Interesting stuff happening in the labor market, suddenly.
By Wolf Richter for WOLF STREET.
Employers added 315,000 workers to their payrolls in August, and 1.13 million over the past three months – solid growth.
Households reported that the number of working people in regular jobs or self-employed jumped by 442,000 in August, after having been essentially flat for months. There have been indications that aggressive hiring by employers pulled some self-employed workers out of self-employment and onto regular payrolls. Hence the sharp increase in payrolls and the more slowly growing overall number of working people.
Wages rose again, but a tad less sharply. The number of unemployed people actively looking for work ticked up from July, but July had been the lowest level since the year 2000 at the peak of the dotcom bubble.
The biggest movements were the jumps in the labor force, in the labor force participation rate, and in the prime-age labor force participation rate, a welcome turn in a labor market pressured by demand for labor and labor shortages.
The instant play money vanished.
This jump in the labor force comes as the S&P 500 index is down 18% from its high at the beginning of the year. The Nasdaq is down 28% from its high in November. Many of the most speculative stocks, crazy meme stocks, and SPAC and IPO zombies have collapsed by 70% or 80% or even over 90%, hundreds of them, some of which I report on in my Imploded Stocks column.
Most cryptos have collapsed by 70% or more, and some have essentially vanished. DeFi crypto exchanges and lending platforms have filed for bankruptcy and taken their clients’ fiat and cryptos with them. It has been a nightmare out there for people exposed to this stuff.
These are the kinds of high-risk blood-pressure-raising adventures that lots of people embarked on during the pandemic, and initially made lots and lots of money with, often life-changing amounts of money that allowed them to just rest on their laurels and live off their gains, and not have to return to the daily grind.
If they didn’t return to the daily grind, they thereby exited the “labor force.” The labor force is defined as people who are working or who are actively looking for work. But if crypto millionaires don’t want to go back to their day jobs and aren’t looking for work, they’re out of the labor force.
The labor force has been stubbornly constrained for all kinds of reasons, including that people could afford to not go back to work because their most speculative bets were making huge amounts of money very quickly, and many figured that this would somehow keep going, having fallen prey to their own hype-and-hoopla show.
But if they didn’t get out of those bets in time, their instant play money is now vanishing, and if they were leveraged and didn’t get out in time, that money is now gone.
The labor force jumped to a record in August, finally.
There has been lots of thinking on what it would take to bring these people back into the labor force. And maybe a big selloff would do the job, as it has been surmised many times, and maybe we’re starting to see some of it.
The labor force jumped by 786,000 people in August, after wobbling for months, to 164.75 million, finally inching past the pre-pandemic high of February 2020, and setting a new record:
Lots of logical reasons have been cited why the labor force had gotten stuck at these low levels for so long, rather than recover: The difficulty and expense in finding daycare; the need to care for elderly relatives; the excess mortality since 2020; health problems; ageism where, even in a labor shortage, a 35-year old refuses to hire a 60-year old; etc. etc.
On that long list is also the large wave of “retirements” by people who can afford to “retire” thanks to the huge gains on their most speculative bets.
But then, enough of those speculative bets went south hard enough for long enough, and suddenly the labor force jumped as people started looking for a job again? It’s starting to look like it.
The labor force participation rate, which measures the labor force as a percent of the working-age population 16 years and older, has been woefully low, and had refused to recover. But in August, it jumped to 62.4%, which is still below the pre-pandemic years, but it’s a big step up from July and reversed several months of declines:
The prime age labor force participation rate – people between 25 and 54 years old, the most dynamic and crucial portion of the labor force – jumped to 82.8%, the highest rate since November 2019.
For people aged 25 to 54, the labor force participation rate is now higher than in the Good Times before the pandemic, except for the three months from December 2019 through February 2020, indicating that younger people have moved into the work force. In other words, the rate has fully recovered to Good Times levels, and that’s very good news for the labor market that needs them:
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I guess the smart money is doing what Michael Burry just did. Unload just about everything.
Even a broken digital clock is right once a day.
Good to see people working again.
Not so good to see that their speculative dreams have given way to harsh reality where their wages have not kept pace with their expenses.
No, that’s good too.
“No, that’s good too.”
Exactly. It’s heartwarming watching these cryptobros lose everything. Get a f***in’ job. Sitting on mom’s couch “trading crypto” and getting high with stimmie checks isn’t “working.”
Yeah, so much of that trading was straight-up Ponzi. Cyrpto firms got away with not showing audited financials, as so many other boring companies must. These lessons had to be learned somehow: the easy way (actual disciplined learning) or the hard way (fantasies plus arrogance plus loss).
I guarantee you the people who should be learning the lessons and paying the consequences are not. They are laughing all the way to the bank.
Crypto is a zero sum game, a transfer from the unlucky to the lucky. Or maybe the not so smart to smarter people. Pretty sad, but not the first time in human history.
All the money is made early in Ponzi schemes. The latecomers are the bagholders. Pretty much all of the cryptobros bragging online were the bagholders. Most didn’t even get a 2x return before things went south.
“All the money is made early in Ponzi schemes. The latecomers are the bagholders.”
Which is why, as of today, there are 20,845 different cryptocurrency flavors.
1. Create your own crypto.
2. Mine a whole bunch of them when mining can be done extremely easily.
3. Hope that suckers pay you for them and that YOUR crypto flavor catches on.
Forgot to mention, the digital tulip bulb “market cap” as of today is $976,538,723,771. That’s 976.5 BILLION dollars.
Collectively it’s not possible to “unload everything”, because someone, somewhere, has to “own everything”.
