So... the Dow was down 1,000 points today- 8/26/2022

 

CNBC Dow Jones Industrial Average page after close today, August 26, 2022. 

Disclaimer

You guys all sold out of this last false hope rally a week or two ago, right?  Again, here's my March 2022 blog post, on the old blog, with my thoughts on the economy for 2022.  This year, 2022, is the year of big change.  2023 will be the "I'll take Things That Suck for $1,200, Alex" year.  Unless you pay attention to this stuff, and have some cash.  Then you'll be able to get insane deals on all kinds of assets in late 2022 and 2023.  

My March 2022 predictions for stocks were Dow- will drop below 27,000 in 2022, Nasdaq- will drop below 10,000 in 2022, and S&P 500- will drop below 3,500 in 2022.  I'm sticking with the predictions in that post from March.  I also wrote about interest rates, and a couple of other things.  Here's Joe Brown from Heresy Financial with his take on today's remarks by Jay Powell of The Fed, from Jackson Hole, Wyoming, that sent the markets plunging.  Yes, today's market numbers are still quite a ways from my predictions, but they're 3%-4% closer than they were this morning.  

In other financial news, September 6th has been set for the beginning of the Ethereum Merge, which will switch it from a Proof of Work blockchain into a Proof of Stake blockchain.  Ethereum, due to the ability to create smart contracts, and build apps on it (like NFT's, for example), is far more useful than Bitcoin.  With the Merge, providing everything goes well, Ethereum will use something like 99% less energy to operate.  How will this evolve in the future?  That remains to be seen.  But it sets Ethereum up as the top blockchain with smart contracts and other functions.  So The Merge is just something to keep an eye on, if you are interested in crypto and NFT's.  

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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Two good videos to watch about the future of stocks and real estate

It's July 27th, 2022, and the stock market is surging up after the The Fed announced a .75% hike in the Fed Funds rate, which sets the pace fo rall other interest rates.  Have stocks hit bottom, and they're going to head back up?  Or is this a bear market bounce?  This video takes a really solid look at those questions.  Check it out if you are wondering about the direction of stocks over the next 6 -12 months.  

What about real estate?  Are we in for a minor correction overall?  Or is there a major downturn coming?  This is a great video, also brand new, that looks into the mid-term and long term demographics affecting real estate.  If you're wondering where it might be headed, check this video out.  

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Could be a rough week for stocks and crypto- 7/15/2022 to 7/29/2022

Mohamed El-Erian is one of the few people you really want to listen to on the direction of the economy.  He's been saying for many months that The Fed was behind the curve on attacking inflation.  That had him worried that they would have to "slam the brakes on" at some point, raise interest rates dramatically, and... here we are, at that point.  

Disclaimer for this blog

The F.O.M.C. meeting (Fed governnors), is Tuesday and Wednesday, July 26 & 27, and they are expected to announce a .5% to .75% hike in the Fed Funds rate Wednesday afternoon.  But the recent, much higher than expected inflation rate, has led to rumors of a 1% interest rate hike.  That would be historic, and the stock markets could react poorly, particularly after this recent rally.  At this point, a .75% hike in the Fed Funds rate seems most likely.  But someone seems to have floated a rumor that The Fed might lower rates, and go back into bail out mode for stocks (and everything else).  With inflation as high as it is, that seems pretty much impossible.  That would just drive inflation much, much higher.  

Then, at close of the stock market on Thursday, July 28, Apple will announce its earnings, followed by its quarterly conference call.  Because of the way both the Nasdaq and the S&P 500 are weighted, Apple has a huge effect on both, and has been holding up both averages during this summer's tech bear market, though down around 14% recently, from the peak.  But signals are that Apple expects lower earnings and slower growth in future months, for multiple reasons.  If Apple's numbers and conference call are worse than the expectations of traders, than that could also have a big, negative effect on the markets.  If stocks take a dive, which is very possible, crypto could do the same thing, and drop back some as well. 

These two things give the potential for a really negative week in stocks, and some carry-over negativity in crypto.   

Blogger's note- 7/28/2022- 2:30 pm, Pacific time, 5:30 Eastern- So...  Stocks dropped some Monday and Tuesday, before the FED (FOMC) meeting announcment.  On Wednesday, The Fed hiked the interest rates by .75%, making loans of all kinds more expensive and harder to get for everyone, and the stock market rallied.  Today, Thursday morning, we found out that, yes, by the actual definition, we are in a recession, two quarters of GDP contraction.  But it doesn't matter, because Uncle Jay and Aunt Janet say that there isn't REALLY an actual definition of "recession."  Stocks rallied again, since the economy will get worse, but we don't call recessions recessions anymore.  

Then after market close, Apple beat earnings, crisis averted, so everybody pile into the rally tomorrow!  Maybe.  If you own stocks, just follow the rabbit down the hole and smoke whatever the worm on the mushroom is smoking, and life will be great.  Just don't try to sell your house for the price they sold for 3 months ago, if you're market was hot last year.  Tragedy avoided, and I feel like I've walked into a rave where everyone is on E but me.  New soundtrack for stock trading...  Hey, it's the end of July, we have five months left in 2022, and I'm sticking with my March 22, 2022 predictions for stocks.  But who cares? Nobody reads these updates.  Time will tell what happens.  And whatever you do, don't listen to Ray Dalio, Jim Rogers, Robert Kiyosaki, or Michael Burry.  And here's Joe Brown of Heresy Financial, making fun of people saying this recession is not a recession.  Absurd, yet flacid.

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