Dotcom Bust 2, New & Improved

But we’ve had it so good for so long. And it was so easy, and it made everyone look like a genius.

By Wolf Richter. This is the transcript of my podcast recorded last Sunday, THE WOLF STREET REPORT.

One of the big mysteries in this grotesquely overstimulated economy that the Federal Reserve is now trying to de-stimulate, is the labor force.

The labor force is defined as the people who are either working or who want to work and are actively looking for a job but don’t have a job. The labor force has risen over the past 12 months, but not enough, and has remained stubbornly below pre-pandemic trends, which is contributing to the large-scale so-called “labor shortage,” including an astronomical number of unfilled job openings, with company after company complaining for the past 12 months that they’re having trouble hiring enough people. According to the latest data last week, there were a record astronomical 12 million job openings in April, up by 54% from the pre-pandemic April 2019.

Employers are trying to hire people away from other employers. And workers are job hopping. They’ve discovered that suddenly they have leverage in the labor market and can get better jobs, higher pay, and better working conditions, perhaps even in other industries, where employers are desperate to hire workers.

So there is massive churn in the labor market, with people jumping jobs because compensation packages are better on the other side of the fence, and it is through this mechanism of churn that wage increases have spread throughout the economy, at the steepest rates in four decades, though they’re still not enough to make up for raging inflation.

All kinds of reasons have been cited to explain this mystery of the labor shortage and this huge number of job openings, and all kinds of reasons have been cited why the labor force has refused to go back to the old normal trend.

Some of those reasons have gotten resolved. Others have been debunked, and others have moved from being seen as kind of a joke to being a real issue.

One of those reasons that started out as kind of a joke and has over time become increasingly realistic, goes like this:

The Federal Reserve’s $5-trillion in money printing since March 2020 inflated asset prices across the board, from stocks with the most ridiculous valuations to even more ridiculous cryptos, to such an extent that people took huge risks based on a wing and a prayer, and made hundreds of thousands or millions of dollars in the shortest amount of time, and expected for this to continue, and decided that they would forget about working and just trade miracle stocks and crypto blessings.

And now, all this stuff has started to deflate, and I’m looking for signs that these folks are coming back to work after having gotten wiped out in their leveraged positions. But for now, prices of these assets and gambling tokens don’t seem to have deflated nearly enough, and there is still wide-spread hope that they’ll start spiking all over again.

This theory is not new. Some of us rode to easy riches during the dotcom bubble. At the peak, we were rich and very smart. We were geniuses, practically. The internet was the big thing. Everything with “.com” in its name was instantly worth billions of dollars, and we all knew why. Because this was a new paradigm, and it was different this time.

People who’d been around the block told us that this crap we were investing in was crap, and they told us that taking on margin debt to the hilt to buy more crap was very risky, and they told us that they’re just fine sitting on their Treasury securities and high-grade corporate bonds earning 5% or 6% a year – yes those were the times before all-out interest rate repression.

We ridiculed them for not understanding the new paradigm, and for not understanding that it was different this time. And how could they be satisfied with returns of 5% to 6% when we were doubling our money in just a few months?

I’m not sure how many people became professional day traders. I knew a few. As for me, at least I traveled around the world for three years without coming home, to over 100 countries on all continents, starting in early 1996, an immeasurably wonderful experience. Those three years of traveling were funded by the dotcom bubble, by the inflating value of my portfolio. While I was traveling, I wasn’t even trading. It just kept inflating.

Then I came back, and not much later, crap turned into crap, and our wealth got mostly wiped out when the Nasdaq crashed 78% between March 2000 and October 2002.

Over this period of two-and-a-half years, the Nasdaq crashed from a little over 5,000 to about 1,100 – and it did so despite a vicious 35% bear-market rally in the summer of 2000 that drew more people into stocks, before wiping them out too, and hundreds of companies shut down, and their stocks crashed to zero and died.

There was no recovery for those stocks. There were delisted and removed from the indexes before they hit zero, so that they wouldn’t drag down the indexes further, and that was it for them.

On October 9, 2002, the Nasdaq, at 1,114, was back where it had first been in April 1996, six years earlier.

We now only remember the survivors and the few big winners to come out of this, such as But it was brutal. Our lives were being crushed on a daily basis. And every rally turned into just another set of fake hopes. And eventually, we went back to work.

Then stocks – the survivors and some new ones, such as Google – started rising again. In October 2007, as the Financial Crisis was starting to seep to the surface, the Nasdaq had just breached 2,800, before wandering lower and then crashing. In March 2009, it hit 1,268, back where it had first been in May 1996. A wild ride to nowhere that lasted 13 years. In other words, it had unwound 13 years of gains.

And what happened then? A historic money-printing binge to bail out the banks at first, and then to bail out the housing market, meaning the mortgage market, and then to accomplish the wealth effect, pure and simple, which drove the Nasdaq to the ridiculous high of 16,212 by November 2021.

So now, the money printing has ended, rates are going higher, and the Nasdaq has dropped to 12,000 on Friday, down 26% from the high. So that’s not a big decline.

But many individual highflying stocks are down over 80% or 90%. Some of the biggest cryptos are down over 50% from their highs. There are over 10,000 cryptos. Many are down nearly 100%. Tons of them appear to have died.

And folks heavily concentrated in these kinds of bets, and leveraged, have already lost a big part or all of their gains, or even all of their capital at risk.

This time around, people who are betting on the Federal Reserve to bail out the markets with rate cuts and money-printing are facing a complication in their calculus:

The Fed won’t cut rates or restart its money printing binge – it will instead hike rates and shed assets, meaning the opposite of money-printing – because the biggest problem the US economy now faces is raging inflation that has spread to services.

In services, inflation is shooting higher, even as some goods prices are flattening out, and services is where consumers spend 70% of their money, and this inflation in services is now spiking, and is in the process of turning into runaway inflation, and the Fed is going to try to prevent this inflation from tearing up the economy, and it’s cracking down, and it’s not going to bail out stock prices or crypto prices, and it’s specifically targeting the real estate bubble due to its contribution to inflation via the housing cost components in the Consumer Price Index.

Those over-inflated asset prices cannot suddenly stand on their own two feet after having been driven to these highs by money-printing and interest rate repression since late 2008. So it’s going to be rough out there.

But we’ve had it so good for so long. And it was so easy, and it made everyone look like a genius. Look at the long-term chart. Since early 2009, when the money printing and interest rate repression started taking effect, asset prices have spiked out the wazoo. And folks sitting on assets have gotten immensely rich via the asset price inflation that the Fed had engineered. The more they had, the richer they got. And it has created the biggest wealth disparity in the US ever between to top 1% and everyone else.

This is according to the Federal Reserve’s own data on wealth distribution that I depict in my “Wealth Disparity Monitor.” You can google that: wealth disparity monitor, and it comes right up at the top.

So now, that asset price inflation has turned into consumer price inflation and wage inflation that the Fed is fighting, it’s time to give up some of those gains.

And no, we cannot get out all at the same time because if we tried to get out all at the same time, the whole thing would just collapse.

Look at this way, a 40% decline in the S&P 500 would just take us back three years, to June 2019. Unwinding three years of gains is nothing. This happened many times before. And it’s no biggie.

By the time the S&P 500 bottomed out in March 2009, it had unwound all the gains since 1996. It had unwound 13 years of gains. The Nasdaq had also unwound 13 years of gains.

Just to give you a for-instance to think about: If the S&P 500 index drops 70% from the January high, which would be a huge massive drop, it would only wipe out the gains of the past 10 years. This is how crazy the stock price inflation had been over the past decade.

