May Market UpdateInvesting Insights
Swings of emotion, driven by fear - is how short-term windows of activity are driven. The long-term windows of force and economic upside are driven by people - generational cohorts moving through the economic system.
This current illogical fear-driving list of topics (sooner than you think) will be fixed - and then replaced by uglier topics with more reasons to be afraid. The issue is that the process of delivering all the bad news with a firehose on a 24-7 basis, takes away the crowd's ability to remain patient.
The reality is that we have more demand. It is not false demand. It is 88 million Generation Y kids turning into impact-driving aging consumers building their lives. Its "beginning" was hidden by the Covid shutdowns and reactions for 2020-2021. There are 19+ more years of the "surprise", hinting that steady growth remains ahead.
In the grander scheme of things, technology will be required MORE, not less in the future. The currently "bad" sectors will soon be chatted up as "value" as the Wall Street insanity continues. Efficiencies, increasing output and productivity to meet a steady, higher level of "normal demand" will be the focus of the new equilibrium in the economy.
Even though all we hear about are the "cons", there is still much to view on the good news front. In this stretching of the fear rubber band, we simply have to accept we are trekking through one of those windows in history where all news is bad news - and investors are afraid. Fear drives inaccurate decision-making, often regretted. That has never changed.
Bad News is Cyclical
It’s easy to fear the latest bad news cycle, but let’s take a closer look.
- Food shortages
- China lockdown
- The Fed and Rate hikes
- Slowing rate of growth
Squeeze on consumers
12 months ago...
- More shots to be approved
- Build Back Better Funding
The point? None of the first dominoes were in the second list of dominoes from 12 months ago. Be confident 12 months from now will look just as different.
Riddle Me This
We will catch up to a higher level of equilibrium. The media still wants to point to the idea that the "excess demand" is from the free money during COVID. No - it is from millions more people hitting the "financial and economic impact age" as they grow up in the Generation Y demographic. There will be millions more next year too. And the year after that.
China will not be in lockdown forever. Neither Russia nor Ukraine can afford to be at war forever. Inflation pressures are already rolling over on more and more channels - but it takes time for that domino to show up in the reported data.
Bottom line? These dominoes all turn in the opposite directions. As one catches up to the new speed of the economy, the YOY comparisons will "appear" to slow down, hence the pressure to maneuver will ease as well.
The only way to the other side of the valley? Through it...steadily, patiently, and with discipline and focus on the long-term.
None of the narratives we are being terrified by will change The Barbell Economy®. It is busier than we have ever been for one simple reason: more people.
They Are on The Case
One thing that is front and center - besides the recession coming at us - is the bear market. We now have ONLY ONE week in the last 15 years where the number of registered articles in the press mentioning "bear market" was higher than this past week: the low week of the pandemic shutdown.
The bottom line is that The Barbell Economy will have a tremendous reverberating impact on the economy. With 78 million baby boomers and 88 million millennials, the market will be busier than ever. As always if you’re wondering about how the current market impacts your retirement plan, schedule time with our team of experts to chat.