Except of course for stocks that go bankrupt and bonds that mature or get defaulted on, without being refinanced…
to bad they were all PART TIME
# full time continues to fall as employers need to TRY YOU OUT before going all in
not to worry though
there are around 11,000,000 FULL TIME WORKERS aged 60-65 that will be retiring soon
so IF YOU HAVE SKILLS there is GAINFUL employment coming soon
“Unload everything” is a figure of speech, with a distinct meaning of psychological state of the market participants. “Everything” in the markets is the sum of beliefs of the participants of how valuable are some abstract financial concepts, which they cannot possibly understand. I know people, people are not that smart. Not that many of them at least for “everything” to be the actual business value of traded companies and not the value of the deranged casino. When the markets start evaporating the participants are collectively unloading into nothingness. The value is no more. Not in a single transaction per unit, but as I said – it’s complicated. “Everything” is a hyperbole, but stay tuned for 75% drop this time, pretty much “everything”. The most deranged casino in the history of deranged casinos is about to be cut to size.
Re: “When the markets start evaporating the participants are collectively unloading into nothingness.”
No sir! We must always remember that “The Participants” are always on both sides of every single trade. Without buyers, would-be sellers can only be bag holders.
It’s true there are sometimes panic moments when sellers are unloading in pain… but that’s still only half the participant list, because for every seller there’s a willing buyer.
Those buyers are intentionally and thoughtfully taking the other side of the trade. Both sides believe that they’re doing the right thing for themselves, or they wouldn’t be trading. When sellers get desperate, and potential buyers get worried, then the buyers must be enticed with a discount on the price, that is all. But no one is “unloading into nothingness”. They’re unloading into someone else’s portfolio, at a discount.
Today the MSM artificially blamed “rising unemployment rate” on the SP500 reversal from 1% up to 1% down. This is amusing at best as rising unemployment (bad news) is good news for Wall Street, as that would mean the Fed, in theory, could pull back on hiking rates sooner. Plus like Wolf stated, the participation rate increase was to the reasoning for the increase percentage wise for unemployment, etc…
Dig deeper and you will find the news that actually turned the market, on a dime to the minute, was the EU gas shut-off. The poorly contrived move to “cap oil prices” set up a completely predictable reaction that even Grandma Yellen should have seen coming, yet maybe that was the plan all along to “reduce liquidity” via draining market liquidity, in my attempt to find a morsel of reasoning as no EU gas pretty much ensures a global recession for everyone…
Per Bloomberg:
Gazprom said a leak of oil was detected at a gas turbine that helps pump gas into the link, and there’s no indication how long fixing it may take. Similar oil leaks were previously detected at some other turbines, which are out of action now, and “complete elimination of oil leakage on these turbines is possible only in the conditions of a specialized repair company,” Gazprom said.
Hours earlier, the Group of Seven said it planned to implement a price cap on global purchases of Russian oil.
There was also an announcement that any countries participating in a “cap” would be on the receiving end of an oil embargo.
Yort,
Stocks have been sliding since Aug 16, because this was a bear-market summer rally, and it ended on Aug 16, and every day there must be one specific reason, such as “Dolly Parton sneezed,” for markets to head lower. It’s hilarious actually.
In reality, it’s just a bear-market rally that is getting unwound, and that’s the reason why stocks are going down.
Excuse me, but a Dolly Parton squeeze could cause an earthquake.
It was the 45th anniversary of the day Elvis died. Say no more.
“Dig deeper and you will find the news that actually turned the market, on a dime to the minute, was the EU gas shut-off. ”
No, it didn’t, really. All supposed “reasons” are rationalizations for market action.
No news event has ever bought or sold a single share, ever. Or anything else for that matter.
Good news! Interesting that the 18-54 is moving towards highs but the 16+ is still at lows.
Hopefully this is more voluntary early retirements rather then ageism. But looking at average vs. median net worth…I am pessimistic. So, I for one would like to see some new laws addressing this discrimination.
Because looking at birthrates, ware going to need to get a better capture of our labor force participation, increase growth, or cede more of our economic share to folks who don’t think highly of us.
I read about a big fenced in crypto mine (made out of lots of cargo containers it looked like) way back in the hills of NC that’s bothering the neighbors…..for now, anyway……
If i read correctly I think Burry thought the S&P could reach down to 1900 or so !
Liquidate them all, the bosses need more workers. Seriously though, what do these people do all day with their millions? Count them by the pool? Sleep in? BORING! Last I checked you can be wealthy and still contribute to our economy if you’d like.
Scuba dive, swim a mile and chase the wife retirement and money are enjoyable
Really? We exist to work for some worthless company that doesn’t care about it’s employees or it’s customers? No thanks. I have plenty to keep me occupied all day and being a worker bee in your little hive dystopia isn’t part of it!
Willing buyers with actual money to spend or invest, a.k.a. the markets, are the judge of what is “worthless.” I have had to be a contributing member of society, OK a worker bee, at whatever rate was being offered, and pull my weight for several decades, without the luxury of so casually judging and deciding all those things. Yes, in a little hive dystopia also known as human society. Bees are super-honorable creatures. Many humans do not, for me, afford the same respect.
It is the same as when I learned to like healthy food. I could not afford the haughtiness of zero feedback from reality. And it came out pretty good, after year upon year of discipline.
Contribute to open source as a public service.
F**K our economy…. From a crypto millennial who got out in time
A more interesting topic would be why so many of people my age feel the same way…🤔
Because they see the scammers as getting away with selling out of the scam early and leaving them holding the bag?
Because it’s a system where two individuals hold more wealth than the entire bottom 40% of the population.
The 25-54 chart is the key one (especially if you extend it back to 1998-2000 when it was hitting its all time highs).
Until about *2017* the ratio never really approached the highs of 18 years earlier.
The Fed saw that and saw 1) labor mkt slack and 2) stagnant or declining wages due to #1.
Fed answer – ZIRP.
Result – Asset mis-valuation and inevitable chaos (multiple times)
Further Result – Incredibly slow slogs (2000-17) out of impact craters as hiring corporations knew they were in ZIRP bizarro world and were very, very cautious hiring people, out of fear of getting whipsawed. Chinese competition played other huge role.