What happened during the dotcom bust was that plenty of people who were invested in individual stocks, and had bought some of them on margin, they got margin calls and they had to sell their shares, their most liquid shares that could be sold, and they might have sold Amazon, and they got cleaned out, and for them, when stocks bounced, there was essentially no recovery, because they couldn’t participate because their money was gone and their Amazon shares were gone, along with all the shares that had died.

And during the dotcom bust, folks that were loaded up with the high fliers that then went to zero or near zero, even if those folks weren’t margined, they lost a lot more than the 78% decline of the Nasdaq. And they then had to just start all over again.

This money-printing orgy and interest-rate repression that started in late 2008 has created a far bigger and wider asset price bubble than the dotcom bubble. This time around, it’s stocks, it’s bonds, it’s real estate, and now they’re also cryptos to lose all your money with.

The opportunities to get wiped out are much greater now. But hey, no biggie. Investors had it so good for so long. But that ride cannot go on forever. And we’ve been through this before. And at some point, lots of people will come back from their long travels, and others will mothball their trading rigs, and others will say goodbye to what’s left of their cryptos, and they’ll start looking for jobs again. But we’re not anywhere near that point yet.

You can listen and subscribe to THE WOLF STREET REPORT on YouTube or download it wherever you get your podcasts.

Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.

  173 comments for “Dotcom Bust 2, New & Improved

  1. Phoenix_Ikki says:

    Shout out to SNAP and Beyond Meat , 2 of my favor fallen from grace high flyers that I like make fun of..based on today and recent drop, everytime I see their stock ticker I just feel like singing drop it like it’s hot..

    I still remember reading what Wolf wrote about BM back in 2019 with their crazy IPO price. Maybe that’s one of the waterfall moment of realizing the market is completely nuts and also back then the amount of hype WeWork was getting.

    • Johnny Beck says:

      Absolutely concur !

    • Wisdom Seeker says:

      Hmm, tasty! BYND (Beyond Meat’s stock) just closed at a fresh all-time low, down over 90% from its all-time high near $240 in mid-2019 … It may be Beyond Hope now?

      P.S. Wolf, I like the green titles, headers, and other accents with the new font.

      • Brian Murphy says:

        INKT (inktomi) and GLW all over again, the names may change but its still the same Wall Street game.

    • Implicit says:

      Impossible burger tastes way bettor.
      You could say that Beyond meat’s Public lunch is being eaten by the private Impossible burger. It is not Beyond imagination, that it is Impossible to make a profitable fake meat that tastes good, and has less artery clogging fat.

    • gametv says:

      Homes are the largest asset most people own and it makes them feel rich. Bank balances are still high from past stimulus. Once home prices plummet and bank balances come down the consumer spending will drop and inflation will abate. Give it 4 more months to start to unwind.

      Of course, higher transportation costs effect every good and I imagine China will be raising prices and we will be importing inflation.

      • sunny129 says:

        “Bank balances are still high from past stimulus’

        What Bank balances? Another myth from Wall ST1

        Nearly 58% of people from the bottom don’t have $1000 for emergency!

        The University of Michigan’s gauge of consumer sentiment fell sharply to a record-low reading of 50.2, down from a May reading of 58.4. Economists polled by the Wall Street Journal had expected an June reading of 59!

        Way off!

  2. Up North says:

    Many thanks Wolf, once again, for your enlightening articles.

    • MiTurn says:

      Concur, and also for taking the time to put your podcast into print. Helps us hearing-impaired readers.

      • VintageVNvet says:

        Ditto MiT, as a HUGE fan of the Wolfster, also hearing impaired… but can and do read,,, yes, read still, every word….
        Thanks again Wolf

      • Goomee says:

        Also for us attention impaired. In podcasts, my attention gets easily diverted. In reading, my attention is focused.

  3. 2banana says:

    The high tech stocks that survived (usually that had slim profits) went on to richly reward the investors who invested in that “dark period.”

    Google, Apple, Amazon Cisco, etc.

    “And during the dotcom bust, folks that were loaded up with the high fliers that then went to zero or near zero, even if those folks weren’t margined, they lost a lot more than the 78% decline of the Nasdaq. And they then had to just start all over again.”

    • Bobbleheadlincoln says:

      Google was first publicly traded in 2004. So it was not part of the dotcom bubble era as was noted in the article.

      • Rob says:

        Bobbleheadlincoln said: “Google was first publicly traded in 2004. So it was not part of the dotcom bubble era as was noted in the article.”

        It was not noted in the article.
        “the survivors and some new ones, such as Google”
        “new ones, such as Google” kinda shouts it came after the bubble, don’t it?

    • Wisdom Seeker says:

      Wolf’s article is great, but it’s also important to remember that the investors who owned stocks at the top of the bubble are not all the same as those who owned at the bottom. Some held on, and took their “fair share” of the losses. But others got out in time, and sold to bagholders who never saw a penny of gains, just 80% losses.

      Gains and losses in either a bubble or a crash are not evenly distributed: some people get smart or lucky and make out like bandits, while others do even worse then the stock indexes. There is no real justice in this process, no link between productive effort and financial reward, just financial wolves fleecing the sheeple. The ability to spot a bubble or bust is valuable, but not so much that one should be rewarded with repeated doublings of one’s wealth.

      In fact, financial manias, panics and crashes are as big a source of wealth inequality as interest-rate repression, in their own way. This provides a very strong argument for maintaining prudent financial policies that don’t create boom/bust cycles that generate such unjust outcomes. If we want better economic leadership, we need a system that rewards production and genuine investment, not speculative trading.

      • Harry Houndstooth says:

        I would argue differently. The rise and depth of our speculative tendencies in the United States favor those entrepreneurial spirits that recognize and profit from the volatility, understanding the power of research and risk. This is part and parcel of the very best of our financial system and insure our global financial dominance.

        • Wisdom Seeker says:

          That’s how it’s supposed to work, and when it does work you’re right. But that’s not how it’s been working since about 1994. The Fed Put has rigged the system too much.

        • cb says:

          entrepreneurial spirits?

          more like trading spirits. no production involved. just parasitic activity.

          Our financial system is corrupt. It has waylaid our productive dominance.

      • Frengineer says:


      • COWG says:

        “ If we want better economic leadership, we need a system that rewards production and genuine investment, not speculative trading.”

        I dunno…

        Seems like over promise, never deliver, has worked quite well for some…

      • VintageVNvet says:

        I too would argue differently, but not like HH:
        Many times before 1913,,, ALL the LOLs, in this case ”little old ladies” of each and every ”gender identity” made out like ”bandits” when they put their gold in the jars in the dirt in the ”good times”,,, bubbles, booms, etc.
        And then took that same gold out and bought ”real” assets for, quite literally, ”pennies on the dollar” when the banksters, corrupt then as now, caused the ”economy” to crash again.
        Try as WE may,,, in this case WE being WE the PEONs who have tried to do something similar,,,
        WE will never ever be able to overcome the results of the world wide ”takeover” of our ”finances” as has been done since the start of the FRB…
        Hope all of you on here, many clearly with some semblance of ”relational reality” understand this very very clearly, because IMHO, there is NO going forward to any real ”equal opportunity” for ”investors” or any other sub category of folks in ANY market…
        Surely, I realize it is a very hard concept,,, EXACTLY as the world wide oligarchy wants it to be,,, knowing that the ”education” industry does NOT actually educate ANY one to understand the manipulations of the oligarchy who pay to make sure WE the PEONs are NOT educated, especially with regards ”financial” topics…

    • Ryan S says:

      Cisco is still down about 40% from its Dotcom era high. The dividend yield is now over 3%, but that’s hardly richly rewarding.

