
Wolf, OK I’ll take your advice, thanks. It was just weird how only that one blog was so hard to access while everything else is fine.
I’m very lazy with clearing history, but I know how to take care of it, yes.
I even turned your page link and sent it to a Windows desktop icon.
Get rid of chrome….yuck
SPX breaks below 4000 over the next few weeks. 3850-3950.
Then takes off to 4400-4500 by October, before another correction…then breaches 5000
There is another thing , of course, the colder parts of the USA has just had one of its worst and coldest winters in many a year.( For a few states it is still too cold and wet to plant crops, other states are around 7% planted) With the price of natural gas zooming, heating the home is first on the list with food and filling the car (for work)
People don’t need Amazon and the rest…simples
and what you don’t need, you dump..
ps I don’t know much about living in temps, (being a Brit) as in Texas and the hot states. I guess cooling your home is also zooming….
«Kathoomphed» great word.🙂 I visualise something coming down fast with a distinct sound as it bounces after it hits ground before coming to rest.😂
On the theme that inflation is transitionary. If stock market indexes and real estate market indexes are considered inflation measurements as the consumer price indexes are, the first to go up have now turned down.
Looked at that way, inflation might be transitionary. We just have to wait and see what happen to the real estate price indexes.
1) Fearing a crash people are moving into cash. The dollar is rising
during a 8.5% inflation.
2) If Nebraska food basket will feed the hungry in S. Sudan, more
cash will bid for fewer resources in US. Food inflation.
3) Natgas is five times easier to extract than oil. The easy to extract
is already gone. We need more resources to extract less productive area and and build new pipelines.
4) If we export our Natgas to Europe, there will be less for us. The cost of energy will rise.
5) If we feed the world, send our dwindling energy resources to our European friends, our leaving standards will drop drastically.
6) The Nasdaq will crash, RE prices will drop dramatically in Real Terms.
7) The rising dollar will disguise the inflationary depression problem.
8) .
Well, too bad. The oil company’s latest profits will probably go to stock buybacks.
If someone gets around to dismissing ‘shookalack’ and ‘woonsocket’ as made up words, you can answer them unanswerably by reminding them that all words are, after all, made up.
Joyce had the ultimate word for a catastrophic fall:
bababadalgharaghtakamminarronnkonnbronntonnerronntuonnthunntrovarrhouna-
wnskawntoohoohoordenenthurnuk!
Describes Imploded Stocks perfectly, I think. Not so easy to work into casual conversation though. It’s hard to get the pronunciation right.
Like many other novels, Finnegans Wake doesn’t really end. It sort of trails off, and you’re supposed to start over from the beginning, and then wake, fine again:
Given! A way a lone a lost a last a loved a long the
Inflation is 8.5%, productivity Q1 2022 = (-) 0.6, no good.
Anyone know why the S&P 500 hasn’t reach bear status? I’m guessing a non-tech company is carrying it compare to nasdaq
You get into a lot more relatively more value-type stocks at large weights in the S&P, once you get below the heavily weighted FANGs. These other firms would mean-revert a lot less, especially with the current vogue of abandoning the tech stocks.
S&P 500 Constituents By Index Weight (2022)
https://finasko.com/sp-500-companies-weightage/
Thanks for the visual. I remember a time when oil and retail were the big fishes
Those that go up the most during bull markets also tend to come down first. Those tend to be the most speculative and actively traded stocks, and those are usually blue chips in the DJIA and NASDAQ tech stocks. Stocks in the S&P 500 are generally less speculative, less ambitious, and more stable. Naturally there are plenty of exceptions on both sides, but the tendencies are there.
But the S&P 500 will also fall with everything else. The US has become politically and socially unstable and unsustainable, which will ensure the US economy will increasingly recess, taking investment markets with it. The cracks are widening.
These and other effects have been predicted by numerous studies since at least 1972, and all the important milestones have been met so far. As global ecological supports degrade so will economies, and so will investment markets. Chronic lack of investment in complex economic systems are already exposing the brittleness of supply chains, no less than other systems. The massacres are coming, particularly in the US, and in view of the overheated socio-political atmosphere those will hardly be limited to investing.
Anybody been to a bicycle dealer recently, to see if they are back to normal? I remember at the start of the pandemic that bike sales soared and dealers ran out of inventory. I wonder if there are still shortages, given Chinese supply problems.
Yes, I have been at my local dealer in St.Paul. Shortages are still there. But the service and repair portion of the shop is busy. It is a hit-and-miss for frame sizes on hand for top-end machines.
Case in point: one month ago, I ordered a new cassette, and rear derailleur also to go with the different sizing of the large sprocket, to change the gear ratios of my gravel bike from an 11 to 34 tooth 11-speed Shimano GRX 800 to a 12 to 25 tooth 11-speed. Nope, not happening. Before the winter returns to Minnesota, I should be set up, but maybe not until September.
This is a pretty standard piece of gear, but it is not available. My bike was a 15 week wait from early October to early January of this year for the same reason; parts to assemble it were not in stock or available at the manufacturer in Burnsville, Minnesota.
Thankfully, tires and inner tubes are in stock for my road bikes. But they have gone up in price a lot, as have the accessories like water bottle cages and frame pumps as an example.