Then, Covid hit…
But without the financial illusions/delusions of ZIRP (see also DC “promises” and entitlements) the US would have gone into Covid much healthier financially.
But the takeaway is, creating financial illusions by manipulating the money supply serves no one…the real underlying problems (lack of competitiveness vis a vis China) have to be addressed honestly (not a DC thing, I know) and directly.
You don’t keep the Titanic afloat by renumbering the deck chairs.
This analysis leaves out people who are leaving the official job market due to regulatory environment and taxes.
At least here in Portland, OR in my age demographic of gen X and older millennials I know dozens of people working in assorted forms of under the table self employment to avoid the crushing local fees, taxes, and regulations of taking their businesses legit.
As inflation and cost of living pressures have built up over time, this has become a much more viable way to make ends meet.
In addition to avoiding the tax and regulations, they qualify for free healthcare and food/energy/rent subsidies from the state and local gov.
If you go to a high end grocery here, you can observe a large percentage of affluent people 30-50 years old using food subsidy cards.
The incentive structure (at least here) is against most forms of legitimate employment.
The labor force data is based on a large survey of households and captures work of all kinds, from W-2 job to gig, whether or not people are paying taxes on it.
It does however under-count or fail to count illegal work, such as drug dealing and prostitution.
Wolf. You made my day with your last comment. “Drug dealing and prostitution” under counted. You are first person to bring that out publicly.
In Texas, that demographic is about 2 percent of the general population but almost 6% to 8% if you only count 18 to 45 year Olds
I wish I could cite you an open source besides the local Law Enforcement Organizations.
No acronyms here. What the heck is a ZIRP?
Zero interest rate policy & also NIRP Negative Interest rate policies (Japan and EU rope (sic)
It is blatantly incorrect to publish statistics saying 8% of the population are prostitutes. 100% of the population would need to be customers wouldn’t they?
Law enforcement is again pushing false agendas.
I don’t think the drug and prostitution numbers vary a
great deal
Sorry but Portland High End grocery Store = Zupans or New Seasons =
🤡🤡🥺🤡🤡
Your anecdotal experience dovetails with what my wife thinks is happening. I don’t see the incentive structure, but she says it is huge anong younger folks, who have become masters of the grift. She somehow relates this to what she is seeing when she goes out boutique shopping, and says that it’s weird how vendors are constantly switching their payment systems. There was a loophole that has been closed this year with the new 1099-K law being passed, and anyone that actually *has* been exploiting this kind of grift will be in for a rude awakening when the 1099-Ks start showing up early next year.
Same here. A neighbor here (Maine) was collecting benefits up the wazoo and working as a lobster boat stern man, which has traditionally been an under the table cash deal. But last year the boat captain sent him a 1099!
I doubt Oregon is much worse than Washington. I’ve had a number of businesses in WA, construction, design, trucking, retail. The local fees, taxes, and regulations were not difficult to bear. Maybe someone with a sixth grade education would find them baffling………
By “under the table”, I assume you mean gig work. All these people are about to be crushed by the new 1099 rules. I wouldn’t want to be in their shoes when the IRS asks for back taxes, plus the possiblity of fraud charges for the perjured welfare applications.
Pretty sure this is why gov’t wants 87k new IRS agents. There will be one behind every rock and tree.
Its only cheaper to cheat until you get caught, after that not so much.
Better to play by the rules so you can sleep at night. Unless your netting over 35K the taxes are minimal anyways, in my experince.
Kiss that wage gain goodbye ….
“Revenge of the Employer”….
Coming soon to an economy near you…
That reminds me of that old joke:
“What does it mean when the flag is half raised over at the post office? It means they are hiring!”
The labor market has permanently shifted. Experienced, skilled employees are now sufficiently scarce to cause scarcities in the supply chain.
Nearly the entire developed world is facing the same fate. Japan was first. Their labor force began aging out more than a decade ago. We’re just a bit later on the curve.
Add the catastrophic drop in fertility rates, and there’s no light at the end of the tunnel for employers for at least another 20 years.
The Fed may be able to get inflation under control, but it can’t produce qualified employees out of thin air. Wages will continue to go up, and there’s only one place in the system with any elasticity left: shareholder profits.
MF
Labor mkt will remain tight for the near future, unless immigration laws change. There are 22 million work force above 55Y (dominant group 65-75y) will retire slowly and NOT many 55y or under (just 1.2 M since 2010) to replace them.
Wage increase won’t go away. Fed is trapped by their own ill thought out monetary policies. Inflation will be more stickier than many assume.
We need catastrophic drops in fertility rates if we are to deal with climate change and environmental destruction.
Of course the drops are needed even more urgently in Africa (Nigeria, Ethiopia, Congo etc. come to mind).
A world population in the 2-3 billion range would be much better – of course there are no volunteers to help us get there.
> of course there are no volunteers to help us get there.
I volunteered: lifelong zero kids policy. I may have a technical, formal legal right to have offspring, but in my view, absolutely no moral right. Less than zero moral right, to be mathematically precise. That goes for domestic pets too: incredible carbon wastage for purposes of self-indulgent vanity.
Absolutely! I am childless by choice. The world never needed my kids.
I think your 2-3 billion is about right, but it’s going to be painful to drop back to that number. The economy is used to having an abundance of young low wage labor.
Thanks for being open about it.
Also our energy consumption needs to go way down, probably 5 fold. And no more oil. Lifestyle will be mid 1800s. Not terrible.
Smaller population also means less people the technocracy have to monitor, control and brainwash.
Since this comment wasn’t marked as sarcasm, I weep for these soulless thoughts.
The upcoming economic stagnation and contraction will solve most of the labor force shortages you describe.
Shortages from demand are substantially the result of fake growth. Much of the lower labor participation rate among the older population is the result of grotesque fake wealth.
A reversal of the US stock mania to somewhere below the 1994 “lift-off” (roughly 3570 on the DJIA) along with the end of the 39-year bond bull market will solve your described problem.
No one actually gets to stop working just because they reach a certain age. I see this logical fallacy repeatedly over and over on this blog.
Anecdotally, the only “day traders” I’m personally aware of gave up the day trading gig several months to over a year ago and returned back to work once their unemployment benefits came to an end. Obviously some of the more successful day-traders likely kept at it longer, but my intuition is that this is the minority of cases. It seems more likely that with intense inflation draining budgets, more people are returning to work that beforehand didn’t necessarily “need” to. This primarily applies to two-worker households. This would be an example of self-destructive inflation. The worker shortage initially exacerbating inflation, eventually leading to more people returning to the workforce to cope with said inflation. Then inflation naturally cools off as less competition for workers leads to slower wage growth.
For 2-worker families, one good reason for surge in labor force in August (and likely more in September) is kids going back to school, thus freeing up the 2nd parent to work (at least part-time), instead of providing the only reliable low-cost high-quality daycare that many families can afford.
Yup I wouldn’t doubt if there is a correlation between return to school for kids and return to work for parents. You’d expect this to be the case every year, at least to some extent (seasonality of sorts) but this year more-so than others as household finances take an exceptional hit from inflation.
This rings true for people in my social circle as well, some either went on a long hiatus and some like my sis only took part time slots and dabbled with side hustles or whatever. Some of my older coworkers cashed out their highly inflated properties to live mortgage free in cheaper markets with leftover cash. I guess there’s multiple situations where people felt they could stay out of work but it seems in time many will have to return. The timing also makes sense to me, this summer was huge for travel with all the pent up demand where a lot of people, me included, just went no matter the cost.. well, time to pay those bills :)
At the age of 53, I took a step back from fulltime employment to enjoy life without the constant stress from work. Hurricaine Irma destroyed my sailboat in the virgin islands and then shortly after that covid hit, so I went back to work partime to shore up finances.
Now considering this out of control inflation and other political/social problems, at the age of 57 it makes sense to work for the foreseeable future. I think most people underestimate how much retirement actually costs…I did.
The trick is to find enjoyable work. Being self employed helps with that.
You didn’t have insurance on the boat? Because other than that, it reads like you really couldn’t afford to stop working, you just did it anyway.
It is very expensive to get boat insurance during hurricane season,
unless you arrange for storage in a “hurricane hole” [ultra safe storage-the latest trick is to pull the boat out of the water and drop it in a shallow hole for the keel].
Had a sailboat in Antigua for a time.
I was in a ‘hurricaine hole’ marina but it was nearly a direct hit, st thomas. No ins because it was an old Baba…not worth much so I sold it to a friend down there. A real heart breaker though.
I feel your lose, Baba built some nice boats.
its not advisable or practical to insure a sea worthy sailing vessel,
that is it is not being used for excursions or charter.
most sea going sailing vessels to this day are documented and in addition ounce three miles off shore are no longer insurable.
some buy boat insurance as a requirement for moorage in a marina, others may buy for a lease or purchase agreement.
a sailors best defense in worsting weather conditions is to set out to sea.
PS – if the whole shithouse burns down, I wouldn’t mind buying a used bluewater sailboat in great condition, something like a Westsail 32.
Only a puddle jumper.
You need to consider at least 39 feet…………..
Don’t want anything larger than 32′. Moorage fees go up considerably.
Baba are excellent sailing craft, frankly top of the line liquid snot.
seriously the best, top dollar in her day and still command such if you can get her.
“The trick is to find enjoyable work. ”
So true!
37 years and counting. I love every day like the first. Have missed a total of 5 days of work in that time.
One of my late, great friends (rest in peace, Lee!) worked in adult probation for 36 years.
Loved it, absolutely loved it. To the point where he only took one vacation.
I often note the forseeability of the future mentioned here on Wolff Street. I’m going to test this forseeability tomorrow at Del Mar in the third race. Perhaps I’ll see you there, where “the surf meets the turf at Del Mar.”
I dreamed of sixes all night. So I got up and had six cups of coffee. Drove six miles out of my way to get to Del Mar. I waited for the sixth race and bet $600 to win on the six horse.
Sure enough, he ran sixth.
You, dummy, you should have bet only 6$ in order to win.
WOODBINE Winning Post Positions WOODBINE Winning Favourite
JANUARY 1 to AUGUST 26, 2022 JANUARY 1 to AUGUST 26, 2022
Pace (includes 8 dead-heat) Races 1494
Favourites or co-favourites 1502
1 2 3 4 5 6 7 8 9 10 11 Favourites finishing 1st 649 43.2%
Starts 1026 1026 1026 1026 1026 1015 946 781 525 265 9 Favourites finishing 2nd 296 19.7%
Win 88 103 88 116 178 248 95 71 30 12 1 Favourites finishing 3rd 177 11.8%
Win% 8.6 10.0 8.6 11.3 17.3 24.4 10.0 9.1 5.7 4.5 11.1 Favourites finishing 4th – 12th 380 25.3%
Trot
1 2 3 4 5 6 7 8 9 10 11
Starts 468 468 468 468 466 463 443 361 236 119 6
Win 39 48 45 44 68 113 56 30 19 6 0
Win% 8.3 10.3 9.6 9.4 14.6 24.4 12.6 8.3 8.1 5.0
At Woodbine/Mohawk the win percentage is 24.4 percent for the 6 horse. Before the slot machines the favourites in the money was about 55 percent instead of about 75 percent all those years for decades on end. Everything was a fixed or rigged race before they put in slot machines with the exception of the big stakes races. Mohawk racetrack is just west of Toronto, Canada
Love Del Mar. One of our most fun shipments, when Mary and I were trucking, was picking up a couple of Honda MC Co. show bikes from an event at the Del Mar track and taking them to a huge resort in Huntsville, Ontario for the Canadian Honda Dealers annual meeting. We rented a car there and spent 4 days touristing in the area. After the meeting we loaded the bikes back up and took them to Bike Week in Daytona, FL. One of those times when you say “I can’t believe we get paid to do this”
And get a new boat –or better yet, find a boat you love (with an owner you like) and start crewing for racing or cruising…it makes the work you do even more meaningful and enjoyable when framed against the sailing time you are always looking forward to….
“I think most people underestimate how much retirement costs.”
Ain’t that the truth. We snow bird in Florida at an RV park and many of the people there are full time RVers. They thought SS and savings would provide a comfortable retirement, but found out that their expectations were way too high. One couple — he was in construction, she a dental hygienist — found themselves having to find jobs. She is now a checkout clerk at a small local grocery store and he a truck driver delivering mail to local post offices. It is amazing that people are so ignorant of budgeting in a realistic way.
They probably didn’t factor in a tripling of RV Resort prices. Have you ever seen what those Florida parks charge? That’s not a cheap retirement, that’s luxury living.
This is outcome when too many people with fake wealth from inflated asset markets try to spend it.
The whales and rich made off like bandits.
If the average Joe was profiting from crypto the mainstream media would vilify him. It’s the whales the media was promoting in early 2021 to get more suckers.
The billionaire set jumped into crypto late, after the FED decided to pull its shenanigans late winter 2021. The “free money” these vultures received went towards reckless gambling. Then you started to see tweets like “diamond hands” from the charlatan Musk after he used his company stock to start speculating.
*2020, not 2021
Categorically untrue. Several billionaires were in crypto before 2016. Thiel, The Winklevosses, and Tim Draper immediately spring to mind.
Nope, you listed outliers. The majority jumped in in 2020.
I hate to say this but coming secular BEAR mkt will make many retirees to go back to work.
Reasons are many. First Stocks remain overvalued by 2.5X.
Debts all or any kind are at record levels unlike any time in human history.
The inflation will be more stickier than most assume. Rate increase have to go beyond 4%. The coming recession will be unlike any other in the past including GFC. Volatility swing of 845-point intra day, like today will be more common.
Many retail investors especially newbies (45y or under) have NEVER gone thru a typical secular Bear mkt. As I have repeated countless times that without Fed’s easy-peasy money and Fed’s put, there will be no mkt any kind anywhere in the world.
Money in the net, will be made by going against the mkt. But many are loathe to do that. Many are psychologically NOT prepared nor trained. Wall ST wants every one to BUY & HOLD (hope!?) Hence many will end up holding bags at the end of the each Bear mkt. I have gone thru more than one since ’82. The surreal Bull mkt post-GFC is clearly an ANOMALY and unlikely to repeated again!
My sentiments exactly, but expressed much better that I am capable of. I reached the same conclusion about how overpriced the market is after following John Hussmann for the last couple of years.
I know somebody who already postponed their retirement until next year based upon what happened in the stock market. I laugh to myself thinking “you ain’t seen nothin’ yet.” He thinks it was a minor correction and new all-time highs are coming. I asked him why, if he’s retiring next year, he’s in stocks at all. He’s all in on BTFD. GREED.
Sometimes the world is fair. Most often meaning the opposite of the outcomes people expect for themselves.
When the asset mania is confirmed as having ended, many millions will be financially ruined for good. Many more will be set back noticeably or permanently for years or decades.
sunny129: Agree that retirements are being put off indefinitely. What we don’t know yet is whether/when it becomes a macro trend and hits the broader labor market.
An aged workforce, however, changes the mix of leverage amongst individuals. Younger people who are willing and able to pull longer hours and endure more stress command a premium in the U.S. job market.
Older workers are far more likely to be happy with part time or lower stress positions. Everyone over 62 is calculating how and when to apply for Social Security, and whether it makes sense to limit the hours they work so they can maximize their income with a combined SS, pension (if any) and job income. Anyone who already receives SS is docked if they receive too much compensation from job-related income.
Nothing is overpriced until buyers don’t pay the ask.
I shorted the market in both 200-2002 and GFC but not fully committed.
The problem with shorting during this mania (since mid-90’s) is that psychology has been so manic that it mostly hasn’t mattered how overpriced or how over bought.
The opposite is about to happen on the way down, though bear market rallies will be longer.
The good thing is, if you want to work, you can. Someone called me to bid on to fix a roof a tree fell on. I’m 65 and don’t want to work on roofs or toilets anymore, but for laughs, I went and made a bid.
I priced in materials at inflation and then some. I added in everything for labor and then some, plus added 25% overall. Well, they accepted my bid (mainly because everyone is afraid of hard labor) and here I am working in this heatwave at 65.
It’s ok, It’s dam good money and I’ll fix it right. That’s why they call me. I can start work at 5 am to beat the heat. It becomes unbearable about noon.
The truth is, it’s never been better than now for making a buck.
“I priced in materials at inflation and then some. I added in everything for labor and then some, plus added 25% overall. Well, they accepted my bid..”
This made me laugh out loud. It happens to me every time. I usually end up giving them a discount at the end.
Yeah, you like me. Soft hearted. I don’t want to take advantage of good people.
Ends up working both ways. I’m pretty handy, but there’s of course a lot I can’t do. When a guy I hire to do something does a good job, is reliable, and doesn’t try to rip me off, I take care of him, often pay extra, and pay him in cash. If he tries to screw me, I pay by check and only pay exactly what I have to.
You don’t pay by check unless I allow you to.
Sales trick :)
“My” carpenter did that all the time. Make an offer, complete the work, then send us a bill that was 10-15% lower.
When one asks, he will say: “That’s how much it worked out at”.
Normally trades people here are not exactly renowned for going under their offers, to put it mildly.
Way to go Mr. Lee!
Fixing a roof is something that resonates with me who is 65.
I am physically ok but don’t think my strength is there to fix a high sloping roof or carry the shingles up the ladder.
I want to install my own solar panel system but won’t for same reasons. Ageism and location are the two primary reasons I am not working today at 65. Probably work for me in another location but not sure because of ageism and the cost to attempt the move is daunting.
I still may renter the workforce for underemployed to have some extra cash.
Let the QT continue and yes the Russian sales to Germany did cause the immediate drop apparently and the program traders took over. I don’t know what the triggers are maybe purely momentum trading with a time factor invoked.
For all of the program sellers there also has to be program buyers as well. The buyers will not be the retail investor at that pace and speed in my opinion. No fact to back that up.
Maybe the group buys and sells between themselves.
Are vices such as TikTok social media influencers losing business these days?
I remember during the peak of the pandemic money the amount of bragging on Twitter how one can make hundreds of thousands of (taxfree) dollars a year by creating a certain adult entertainment account.
I also read stories of gullible people paying US$10,000 to meet their favourite social media influencer in person.
That was also a time to be alive. I was working in a non-union factory job for C$17/hr while “social media influencers” get C$1,700 for a post.
Will those “social media influencers” go back to working at Starbucks or McDonalds?
The Guardian today reported that said entertainment site grossed $4.8 billion in 2021, 80% of which went to the content creators.
Entertainers(actors, singers, pro athletes, influencers) have been paid well for a long time. Nothing new there, except the new way to entertain.
“Will those “social media influencers” go back to working at Starbucks or McDonalds?”
Hell no. OnlyFans. Even struggling actresses would never be caught dead working a Starbucks job. But a little private online action? Hell yeah!
So I guess there isn’t really a bubble in TikTokers and Only Fans then as long as there are customers?
I remember in the early 2000s one can get that content for free. There wasn’t gullible fools paying $1000 to Skype or Zoom their social media influencer. Who would pay for it? That’s silly.
Switching costs from one “influencer” to the next are so low. There is no lock-in. Easy come, easy go.
As a result, I see articles on stress and occasional fatalities among extreme-living, stunt pulling “stars.”
I’m told some are stalked, too. Even Elon is finding himself being located on his jets in real time.
Boobs on onlyfans will inevitaby age long before social security kicks in. But I doubt any nudie camera stars are actually paying taxes, even though all their payments are traceable.
Lot of projection there.
Explain yourself.
“I also read stories of gullible people paying US$10,000 to meet their favourite social media influencer in person.”
What an empty shell of a human being. It’s complete idiocy. Paying $10K to meet a complete actual nobody.
Here, for 10000 USD one could procure a seriously freaky date for an entire night out. The money would be better spent too.
Great day for cash and short term treasuries.
Boom Chuga Luga!!!
Good evening sports fans, this Chris P. Bacon, bringing you the build up to the main event:
Jeremy vs Jeremy title fight pitting their skills against one another in prognosticating the likely economic future that lies ahead for Americans.
From the Wharton School, Finance professor , Jeremy Seigel, envisioning a soft landing and an essentially continuing bull market for stocks because the Fed is likely to ease up after a 1 % increase in the FFR in the coming quarter. Seigel has been correct in calling the bull market since 2008.
His opponent is one Jeremy Grantham who sees the bursting of the current superbubble which he claims rarely occur in economic history, only twice in US history, 29 and 2008.
In Grantham’s own words:
“The current superbubble features an unprecedentedly dangerous mix of cross-asset overvaluation (with bonds, housing, and stocks all critically overpriced and now rapidly losing momentum), commodity shock, and Fed hawkishness. Each cycle is different and unique – but every historical parallel suggests that the worst is yet to come.”
It promises to be an epic battle at the highest level of financial philosophy. Lurking in the background, is the contender, Nouriel Roubini from NYC, Dr. Doom.
A contender in this battle royal of the heavy weights, Dr. Roubini delivers a terse summary of his impressions, based on a rigorous application of the current analytical understanding of the financial metrics. Recently, business insider wrote :
“Nouriel Roubini warned investors to prepare for a historic market crash, and suggested the US economy could tumble into a quagmire of shrinking output, surging inflation, and soaring unemployment.”
It has been eons since a punch out of this magnitude was on proffer. Strap in.
C.P. Bacon
Appendix 1:
The sell off today was typical pre-3 day weekend action in a bear market.
Small potatoes in light of the tsunami bearing down on next year. I think.
Equilibrium is like a black hole gravity event horizon, it cannot be denied.
Unemployment is still at a record low.
It’s like these economists are driving by looking in the rear view window.
They keep looking to the past and ignoring the present.
“It has been eons since a punch out of this magnitude was on proffer.”
This is an absolutely perfect description. “A punch out.” That’s what the stock market and economy need, a total KO. Lights out. Burn it all down. Start over.
This whole “soft landing” BS is just that – bullshit. This entire economy is a fraudulent house of cards brought to you by the filthy, insincere, reckless, corrupt Federal Reserve led by the pasty, thin-lipped, sketchy Jerome Powell.
We have zombie companies care of a junk bond bubble, meme stocks, Ponzi crypto schemes, suburban rotboxes for a million bucks, 100k mile vehicles priced at more than they cost new, an RV bubble, a repeated triple bubble and crash in lumber, etc. It’s time for a new model.
Why the hell would you listen to any of these fools when Cramer’s investing club is on sale….
Jeez…
Cramer a 50% stock pitching rating ,not exceptional performance from a professional
Siegel either doesn’t know that we have biggest asset mania and credit bubble ever, thinks it’s different this time, fails to understand crowd psychology, or a combination of all three.
Asst values aren’t determined by the FFR. The only reason the FFR supports stock prices is because of psychology. Go look at a long-term stock chart for Japan, EU markets, and China if you don’t believe me.
This is the Tyson economy the Fed has to punch out to bring demand down or inflation will continue.
Hence Powell “dangerous words” as the clueless Warren puts it, he wants to kill demand through forward guidance without having to raise rates.
They already HAVE raised rates, 4x, including by 75 basis points 2x, which is more than some people here ever experienced in their lives. They’re just telling markets to get ready for more so that markets can adjust gradually, rather than all at once.
Wolf – do you have any proof that “gradually” is better than “all at once?” I don’t know about you, but I prefer to get the bad over with in order to get on with life. By dragging things out for years – decades – they cause absolute misery.
Its “gradually” because otherwise rates would end up being positive in real terms rather than negative, and positive real rates would expose the bankruptcy of large swathes of the US economy, notably the US government. Gradually lets you cross your fingers and hope.
First the tsunami of cash flowed from the US government, then flowing freely into lumber prices too much money chasing lumber, then flowing all over the car market and too much money chasing cars, and now the money washes over the workers too much money chasing workers. There will be a spike in labour rates and then a crash because for e.g. restaurants, in the managers mind he has the money for new staff, in the real world there aren’t enough staff. You put the prices of burgers up to compensate and demand drops leaving you stuck.
No different from planning to build 10 houses because you have enough cash (…) to buy 10 houses worth of concrete. Real world only has 6 houses worth of concrete.
You’ve been misled by false prices.
Having said all that i do hope there is some way to a soft landing and that forward guidance is successful, but the money supply has -already- been increased. Wages heading up at 5.7%.
Just personal preference. “All at once” means that the Fed will re-re-unleash super-mega QE, and we re-re-start this mess all over again. No, I’d rather have a more or less gradual path that gives everyone an opportunity to deal with it, however they need to, rather than get shocked out of their wits, and then have to re-re-watch Fed megalomania bailouts all over again.
Sunbeam,
“positive real rates would expose the bankruptcy of large swathes of the US economy, notably the US government.”
Not so sure this would be the case if fed funds instantly increased by, say, 6%. There is a term structure to all debt, and the government wouldn’t feel the pain until (all) the debt has to roll over. Zombie corporations, of course, are another matter. Anyway, a +6% fed funds rate for one year might cost the goverment less than an absolute 4.5% rate for four years.
As a portfolio risk-check, it’s not a bad idea to consider what might happen if a shock-and-awe event DID take place. (Not just a Black Swan, but a fast one.)
There are at least a few possibilities:
The Fed has the power, should they choose to use it, to really Jack rates and/or unload balance sheet faster.
A Chinese-Russian-OPEC trade embargo is another extreme possibility. (WW3 is always on the list but if ur dead ur portfolio is irrelevant.)
An economic or political implosion of the EU, China, Russia, Japan, maybe even US is another possibility but would probably happen slowly enough for alert watchers to react.
Conversely, a desperation sneak-attack war (bigger than Russia-Ukraine), either by a dying regime or a resource-starved one, might also happen.
Things aren’t desperate yet IMO, but if they did get there, people may do some crazy things…
I am from the camp who believes the FED and politicians have been lying and trying to scare people into believing the world would end if asset prices were allowed to reach their true market clearing level without interference, when in reality it would make for a more comfortable, sustainable life for the masses.
The bank bailouts of 2008 were the worst idea in the history of the US, and have led us to where we are today. There should have been prosecutions and prison terms for all involved. Instead they were financially rewarded. And what did us regular people get? Massive inflation and a destruction in the standard of living.
No, no I don’t believe in slowly removing the band-aid so the wealthy can perfectly preserver all of their net worths while turning the rest of society into bagholders and poverty-stricken plebs. “Soft landing” means exacting the most amount of pain from the middle class and the poor, dragging things out for decades. We’ve already got almost $20 per pound potato chips. It’s getting ugly.
very convincing Mr. Depth Charge.
I’m old enough to remember Fed rate hikes happening without warning. Nowadays Fed intentions are projected so far it lights up the sky like an aurora borealus of doom with giant chimera half human vampire bats flapping all around in blood red lights from the North screeching like a thousand winged Krampus devouring Santa and his sleigh filled with QE, eating every part before it hits the ground.
otishertz
“I’m old enough to remember Fed rate hikes happening without warning’
Exactly!
There was no future guidance, dot plan or FOMC members pontificating, every other day, when Mr. Volker in charge
Mr. Powell and his ‘kabuki’ team members are a joke.
Telegraphing the money flows allows grifters to grift with 0% risk. There lies the problem.
What a cool paragraph:
” Households reported that the number of working people in regular jobs or self-employed jumped by 442,000 in August, after having been essentially flat for months. There have been indications that aggressive hiring by employers pulled some self-employed workers out of self-employment and onto regular payrolls. Hence the sharp increase in payrolls and the more slowly growing overall number of working people.”
It highlights the most important people that make this world worth living in, the working people.
dang
“important people that make this world worth living in, the working people”
Yep!
Debt slaves in a Rentiers economy exploited by those in the top who control, capital, power and wealth. USA becoming more ‘Banana Republic”
That is what should be expected when a privileged group is allowed to create money from nothing
American homeowners’ total tappable equity – what they could borrow against while still retaining 20% – hit a new record high of $11.5 trillion in the second quarter. Looks like HELOCS are up 45% from 2021 in 2nd quarter. Being rich or wealthy in the US is all about having options. Using credit card for $5.00 gal fuel one day, or dropping $5k at Disney for the weekend. Loyalty to the Rat Race has changed. “The FreeBird Anthem”
“Debt Free State of Mine,
“Looks like HELOCS are up 45% from 2021 in 2nd quarter.”
HELOC balances through Q2 2022:
https://wolfstreet.com/2022/08/04/trip-back-to-reality-starts-mortgages-helocs-balances-delinquencies-foreclosures-in-q2/
HELOCs were replaced by straight cash-out refis.
Yes. And now cash-out refis are plunging, and we should see an increase in HELOCs going forward.
Debt Free State of Mine,
So I see that Wolf got his data from the New York Fed. I’m wondering where you got your “HELOCS are up 45% from 2021 in 2nd quarter” data from?
Long COVID is keeping as many as 4 million people out of work
“A new study reckons with the incredible economic impact of long COVID, which has erased over 2% of the workforce”
Life expectancy in the U.S. continues to drop, driven by COVID-19.
Obesity is an epidemic. Obese people are more likely to miss work or become disabled.
You never meet a 280 pound 80 year old
SPAC CRACK THWACK!
“ageism where, even in a labor shortage, a 35-year old refuses to hire a 60-year old”
Which is remarkable, considering that older workers can be expected to have that ‘work ethic’ which has long since gone out of style because it has instead become stylish to dismiss such people as ‘unproductive’ out of hand.
Crush the peasants
Truth is always bitter to swallow and being by denied by those, in power, controlling over 90% of Wall St wealth and capital in this country, for decades if not, centuries.
History of ill-treatment (segregation, housing, school districts, Mortgage loans, jobs etc) of minorities is a historical record if ONLY one cares to study. But it doesn’t square with the agenda of those deniers. So it is ‘nonsense’ right?
It is a fact that every minority of any sort in this country has experienced one way or the other. Seen it, been there and also experienced ‘IT” more than once, along with my family members.
Non-sequitirs and caps are not an argument. With regards to today, companies are violating the law to offer opportunities exclusively to non-white and non-Asian people. See the Pfizer Breakthrough Fellowship Program. Discrimination against white males is codified into the federal register with regards to small businesses, for example. Thankfully, the state of California’s BOD racial minorities and LGBTQ quota proposal had recently been struck down as unconstitutitonal.
Crushthepeasants
“Non-sequitirs and caps are not an argument”
Focus on the facts NOT caps or whatever. This is a classical deflection away from this issue. And you are NOT the first or last one.
Just read the history of USA since 1776. Look how American Natives, Blacks, Chinese, other Asians have suffered for centuries
Don’t forget the coded want ads that “strongly encourage” women, minorities, and “traditionally disenfranchised” to apply.
Luckily, I too, can also become a protected class just by changing my hairdo, some personal heretofore private preferences and telling all of social media bout it.
I apoligize for presenting as white. We cool now or do you want some money?
My Nephew just got a job. Out of 353 applicants he was the only white person. The employer told him that after he got the job. He did have a masters in biomechanical engineering and a good background for the job. He took the job after he got turned down for medical school.
The real shame is that he was denied entry to medical school.
What reason is there for stocks to go up from here? Even if interest rates suddenly were to go to zero? Earnings are a derivative of fraudulent accounting (mark to maturity) and fraudulent stock buyback schemes to inflate stock prices. Only thieves and the ignorant would buy stocks now. Thieves because they have insider information; and the ignorant, because they are willful victims accessory to their own victimization.
I expect a ‘pivot’ and ATH by Spring 23.
Hopefully a depression level collapse after that.
Once everyone maxes out all their credit cards the inflation rate should start to fall.
You have been wrong every step of the way, butters.
Stocks could go up for several reasons:
1) Peaceful solution in Ukraine
2) Corporate revenues goosed by inflation
3) Job-market finally cools down and takes pressure off wages.
4) Resumption of interest payments gives cash-savers a chance to spend a little more.
5) US and/or European political realignment puts more pragmatic people in power.
6) China abandons COVID-Zero at upcoming Party Congress.
7) An amazing new invention or discovery reignites bullish animal spirits.
8) Whenever “everyone” thinks stocks are going down, they have to go up — because there’s no one left to sell.
When real PEs are unknown, except for that even the fake, publicly-disclosed numbers already are too high?
You work for Wall Street?
I’m with you and no I don’t work for Wall Street. But I’ve learned that it’s best to understand both sides of every trade before taking a position. And Item #8 is especially important if you don’t want to be whipsawed by a short-covering rally like July-August.
I think everything you have listed will drive optimism in stocks and stock prices higher.
How long it lasts is the question.
Inflation of costs all around you…time to send the missus out to make some money.
The “underground economy” has probably grown. Lots of people are paid in cash for small, or part-time work.
The gap between gdi and gdp has been 3.5% larger than its gdp in 2022. N-gDp is still running too high.
The Fed needs to defend the dollar. There are all kinds of geopolitical things going on that are way more important than moves in the stock market.
The DXY is at a 20 year high, but your sentiments are what I have stated here over and over.
Trading “hard power” for fake paper wealth is ridiculous and it’s not going to happen.
The cryptocurrencies are a sea of nothing, the antimatter to the physical matter of the wealth universe.
They will not make it to the year 2035.
Just curious, the charts depicting the “Labor force, Millions of People” and “Prime age labor force participation rate” both shows nice upswings.
However, even just visually extending the historical increasing trend line of both charts, (increasing presumably due to young entering the labor force), the new data is woefully behind that extended trend line. Or have I failed to understand the charts?
Things must be getting tough out there. Some dudes in a golf cart just went around the golf course today stealing golf balls right from the middle of the fairways. They took one of my best drives in the middle of the fairway and put it in their pocket and took off. I chased the mother f$uckers in my golf cart but could not catch up with them. I found out that they were doing this all day long and nobody was reporting them.
The title of the article has been the summary of the last 6 months of my life, almost to a tee!
As much as I’d love to share the details, it appears as if I’m late to the discussion.
Just in case anyone does circle back, I’ll just say that I was not the stimi-check crypto bro. I didn’t qualify for any stimulus. However, I did take full advantage of all the other, LEGAL, free money. No PPP.
I also took advantage of the massive meme gains and the easy crypto money. (Happy to post receipts if possible).
All from the hills of Costa Rica. What a year (June 21 – May 25)?! Say what you will. My only regret – I didn’t have enough principle to REALLY take advantage and rake in enough to never have to work again. Still may be in the cards though. C’mon Wolf Street! Give me that edge, please? haha.