      • Anthony A. says:

        Cisco is a completely new company these days with many different products and services. It survived.

        • andy says:

          And Sysco is coming out with it’s own “I Can’t Believe It’s Not Burger” burger.

        • Ryan S says:

          Survival alone doesn’t richly reward shareholders, which was my response to 2banana’s comment. Perhaps Cisco’s new business lines will reward investors in the future.

        • Mike G says:

          I recall an apocryphal tale from the dotcom boom of someone intending to buy Cisco who bought Sysco by mistake. After a couple of years they ended up much happier.

        • SnotFroth says:

          Meraki is a money vampire for customers but good for them.

      • jm says:

        And there’s been 22 years of inflation since then.

        • Thunder says:

          Jim I am of the opinion Inflation, this time, is a different Fish.
          The bubble of all Bubbles is huge and inflation will slowly eat all of it as it looks like become endemic.
          Note well how long it takes markets to unwind, top to bottom. We are only at Month one of punch bowl removal. If they are apoplectic at a 0.5% rise in prime when real inflation is around 10-12% then like cocaine addicts the place is going to get busted up bad.
          I don’t know who the absolute genius was who said “You cannot taper a Ponzi” This Truth is what we face!

        • Ryan S says:

          That’s true too.

  4. Carlos Leiro says:

    Does the lack of workers refer to all or only specialized workers?

    • Apple says:

      Inexpensive workers.

      • harvey lin says:

        This, the world is running out of cheap labor willing to do work. Eventually every service performed by a human is going to be very expensive, I am talking about engineer doing stuff that level of expensive.

        • NBay says:

          We have been riding on fossil fuel as the “new slavery”.

          That shit is gonna END!…..and in a really bad way, unless we all can grasp the fact we are on a ball in space…..and


          Which will be tough since for 2-3 thousand years most have believed we have a cosmic “Daddy” lurking out there, and still do.

        • VintageVNvet says:

          you mean like carpenters/plumbers/electricians getting $100-200 PER HOUR harvey???
          or doctors/lawyers getting $500-1000 PER HOUR???
          that we are in a truly disconnected reality these days is far damn shore, eh?

    • BeetJuiceSunday says:

      :{ Biochemists needed at Beyond Beyond Meat.

      • Dan Romig says:

        Imitation vanilla. It’s not derived from vanilla beans. Nope, it’s synthesized in a lab.

        85% of imitation vanilla is made from guaiacol, a liquid produced by distilling wood-tar creosote. Or, it can be made by distilling guaiac, the resin from the guaiacum tree (best option).

        15% of imitation vanilla comes from lignin, a complex set of polymers that give woody plants their structure. The commercially available lignin based vanilla comes from the waste products made by the commercial paper industry.

        Yeah! Everyone give those biochemists a nice round of applause. (Sorry to the biochemists out there. You do great work — for the most part.)

        And when you go to the grocery store and see imitation vanilla in the list of ingredients, it is probably synthesized from wood-tar creosote or pulp-waste.

        I’m just sayin’ …

    • Gregory says:

      Lack of workers is always BS. I see it in science my field there’s never been a shortage of skilled labor. Of course it’s not cheap. If your business cannot afford the labor cost, maybe it’s not a feasible business. What if we created better businesses instead of propping up inefficient monopolies with cheap imported labor? 🤔

      • NBay says:

        And bringing production facilities back. These “12 million job openings” pay much? Maybe some, but not most.

        COMPREHENSIVE GREEN NEW INDUSTRY! and even yesterday may be too late. Maximum Net Wealth and the IRS as a FULL branch of the military.

        I can see special ops teams parachuting into Cayman Banks (and other places) or corporate HQ’s, and getting needed info at the point of a gun….going after the REAL ENEMY of the people for a change.

  5. Iona says:

    Hey Wolf, maybe there’s a story worth doing on the triple leveraged ETFs. I’m reading more and more people are using them and was shocked to find the volume on the 3x nasdaq funds is much larger than on the qqq itself! This seems like it could end up going very badly for the entire market but I don’t know enough about how these funds operate and what the possible systemic risks they might pose.

    I also learned today there is a 3x etf for the FAANG stocks. Total insanity

    • andy says:

      They make 3× ETFs because there aren’t enough regular shares for every Tom, Dick and Harry.

    • Phoenix_Ikki says:

      If I remember correctly, Blurry did warn about the danger of ETF even in the plain old vanilla kind not too long ago that can post systemic threat to the market..

    • phleep says:

      If your bets are each small enough, you will not be wiped out by putting thin slices of capital on things that just might pop. Yes, most folks lose money on most of these ETFs, but common sense can avoid catastrophe and be an interesting side bet. If the future has a probability of 1, then weighting bet size as a fraction of that, based on assumptions about probabilities represented by each, is not necessarily “total insanity.” One can, for example, bet that this is the bottom for the S&P, without committing a huge amount of one’s capital to the possibility. There always is a bottom, and most people miss it outright, based on too narrow a commitment to one possibility. A few make out, bigtime.

      I have done alright this year (far above market averages) with an ETF that trades futures. The more levered version appears not to pay returns commensurate with its supposed multiple of leverage.

      That said, I don’t know who else is holding these securities, and what their expectations or theories are.

      • phleep says:

        My money in equities now is only about 4% of my liquid net worth. I started selling in November. I had a little bit of the names that have tanked so spectacularly. And I want to credit wolfstreet for that inspiration.

        • William says:

          I trade the big futures. [YM, ES, JY, ZB(US)…]

          Which ETF do you prefer ?


      • andy says:

        Yes, gambling is fun.

        • Anonymous says:

          Of course. And as long as it’s done responsibly, it can be a harmless hobby.

    • Seattle Guy says:

      Caution about those 3x ETFs – They do not contain stocks but futures and derivatives to mimic the underlying….SPY and QQQ are the largest ETF’s of SP500 and Nasdaq 100 (Fangs) and then there are 2x and 3x Bullish and 2x and 3X Bearish of each of them.

      Here is the problem — the fees/expenses are so high that they are self-liquidating….meaning even if you are RIGHT you do not participate in the full move…so treat them like a long-term LEAP or Option trade….that will eventually decline to zero in value and many have had reverse splits. TQQQ went from 86 to 28 this YTD (3x bullish Fang) holding almost 20 billion in assets.

      Second Problem–Even when you short the leveraged ETF as they are slowly eating themselves the leveraged ones are NOT marginable so it does nothing for your future purchasing power — until sold. Dead money as it declines in value…

      Conclusion – You are better off shorting the UNleveraged SPY or QQQ (Fangs).

      We are so fortunate to live in a world that allows a poor guy get a seat at the largest casino in the world. There you can write naked weekly option spreads on a leveraged ET.F. which is holding only futures and derivatives as the underlying – while trying to mimic the Dot Com Bubble stocks x3.

    • sunny129 says:

      I am using them off and on since 2003. They are for trade (position trading – a few days to week or 2) Has to watch like a hawk. I always pair them with their long counter part to reduce whiplashing. Volatility is trader’s friend!

      Definitely NOT for the novice. Need high risk tolerance. I even trade their options. Huge pay -off yesterday and today! They ALL are risk management tools. just option trading. One needs thorough knowledge and experience to be comfortable with them. NOT every one’s cup of tea!

      B/w this mkt is ONLY for traders. Retail investors (for long term investing) will get churned off by Algoes and high frequency. If you cannot hedge, stay out of the mkt and in cash!

  6. Phoenix_Ikki says:

    Man with decline like this, I guess I feel marginally less sad getting close to 1% interest in saving vs losing 50 to 80% of the money. Both are losing proposition but at least the other will take longer from inflation than 3 to 6 months

    • Wolf Richter says:

      You can increase your income by 100%, namely to 2%+ on Treasury securities now :-]

      • cas127 says:

        We’re yucking it up about this, but there is an important lesson (perhaps *the most important lesson*) about how the G can centrally manage the economy (poorly) by “just” diddling Treasury rates from 8% to 4% to 2%.

        Most people can’t conceive of such “small” changes profoundly affecting all of the financial economy, but opportunity costs (“I’m not accepting 0% on my savings!! Not when Underpants Gnomes Enterprises is going up 100% per year!!”) and the discounted cashflow formula guarantees that such small changes do.

        (And not coincidentally, the G’s interest rate diddling is empowered by money printing, which enables the G to *directly* influence/control much of the economy – for a while, until it collapses – through unconstrained spending…on what the G wilt, in its magnificent judgment.)

      • VintageVNvet says:

        9.62 % on I-Bonds this cycle Wolf,,,
        but ya better understand the entire situation with them, as with a low FFR basis to start, they CAN go to zero, though not below,,,
        and if they do go to zero, that would mean ”deflation” was occurring, at least according to US GUV MINT ”official statistics”
        and we all know how true and stable those official statistics are, eh

        • Wolf Richter says:

          To make sure everyone understands: the interest payments for that period that is tacked on to the ibonds can go zero when CPI = 0%, meaning for that period, there is no interest payment tacked on to the bonds. In that case, the value of the ibonds remains flat for that period, rather than rising. Neither the bond itself not the prior interest payments decline in any way or go to zero.

  7. Phoenix_Ikki says:

    “This theory is not new. Some of us rode to easy riches during the dotcom bubble. At the peak, we were rich and very smart. We were geniuses, practically.”

    This reminded me to ask How Dave Portnoy feeling now? Wonder if he still thinks he is better than Buffett as he proudly proclaimed not that not long ago at the height of the market.

    • phleep says:

      The quiet of the braggarts is so refreshing.

    • QQQBall says:

      Dave Portnoy is flying business doing PR for PENN and Barstool instead of a private jet and hates it. I cant see all the hate for him. Portnoy did a lot for small restaurants during Covid and he appears to be self-made? I still enjoy his one bite pizza reviews on Youtube. He gets lots of view on that and must bank a fair amount?

  8. paiute says:

    There are plenty of signs things are turning south. I work in tech and these start ups are having trouble finding new rounds of money to burn. the housing market for middle and lower level houses is still high. But take a look at the Suncadia area outside Roslyn, WA. The number of 2-3 million dollar homes on the market is insane. To me that’s a sign that leveraged tech investors from Seattle need to downsize or maybe even go back to work. Meanwhile in places like OKC the effects will take a longer to hit as folks try to avoid working by moving back home (I’m tempted to follow some friends down this route). For a minute there I thought I could quit tech and do something more relaxed, but after the last year I’m stuck for at least 7 more years.

    • Nate says:

      Maybe. Or maybe the WFH guys get laid off first and have to move back to wherever the offices are to find work, like Seattle. I am really curious how this wfh experiment plays out since so many people took out huge loans assuming it is the new norm, but management seems to not love it.

      • Nissanfan says:

        America is built on micromanagement. Could never understand how this work from home will sustain in that control hungry work culture.

        • Apple says:

          Southwest Airlines just announced they are closing all of their reservation centers and reservation agents will work remotely.

        • Whatsmynameagain says:

          It’s going to be really interesting to see what wins out: the need for micromanaging control or the corporate savings WFH can provide. Of course it’ll probably end up being some dystopian combo when all is said and done– working from home under constant surveillance with every keystroke monitored and assessed for productivity…. Win/win, amiright??

        • Kurtismayfield says:

          They micromanage you at home just fine. The spyware and monitoring programs do it for them.

      • RockHard says:

        You’re reading a site that was built by a guy working from home, using technology built by people working from home (WordPress / Automattic is a “distributed company”), on top of a tech stack that’s frequently built by volunteers as a hobby.

        Yeah, I’m really curious how this WFH experiment plays out.

        • VintageVNvet says:

          Me too RH,,, having ”worked from home” since the 1970s,,, on and off to be sure because of various constraints especially including ”client” skepticism that was prevalent in the last several decades…
          SO, would ”hire in” as an ”employee”,,, then convince the client with very clear ”productivity” benefits.
          Most ”employers/clients” saw very clearly their benefits and made sure I stayed around with very generous ”bonus” types of remunerations.
          ”Cultivate your skills” would be my best guess for all folks, no matter what age, gender identity, etc., etc….
          Most companies do NOT care at all about anything but their best results.

    • Seattle Guy says:

      I talked to some Amazon employees…a large portion of their compensation was the growing value of their vested and unvested stock options… Not looking so good now.

  9. andy says:

    Why didn’t go IPO. Active Monthly Users alone are worth a Billion dollars (in 2021 Facebook terms). Wolf could’ve been swimming in money instead of the cold San Francisco bay.

    • Wolf Richter says:

      Yes, I admit. I dropped the ball. I also dropped the ball on the WolfCoin. I would have been a multi-billionaire by now :-]

      • Brent says:

        There is a Wolfcoin (WOLF) at Coinmarketcap.

        ECG chart shows long fibrillations (disorganised electric signals) followed by sharp spike today.

        I am to following White Queen advice to Alice and try to believe 6 impossible things before breakfast.

        My plan for today: “another broad face-ripping stock market rally”, “WOLF reaching par with BTC” ( & 4 more things).

  10. Ben Sargent says:

    i am no expert on 3x etf but my understanding i think is that the companies that run the products can create new shares as new money flows into etf and they use those funds to buy the futures and derivatives to mimic their indexes. That said i have seen some of these products have thin trading and wide bid ask. I view them as casino money chips. We always hope the casino has the cash to pay us off . Not sure if this is the case.

    • sunny129 says:

      Ben Sargent

      The Whole Equity/Bond mkts are CASINOS run CBers including Fed.
      (see my comment, above on leveraged ETFs. They are DEADLY if one doesn’t know their ‘nature’ including daily/dollar decay – they are Derivatives !

      I just trade. No more traditional investing for me.
      Now there is NO Fed’s put, No ZRP, No QEs but QT on the way, inflation rising. So are the rates!
      As I have repeatedly said ‘ Without Fed, there is NO mkt of any kind, anywhere in the World. Fundamentals DO matter, now! Many retailor investors will get burned just like 2000 and 2008!

  11. Digger Dave says:

    How ‘ya gonna keep ’em down on the farm (after they’ve seen Paree?).

    I’ve watched plenty of people around me, many of which have no real skills or foresight, get stupidly rich and get out in time. They’re so heavily invested in making easy money that they’re going to be true believers through any crash until no one is throwing money at them any more.

    It’s not my style to chase riches like that, but apparently it works. I had a mentor that got rich the slow way in the trades and real estate. I’ve taken the same route. Build up a lot of diverse skills and just keep riding slowly to the top. You’ll miss both the highs and the lows, and avoid a lot of stress. And you’ll keep ignoring the stock market with the exception of hoping it crashes hard so you can scoop up some crazy deals in real estate (after the stupid money evaporates).