What, no mention of which services are seeing upticks?
I suspect that this is the natural impact of inflation, clamping down on consumption in favor of basic necessities only.
As inflation rages, after wave after wave of Federal spending that diluted dollars, followed by the cut backs in spending, then leading to recession.
Children or imbeciles are in charge Federally, and wrecking the economy. Recession is almost a foregone conclusion at this point.
1) SPX weekly, linear, for entertainment only, TA, skip :
2) The vector down from Feb 18 2020 hi to Feb 24 2020 low is equal
to the vector from Mar 28 2022 hi to Apr 25 2022 low.
3) The next bar, at the bottom of the previous close,
appeared in Mar 2 2020 and this week. But there is a different :
4) The current SPX is inside the cloud, on the edge of the cliff. In 2020 above the cloud.
5) A bullish option : May 9 might send SPX higher.
6) A bullish option : May 9 might nuke SPX.
7) We don’t know what will happen next, but the risk is high.
Number 7 says it all.
I’ve been looking for an Official List of Imploded Stocks, with the associated Degree of Implosion, without success. Is there such a list?
There is an official list of Imploded Stocks, and it keeps growing, but it is a closely-held list with TOP SECRET stamped all over it. But small parts of the list have been released to the public by sector.
There may come a day when the whole list gets published, but then others will just copy it, and then everyone has it. My stuff gets ripped off and stolen enough as it is.
Anyone can get a list of the stocks that lost the most from the 52-week high. But getting a list of stocks that lost the most from their highs within the past three years is much harder to do. If you have access to big data, you can probably do it pretty easily. But I have to get that data by hand, and add to it every day, and I’m not about to just give it to some lazy website operator that just rips stuff off to get clicks. Gazillion of them out there.
“There is an official list of Imploded Stocks, and it keeps growing, but it is a closely-held list with TOP SECRET stamped all over it.”
It’s probably for the best. The markets are plenty despondent as it is and nothing would be served by piling on.
Please not Chewy. I need that company ]. My dogs need that company. Their products are fresh, not stale like some others. I guess I need to stock up again.
Seems like all I do now is stock up before the deluge.
Buy the dog food, don’t buy the stock?
Probably the same as the $15 to $20 fare to take Uber from Disney World back to International Drive. Not sustainable. No way they’re making a profit with that business model.
I have a big stack off canned dog food in my living room, plus a few sacks of kibble and some cat food – all from Chewy. I thought I was good for awhile, but they just keep eating it.
I LOVE Chewy, even if it is a losing proposition – I just can’t get ahead. I also love my cats and dogs, as they’re the only family I have that doesn’t harangue me over having so many pets. We’re good for two months, then we’re hitting the road anyway and will probably have to go for road kill. (j/K)
reminds me of a recurring situation when i worked in the moto-biz (pre-online sales days. the explosion of online sales with lack of sales tax application and customers using us as only for a fitting room/free expert advice source let school out afterwards):
A customer whose enthusiasm was starting to get expensive looks into retailing, finds that margins are running about 40%, thinks: ‘…that’s gouging! I could do this at 20%, i’ll get all my own moto-stuff at cost, all of my friends will shop with me because of my lower prices, and’ (like Milo in Heller’s ‘Catch-22′) and be fabulously successful on the volume i’ll doubtlessly generate!’
flash-forward 18-24 months. customers we had lost to the above person’s venture start drifting back into the store more often (they still came in when they were seeking some free, ‘expert’ assistance). If they grumbled a bit at our pricing, i’d ask:
“i thought you were shopping with XYZ, now because they were so much cheaper?”. Rejoinder: “yeah, but he’s (a.) closed his business (b.) raised his prices to your level or higher, and you guys have better knowledge and service…”.
It may take time for ignorance of true overhead costs and a lack of profitability to catch up with a business, but it always will. The public’s reliable disregard for costs of genuine good service over cheap price preference, and a business’ willingness to engage in constant and honest SWOT analyses of their operations are the ever present Scylla and Charybdis that must be navigated…
may we all find a better day.
Although it may take time, lack of profitability will catch up
as suspected, consumer credit reported today explodes…
suggesting that as expected the consumer is throwing the inflation incremental increase onto the credit card.
Revolving…… credit card debt, which more than doubled from the already elevated February print of $14.2 billion to a stunning $31.4 billion, the highest print on record.
Nah… Credit card debt up 3% from March 2019, CPI up 13%… credit card borrowing can’t even keep up with inflation. Look at the charts:
https://wolfstreet.com/2022/05/06/state-of-the-american-debt-slaves-borrowing-more-to-buy-less-due-to-raging-inflation/
“March 2022
Consumer credit increased at a seasonally adjusted annual rate of 9.7 percent during the first quarter. Revolving credit increased at an annual rate of 21.4 percent, while nonrevolving credit increased at an annual rate of 6.1 percent. In March, consumer credit increased at an annual rate of 14 percent.
”
cut and pasted from the Federal Reserve web site
historicus,
This is the manipulative cherry-picking that blows your credibility to little shreds. RTGDFA that I linked and look at the charts.
The increase comes OFF THE SLUMP IN CREDIT. I don’t know why you post this garbage here. This is the chart from the article that you refuse to read because you want to be stuck in your fantasy: