I was wrong

" I Was Wrong," by Social Distortion, my favorite band.  

In this post, from last Sunday, I said "It might be a bad week for the stock markets."  The Nasdaq was 11,834 the Friday before, and as I write this, a week later, it has surged up to 12,390.  What made it surge over 500 points?  Unicorn farts or something, apparently.  Hype.  

Today is Friday, July 29th, 2022.  On Wednesday, we had The Fed raise the Fed Funds interest rate .75%.  That makes every new loan, of any kind, for every American, cost more and harder to get for many months to come.  This will ultimately help slow down the economy to help fight inflation, which is needed.  On Thursday we learned that, yes, we are in a textbook recession, we have now had two quarters of GDP contraction.  We also learned this week that pending home sales in the U.S. dropped 20% in June, year over year.  All hard facts that the economy is slowing down.  That's fine, we have bubbles everywhere, it should be slowing down.  That's a natural part of the cycle.

So the stock markets surged up, dragging crypto along for the ride.  Why?  Because Fed leader Jay Powell hinted that The Fed may... at some point... have to slow down the rate hikes.  Duh.  Of course.  At some point.  It's not like anyone thought they would keep raising interest rates up to 69%.  Yes, of course, they will slow down the rate hikes at some point.

The Fed needs to get the inflation rate to peak, which it may be doing now, and then drop back down to around 2% or 3%, BEFORE they can lower interest rates.  But the traders took that little bit of "good' news and pulled out their crack pipes for another hit.  Enjoy this rally.  The Nasdaq had a good rally in August of 2008, too.  Anybody remember what happened in September of 2008?  Ask a Boomer or Gen Xer kids.  

This year, 2022, feels more and more like 2008 to me.  I'm now about 90% sure we will see a MASSIVE collapse in September or October.  But hey, I couldn be wrong again.  It happens.  We'll see.  I'm sticking with my March 22, predictions for the stock indicies.  That post is linked in the post linked above.  

Meanwhile, I've got other things to blog about.  We are now in the long term, major economic mess, that I have been blogging about since 2018.  I'm more interested in living through it, and finding the opportunities that it will bring, at this point.  You guys can worry about stocks, that's the last place I'd put any money these days, if I had a big chunk to invest.  But that's just me.  Crypto?  Now THAT looks interesting over the next several years.  Cheers!

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