    • Old School says:

      I think if you are close to retirement age you could make the case that you should could forget growth stocks and focus on dividend payers with sound balance sheets. That way you can analyze the stocks based only on dividend income and the stock price becomes irrelevant.

      • Anthony A. says:

        Good thought, and at 79 years old, I see the logic, but in my eyes, the stock price is never irrelevant. Sound balance sheets can go south with the wrong “new” head guy. GE comes to mind.

      • sunny129 says:

        Old School

        “focus on dividend payers with sound balance sheets’

        First without ‘price discovery’ and ‘mkt to mkt’ accounting standard, Balance sheets are of no use. Dividends/yield FALL when the earnings FALL.

        NOT an easy mkt for many!

  12. Seneca’s Cliff says:

    I still have my Enron Stock certificate because I took physical delivery along with other stocks approaching Y2K. The others were sold long ago but my Enron stock certificate still hangs on the wall as a reminder of how things can go bad.

  13. TK says:

    So – buy GOOG at 1250! Or write puts. It could happen. The fact that we are in disbelief makes this idea credible.

    • andy says:

      Goog will be under $125 before summer ends.

      • Josh says:

        For those unaware there will be a 20-1 GOOG stock split on 7/1. At today’s close that would make the new shares $117.

    • sunny129 says:

      Bought 1 or 2, long (leap) CALLS and relatively short frame PUTS.
      just for fun.

  14. ru82 says:

    All these tech startup companies running out of money reminds me of all the oil shale companies running out of money in 2015 and 2016. I still have 3 bankrupt shale companies listed in my brokerage account at a value of $0

    • Wolf Richter says:

      When you get tired of looking at those three, you can call your broker and ask them to remove them manually. I had to do that after the dotcom bust.

      • Kracow says:

        I keep all mine… Helps to be able to show some losers to the folks who always say someone has a easy life but never saw the journey to get there.

      • Anthony A. says:

        I had one tech stock years ago that went to $0.05. I got sick of looking at it and had to call the broker to get rid of it too. Embarrassing to do.

        • The Colorado Kid says:

          is the penny stock market still around? (Was there ever such a thing?) I had a friend who said they lost millions (of pennies) in it on Arabian horse ranches.

  15. Nate says:

    I changed some of my allocations from USA to international because the USA has been over performing for longer than historical trends, which was and continues to be painful in the short term. But I was meaning to do so for a while and the absurdities with the last bull finally gave me a good push.

    Everything is a bubble is probably not the case, imho. Would require a complete change in savings rates, capital vs. labor, wealth inequality, etc. Things tend to work out for the rich, for some reason.

    So, some stuff will do aight and some stuff will crash. Who knows what but that’s what diversification and asset allocations are meant to address.

    I am worried for the little guys who may be 95% usa in their investments because Japan says even huge economies can get wiped out and never reach those heights even decades later. As a patriot I hope that never happens here.

    • andy says:

      Also, Japan trades at discount due to yen crashing like 20% in the last 2-3 months.
      I disliked international for all the Alibabas and Pinduoduos, and other Chinese “tech”. But those crashed too now. So redirected 401K to international.

    • David Hall says:

      I have Canadian oil stock that increased in value during a declining stock market. The industry is cyclical.

      Years ago there was a refinery shortage. They expanded existing refineries, rather than build new ones.

      • Anthony A. says:

        Much, much easier to expand a refinery than build new ones.

        If you can get the air emission permits approved, and can find the CORRECT land option, a refinery will take 5+ years to build. It’s hard to guess out 5 years as to what the value of your products will be at that time. Ordering steel and custom built heaters/treaters, etc, is also a chore.

  16. ru82 says:

    A couple of post ago I said the FED and the government has attempted to pump up the economy through various stimulus programs. Not sure what to call it but here is the running total as of November 2020. So there could be a few program not on this list. I did not come up with it but the author wrote it in response to a WSJ article at the same time saying

    “The Rescues Ruining Capitalism”
    Easy money and constant stimulus have undermined the basic dynamics of the free market. We’ve paid the price in low growth and productivity, falling entrepreneurship and rising inequality.

    So the author came up with the following list that starts in 2009 .

    3,811 = Term Auction Facility
    10,057 = Central Bank Liquidity Swaps
    855 = Single Tranche Open Market Operation
    2,000 = Term Securities Lending Facility and Term Options program
    12 = Bear Sterns Bridge Loan
    29 = Maiden Lane 1
    8,951 = Primary Dealer Credit Facility
    217 = Asset-Backed Commercial Paper Money Market
    737 = Commercial Paper Funding Facility
    71 = Term Asset-Backed Securities Loan Facility
    700 = Troubled Assets Relief Program (TARP)
    2,100 = Agency Mortgage-Backed Security Purchase Program (QE1)
    830 – America Recovery and Reinvestment Act (ARRA)
    140 = AIG Revolving Credit Facility
    802 = AIG Securities Borrowing Facility
    19 = Maiden Lane II
    24 = Maiden Lane III
    25 = AIA/ALICO
    600 = Agency Mortgage-Backed Security Program (QE2)
    735 = Treasury Bond Security Purchase Program (QE3)
    825 = Agency Mortgage-Backed Security Purchase (QE4)
    385 = Feds REPO Operation 2019
    3,010 = Multiprogram COVID Loan programs.

    Total is around 36 trillion.

    The author (Lance Roberts) of the lists states: To date, the Federal Reserve, and the Government, have pumped more than $36 Trillion into the economy to keep it “afloat.”

    I say “afloat” rather than “growing” because, during the last decade, economic “growth” was a function of population growth. Monetary interventions were successful in creating inflation in financial assets. However, during the same period, the economy grew by only $2.92 Trillion.

    In other words, for each dollar of economic growth since 2008, it required $12.67 of monetary stimulus. Such sounds okay until you realize it came solely from debt issuance.

    A growing body of research shows that constant government stimulus has been a major contributor to many of modern capitalism’s most glaring ills.

    The Stock Market Is Not The Economy
    “At the same time, easy money has juiced up the value of stocks, bonds and other financial assets, which benefits mainly the rich, inflaming social resentment over growing inequalities in income and wealth. It should not be surprising that millennials and Gen Z are growing disillusioned with this distorted form of capitalism and say that they prefer socialism. But….In America, if you make $30,000/year, you are in the lower-income levels of the economy and barely above poverty levels. However, compared to the rest of the world, you are in the top 1% of income earners

    • andy says:

      Next up, cancel all student debt. And each Millenial gets a Tesla. It’s only fair.

    • Jerry S says:

      Capitalism was an extractive exploitative system based on infinite growth and externalizing costs to the environment and the labor force. The planet is finite and cannot support this system and the resulting gigantic population (of wage slaves). Gigantic monetary and fiscal stimulus just hide the massive failures of institutions to adapt to post-capitalist realities.

      • VintageVNvet says:

        Please tell us which ”system” was or is NOT exploitive of the environment and slaves/WE the PEONs Jerry?
        SO far, IMHO, ALL of the human based ”systems” while pretty in theory, boil down to the same fallacy of the ”central authority figure”…. and not just economics, far shore
        as such, all such ”systems” are subject to inequality, and always will be
        at least in theory, per above, any system that lacks incentive for merit is inferior, and hence the recent preference for capitalism WITH RULE OF LAW for the last couple of centuries and it’s superiority to kings or socialism, etc., SO FAR

  17. Skippy says:

    Hi Wolf, did you change the font on your site? It looks slightly different to me.

    • Wolf Richter says:

      Working on the fonts for the headlines. Switched to Web Safe Fonts for headlines, and the bold isn’t working.

      • RockHard says:

        It looks like your inline CSS for .entry-title wants font-style: bold; not sure where else that’s used though.
        If you’re concerned about performance, you should move that CSS into a separate file, that’ll reduce individual page weight and allows the browser to cache your CSS, which probably rarely changes. Those Jetpack open graph styles also take up a fair bit of room on the page source – might look into linking to that as external sources.

      • RockHard says:

        Also – I’m guessing the people reacting to the font switch might be picking up on a slight disconnect – paragraphs in the main body are Droid Sans and headlines are Arial. You might look at Tahoma or Verdana or just unifying the entire page under one typeface, sometimes the slight differences in fonts are visually off-putting to the eye.

        • Wolf Richter says:

          My dear readers complained when I replaced Droid in the text yesterday. So now Droid is back.

          But I’d never used Droid for the headlines. There were always different fonts in the headlines than in the text. Droid doesn’t look good in headlines. The headline fonts I used (beautiful) were what moved the page when rendering. So the headlines are now in Arial and they load very well.

          I just can’t get the headlines to be bold. So this being apparently above my low pay-grade, I delegated it up to my web developer, and he got the fix, and I have seen it, but it’s not live yet.

  18. polistra says:

    The post-2008 counterfeiting was always to inflate the market “pure and simple”. Bernanke announced it directly and openly at the time, but all the media ignored him and continued telling us complicated stories.

    • DanS86 says:

      And that’s why we are not only in The Everything Bubble but also at Peak Corruption. If you doubt that, did you watch last night’s clown show?

    • Old School says:

      I will admit I could be wrong, but I think the balance sheet expansion will never be able to be unwound. Maybe they can run off $500 B, but I think that will be about it.

      Steve Hanke says it’s pretty simple and it’s going to take 18 months to get inflation out of the system if the Fed does the right thing. If they try to solve the problem too fast we will be in a hard recession.

      • QQQBall says:

        Old Skool – I was watching a podcast and the guy said $500B of Qt equates to a 1% increase in interest rates, so $1T is 2%. There’s no way they QT the total $9T even if its not 1% per $500B…

        When they flip next time I hope they have a Japanese -American as Fed Head, b/c thats where we are headed. Stunned every day that people arent shrieking about BOJ activities.

  19. Richard Greene says:

    Very interesting article.
    Few investors would ever admit to errors in writing.

    The canary in the coalmine for me in 2021 was a stock with a valuation so high it makes dot.coms in 2000 look like conservative investments for old ladies on Social Security.

    HWIN is one small rural New Jersey Deli with sales in the past 12 months of $26,000. a gross profit (loss) of ($30,000) and a net loss of -$423 million.

    The current valuation of this ONE small deli is an astounding $387 million, down 31% from the peak market capitalization. I have a finance MBA, yet can’t figure out how such numbers are possible, unless criminal activity is involved.

    Concerning the 2000 versus 2021 peak stock valuation comparison:
    Looking at the Median Price Sales Ratio, split 10 ways (by valuation decile, based on market cap), the 2000 valuation peak was mainly the largest (top 10%) market cap stocks. The 2021 peak of those top 10% stocks was somewhat higher than in 2000. But the big difference was each of the other nine valuation deciles, at their peaks in 2021, were much higher than in 2000.

    Based on the Median Price to Sales Ratio, the median stock in 2021 reached, by far, the highest valuation in history.

    • phleep says:

      > “… can’t figure out how such numbers are possible, unless criminal activity is involved.”

      Criminally stupid meme investors with pockets full of free funny-money? Look at the way social media is corrupting the impressionable lately. Which doesn’t exclude criminality.

  20. Sams says:

    A few questions if it actually will play out as last bubble burst. Does the skill of those that left the labour force match the job openings?

    Then, demographics, if many who left retired, are they still fit to re-join the labour force? And do employers want to hire people, say 65 years old and older?

  21. Catastrophe theory delineates a long period of growth followed by a substantial collapse, in turn followed by a return to the previous top that becomes stalled . . . which turns into a complete collapse back to the very beginning. It was this which was the underlying thinking that Robert Beckman used to write his book; The Downwave, where he predicted in 1982 a return to pre 1939 levels. Are we at the point of complete collapse? Food for thought?

    • unamused says:

      Things are different this time.

      Instead of a bursting dotcom bubble or a 2008 meltdown you now have both at the same time, plus a raft of other serious problems. You have to admit, that’s different.

      I’m told that we’ve always had these problems in the past and have always gotten through them, and therefore will always get through them. Just like if you flip a coin and it comes up heads it will always come up heads.

      Children are always going to burn their fingers no matter how careful you are. But you absolutely must not let them burn down the house.

      • phleep says:

        > you absolutely must not let them burn down the house.

        A free society has huge gaps, for better and worse. Look how we came out of COVID in all our chaos better than China has. But I shudder, thinking of relying on big helpings of randomness and luck.

        • unamused says:

          “Look how we came out of COVID in all our chaos better than China has.”

          The US has had over a million covid deaths. China has had fewer than 6000. The US has had 4000 in single days.

          Oh, you were being sarcastic. Sorry.

        • Cookdoggie says:

          Una – if you believe the planet’s resources are taxed due to overcrowding, then the US indeed gave a better performance towards relieving that.

      • Augustus Frost says:

        I’m with you on this one. The US isn’t exempt from reality. The actual fundamentals in the US are mediocre to terrible, papered over the government deficit spending and the loosest lending conditions in history. That’s what’s minimizing the extended social decay in plain sight.

    • RockHard says:

      > he predicted in 1982 a return to pre 1939 levels

      So “catastrophe theory” was completely wrong, unless you give him a 40 year margin for error, then maybe. Given that he was making predictions on a 43 year timescale in 1982, I’m going with “completely wrong”.

      There are definitely a lot of things going wrong but I don’t think it has much to do with technical levels or business cycles.

      • phleep says:

        Theories of complex things recurring in a particular shape are bound to torture the data. Complex means enough moving pars it is incalculable, inherently. It is not merely complicated and calculable.

    • Augustus Frost says:

      The root cause isn’t just economic and financial. That’s the symptom. The factors which made the US (and western civilization generally) successful in the past have been eroding my entire life and earlier. Extended social decay along with whatever else anyone wants to add to the list.

      There isn’t an economic or political solution to this problem. It’s not going to be a straight line, but the US (and western civilization) are in the process of being eclipsed geopolitically which will later be readily evident in a far less prosperous and stable society.

      By my “crystal ball”, initially to be replaced by China and the Far East generally and after that, a global Islamic conquest.

      • NBay says:

        That crystal ball sounds like one of those old 8-balls we had as kids. Take another look at it, I think “concentrate and ask again” just came up.

  22. DanS86 says:

    Funny how Goldman always makes out well. They must be pulling the levers. There is no EMH (Efficient Market Hypothesis). Once in a century crash coming. Think of all the foreclosed homes coming. Unless the Fed buys homes, cars, and credit debt. No joke! Up is Down, Left is Right, Love is Anger.

    • phleep says:

      So there mus be a calculating agent behind a super-complex economic evolution, right? And GS is a recognizable publicized name, so why not anchor to that? All sorts of cognitive error here. GS has done some fancy broken-field running to keep an edge, and is not the factor it was in ’08, which wasn’t all THAT much.

      They do well because they practice superior risk management, is my opinion. They get out of the house before it is afire. The average player does not.

      • Nate says:

        I’ll never forget the pictures of Goldman packing up sandbags in front of their NJ office right before Sandy hit. People thought it was weird. They dodged any losses, even though it was close.

        They may be the most evil of the banking firms. But they also seem to be the smartest. You shouldn’t believe a word that comes out of their interviews but they bear watching what they actually do.

      • Cookdoggie says:

        “They do well because they practice superior risk management, is my opinion. They get out of the house before it is afire. The average player does not.“

        It’s easy to do when you’re the one starting the fire.

  23. joe2 says:

    “having trouble hiring enough people”

    Having trouble finding workers that are worth paying is the problem. Lots of lazy people out there who will sit around while being paid. Others you can’t trust not to sue you. Ever “lay-off” a troublemaker and get a call from the State for a meeting about an illegal firing, and bring your lawyer? The government is the drama queen constantly justifying their existence.

    Regulations, licensing, mandated benefits, insurance, work ethic limit the available good workers to a small pool. And if they are very good they leave to start their own company.

    • unamused says:

      “Having trouble finding workers that are worth paying is the problem.”

      Hence the record corporate profits.

      • joe2 says:

        Check out the companies closed down during the “covid crisis”. Not a lot of profits there. Sure the big fascist crony capitalists make out like bandits but that’s due to government/corporate corruption.

        Which side are you on?

    • phleep says:

      > Ever “lay-off” a troublemaker and get a call from the State for a meeting about an illegal firing, and bring your lawyer?

      As a college teacher, every semester there is a percentage of folks who will blow smoke and often make accusations, over their own failures. It was relatively benign this spring, but I was still called a liar to my face, by a whining free-rider. It is absolutely a feature of the society. Probably always was, but less legalized. Oh, and what I teach is law. It still shocks me shocking what absurd antics appear in a course that is about rules, has simple, clear requirements, and is taught to adults.

  24. Lily Von Schtupp says:

    Is there an industry-by-industry breakdown of labor shortages? Everything I see tends to be generalized about this job/industry hopping, and I do believe some investors hit it big and took a break from the working world in the past few years as Wolf also suggests. But here in my dumpy lower-to-middle, middle-class profession (in a wealthy area), its clear that health care staff have been completely priced out of housing, childcare and commute (gas). Doesn’t appear to be related to any sort of newfound personal investment strategies during the pandemic, they just literally can’t afford to work in the industry as it is.

    Even RNs, PTs, OTs are running for higher ground – more affordable areas or better paying gigs outside of healthcare. Aides make less than coffee shop jockies and McDonalds cashiers while doing God’s work, only to be used and abused, and by and large they’ve had enough (more power to them). I know a fee who dropped off to live on gov’t programs as paid caretakers for their own elderly family. And yet, we hear time and time again from frustrated middle-to upper class patients who can’t get staffing, that its only because ‘no one wants to work anymore’. Frankly it’d be insulting if we weren’t sure the rich folks don’t know any better.

    If they’re leaving the workforce in healthcare, it’s because of COLA. There’s few day cares left open after the pandemic, and it’s now even more ungodly expensive to send your kid to one anyway. Many of the people who have dropped out of the labor force are women who were making less than their partners to begin with. Similar issues with service industry, lifeguards, and other lower paying gigs: housing, gas, childcare.

    At least that’s the viewpoint from down here in the weeds, but clearly I’m no professional investor or economist. Just living the lower-middle class dream.

    • unamused says:

      “Is there an industry-by-industry breakdown of labor shortages?”

      Agriculture is having a terrible time finding produce pickers. They’re all staying home.

      • RockHard says:

        The only thing we have a surplus of in this economy is people willing to complain about other people’s work ethic.

        Pretty sure those produce picker jobs are there for the taking for anyone really concerned about this. Can take a job away from an illegal alien at the same time, really it’s the patriotic thing to do.

        Don’t you all jump up at once now.

        • phleep says:

          The economy was in a sort of equilibrium with hidden immigrants working off the chart and doing the manual labor. Definitely that was a factor along with Chinese/globalizing goods/labor abroad, in containing consumer inflation. There was social peace in my region of soCal. The last prez suddenly started clobbering the hornets’ nest, sending in the cops from a DC edict, sometimes reluctantly, making all those people further underground, to then start fleeing crime scenes and not being witnesses, etc. That is more the norm ever since. Not that the equilibrium would have held.

        • VintageVNvet says:

          May actually be produce picking work available some places RH,,,
          But definitely different in the Salinas Valley where the very best produce is grown in large quantities:
          At harvest 50 years ago, there might be one or two buses and the trucks to carry the produce away from the field, nothing else…
          A few years ago, my last time there, there were 40 or 50 cars, several machines with conveyor belts extending widely from both sides, and at least one ”relief station” with shaded rest area, toilets, hand wash facilities and eye wash facilities…At every field; some had double of all of the above.
          I was told ALL the workers were UNION, and either worked or were kicked out —
          BY THE UNION….

      • Harvey Mushman says:

        These labor shortages are “Transitory”. (To use a familiar term)

    • ru82 says:

      I read a poll of people who just decided not to work or do side gigs for cash.

      Lot of the service jobs that used to pay $10 pre covid that now pay $15 still do not come with benefits like paid time off or health care.

      So frankly, many after tax paychecks, are not worth the trouble when you do not get any benefits. It is just easier to shack up with friend or family and do odd gig jobs as needed.

      • Augustus Frost says:

        Yes, until many or most of those gigs disappear in a bad economy, like the second hand account I know of that person with the dog sitting/walking business.

  25. Phoenix_Ikki says:

    Looks like another one is falling out of the sky today. DocuSign down 25% before opening, it’s going to be interesting today. That “transitory” inflation is now 8.6% but no worries papa Powell, you take your time raising interest rate .5 at a time, that’ll show inflation who’s the boss .

    Isn’t DocuSign hyped by Cathie Woodshed? She better get in on some dip buying now, plenty of opportunity here.

    • unamused says:

      Inflation is permanently transitory.

      You just have to understand the language.

      “Shaka, when the walls fell.”

    • Turtle says:

      Buy the dip! A gift from God!

      That’s what they say when they’re freaking out privately.

      • Phoenix_Ikki says:

        Paging PPT, we need you to do your job today instead of hanging out at the bar again. There’s still couple of hours for you to redeem yourself!

        • Anthony A. says:

          It’s Friday, everyone’s at the bar today after work. It’s the American thing to do. Even the PPT is there and the happy hour free food is good on Fridays.

        • Brent says:

          It can be fixed w/o bothering good folks at PPT:
          1.Turn off screen lock
          2.Rotate your device 180 degrees.
          3.Enjoy the skyrocketing stock market
          If you are a perfectionist there must be some app at Google store which turns “-” into “+” and colors red numbers green.

    • Augustus Frost says:

      DocuSign is another ridiculously overpriced company with no proprietary intellectual property. It’s generic functionality just like video conferencing. I read today that they have some arrangement with MSFT but don’t believe they need them.

  26. Lily Von Schtupp says:

    Cost of living, not COLA*. I raise the question particularly due to healthcare being one of if not the largest industry employing women, and women make up a good chunk of the service industries and they’re the ones who dropped out like flies during COVID.

    • Lily Von Schtupp says:

      D’oh* failed reply to myself.

    • phleep says:

      A student of mine, a nurse, burned out from COVID, told me she and her husband, as of the start of this spring semester, were looking to buy a house and rent it out, as a replacement for her income. Things change quickly these days. I don’t expect the rate of change (since March ’20) to slow down. In 90 days we will having yet a different conversation. I expect weather and war will factor in, along with potential eye-popping runaway inflation. I hope folks are nimble!

      • Lily Von Schtupp says:

        Lots of healthcare burnout after the mismanagement of the pandemic and batshit insane *personal* and professional liability of HCPs. The hired guns are tired of having their necks and licenses in a noose in the name of corporate profit.

        Still, hard to jump out. I know of one who did the ‘passive income’ landlording route and doing fine with it, but many others are returning to school for something else. I myself am looking to go into business school, not a fan of even non-clinical healthcare anymore. But gotta pay the bills meantime and would rather chug colon prep than take out yet more student loans.

        • Anthony A. says:

          At least the Big Guns haven’t moved healthcare offshore like they did manufacturing where I came out of. I had to move my young family across the country in 1981 to find another job after my plant in Connecticut shut down. That was not fun in the face of double digit inflation.

          But we can’t do that to healthcare as it’s local stuff, well except for drug manufacturing. Gotta love those Chinese pills.

        • phleep says:

          > yet more student loans.

          I teach business law at a community college. We have a pretty complete program that is dirt cheap.

          I know it isn’t Wharton, but hey. I leave everything I have in those classrooms, and in summer I’m constantly upgrading myself and my presentations (unpaid). It’s a vocation. And my pension reserves are a micro-fraction of what posters here seem to think folks in my state get. But it is better than scamming people. I respect the face I shave in the mirror every morning, which is worth a lot.

        • Lily Von Schtupp says:

          Anthony A, you would think that.

          I did too, til I discovered they are starting to outsource local agency care coordination and Case Management overseas. Medical billing and coding are already outsourcable.

          The US would sooner outsource our healthcare than switch to a national system. The way our gov’t runs things, I’m not entirely sure which is worse.

        • Lily Von Schtupp says:

          phleep I’ve got nothing against my cc degree, its paid the bills and even saved a few lives along the way, but even the local cc’s are 10x’s the tuition they were not 20 years ago. Without a second income to lean on, the local CC might as well be Yale for all it costs.

  27. David Pare says:

    Something that started in 2021 caused a wave of disability in the 16+ age range – pulling perhaps 2.7 million people out of the labor force – due to this large (and record) increase in disability. Maybe that’s helping to cause the labor shortage issue? For each disabled worker, you probably also have family members who can’t work due to taking care of the newly-disabled workers.

    2.7 million fewer workers – think that might cause a ripple in salaries?

    • VintageVNvet says:

      Very interesting chart far shore DP:
      Likely to be a cumulation of:
      1. Results of recent virus pandemic, especially the ”long” type as an excuse.
      2. More or much more liberal acceptance of ”claims” as has occurred to US, in this case the family US, in the past as we moved from one very liberal area to a very conservative area.
      3. The movement to legalize certain substances as medicine, the possession of which were formerly up to a felony, but now can be obtained totally legal — with a disability.

  28. Finster says:

    Outstanding article, Wolf! On too many fronts to cover. I like your use of the term “stock price inflation”, because that’s exactly what it is. The first place inflation shows up is in asset prices, where it creates an illusion of prosperity. Lulled into reckless somnolence by moderate consumer price inflation, the Fed acts as though it can go on forever. It can’t.

    • Goomee says:

      Also for us attention impaired. In podcasts, my attention gets easily diverted. In reading, my attention is focused.

  29. SoCalBeachDude says:

    The Dow (DJIA 30) is doing much better than expected today and is only down about 800 points at the moment, but the day is still young.

  30. SoCalBeachDude says:

    Yellen Rejects Corporate Greed to Blame…


    (All from the lady who proclaimed ‘inflation’ is transitory!!!)

  31. RockHard says:

    Don’t know where to drop this, but just talking to my oldest who’s home from college. She reports that none of her college friends who’ve tried can find work, unless it’s something pre-arranged like an internship or a previous job. Even the places that advertise “now hiring” aren’t. Obv a business can decide not to hire someone for a lot of reasons (and wanting more than summer help is valid), but that really makes me question the “labor shortage” we hear so much about.

  32. Brendan says:

    I’d been in the business for 5 yrs, selling fixed annuities with my brother-in-law, while the dot-coms were shooting skyward. I left his company and signed w/ what was then Am. Express Fin. Adv.’s in July of 1999. They told me everyone needed their proprietary stock funds and VUL and I naturally believed them. I had just enough time to sell a bunch of this junk to a whole bunch of people who didn’t know what the hell it was before it all turned to sh*t the next year. I had replaced my own predictably solid Canada Life whole life policy with an AMEX VUL, and I remember watching it tank day after day after day. Those years so scarred me as an advisor it shapes my advice to clients to this day. They call me bearish Brendan.

    • phleep says:

      In boom times, everyone from mortgage sales to financial advice are sent out there to hawk increasingly sketchy products. A student of mine leading into ’08 working at a bank, questioned the jive mortgage products he was pushed to sell, and was told, “do you want your job or not?” Welcome to capitalism, where you smile and dance. But it is true of any other system too, just in slightly different (often worse) packaging. That’s why I took a big drop in income to teach. I said the lawyering wasn’t getting to me, but it was.

  33. SoCalBeachDude says:

    The US Dollar is doing spectacularly well today and has reached a new 2022 high of 104.19 on the DXY after soaring 0.89 just today and is headed much higher as yields (interest rates) on 10-year US Treasuries soar upwards.

  34. Miatadon says:

    As the SHTF when will capitalism as practiced in the US receive some scrutiny? It’s not a free-market at all. It’s some kind of weird casino fascism leaving us with a few oligarchs that own most of everything, homeless encampments everywhere, and inflation and hopelessness running rampant. Our system is more like Russia and Ukraine, than it is like democratic socialist countries in Europe.

  35. SpencerG says:

    I have to say that I am one of those labor force participants who is planning to leverage my value upwards. After a year and a half without work… (ageism is a real thing Folks)… I finally landed a job at a casino dealing with the bookings side of the operations.

    The corporate bigwigs can complain about there not being enough workers right now but they might want to look in a mirror. This job that I am training for is akin to working for a 1990s in-house travel agency call center… at 1990s wages. We are expected to master a dozen different specialty programs AND deal with the top ten percent of the casino’s customers over the phone… for well under $15 an hour. I am laughing just thinking about it.

    Every single trainee in my class is looking for another job. At lunch this week one of the women found a job posting for inside the same casino which involves wiping down slot machines after a player is done playing. Literally a half-trained monkey could do it. It pays 25 cents less an hour than what we are being paid.

    Meanwhile, the Management seems to have failed to figure out that this unit is running a 50 to 80% annual turnover rate… AND they brag about how “movement” within the organization is encouraged.


  36. Rslmania says:

    Thank you wolf! So for those of us who agree and get out of nasdaq/tech stocks now, where do you recommend parking the funds for the next few + years?

    • Wolf Richter says:

      Treasuries looking pretty good for cash management, depending on your time frame. Two-year yield over 3%; 1-year yield 2.5%. 6-month close to 2%. I don’t mean “buy in the market to trade.” I mean “buy and hold to maturity.” You can set up an account at and buy at auction without fees and hold to maturity. Very convenient. While at it, you can buy your annual max of i-bonds.

  37. Eferg says:


    Great summary and perspective. Thanks for preparing and sharing.

    PS: I thought there was a font change, but was not sure until I saw your confirmation. I like it.

Comments are closed.