Tomorrow, the vaccine mandate for truckers in the US begins. The Canadian border is already affected by the Canada mandate and there is already some pain. Truckers work alone although a small number share driving with wives or other partners. Their exposure to the general public is minimal in their work life. The same mandate by the US will block most Mexican drivers from bringing fresh fruits and vegetables into the US. All three groups of drivers have a low compliance with vaccination. The result will likely contribute to the supply chain crisis, which has only worsened the past few months.
Now, The stock market is showing weakness.
Energy policy has driven up oil, fuel, packaging and gas prices. Transportation costs have skyrocketed. Emission regulations have driven up port costs and delayed transportation; fracturing the supply chain. Vaccine mandates have hit the manufacturing and processing sectors. Legislative policy and COVID spending have artificially inflated the economy. Monetary policy has devalued the dollar and driven even higher inflation.
The mandate will affect 50% of US truckers. Mexican truckers are unknown but Canadian truckers are already demonstrating in Ottawa.
Into this hurricane of stagflation, the fed is going to raise interest rates. The stock market could lose half its inflated value. The NASDAQ is already responding to the storm clouds. Employment is going to start getting really sketchy. Congress will eventually announce their remedy, which will be more spending – and the dollar gets worse.
A market expert is predicting a bear market.
“Prominent market technician Ralph Acampora says the recent bout of market volatility has him uneasy and now he’s forecasting a deeper drop in a market that has already delivered a significant bruising to Wall Street in the first few weeks of 2022.
and
Acampora, who began his career on Wall Street in 1967, said that the recent pullbacks are bearish for the outlook in stocks.
“I’ve lived through too many bear markets,” he said via phone, noting that the lengthy bullish run for stocks, which has been primarily fueled by easy-money policies from the Federal Reserve to combat COVID, may be coming to a conclusion..
And…
Markets have been unsettled since November and fears about a Federal Reserve that will be aggressive in its current battle with rising inflation — stemming from supply-chain bottlenecks and increased demand as COVID fears take a back seat to consumerism — appeared to culminate on Wednesday with the Nasdaq Composite entering correction for the first time since March and crossing below a long-term trend line, its 200-day moving average for the first time in nearly two years within days of each other.
All of this was avoidable. A year and a day ago, we were energy independent, at peace, borders were controlled, and the vaccine, over hyped as it was, was at last available and being administered. Certainly, the economy was flat but that was another decision by bureaucrats that were elected by nobody and ignoring a lot of science. I’m reading Robert F Kennedy Jr’s book, The Real Anthony Fauci. I am not sure about his conspiracy theories but the book is full of footnotes.
I am not optimistic about the future, at least the next three years.
“The stock market could lose half its inflated value.”
The stock market could lose half its inflated price. Where there are Real US assets behind the stock (eg Tesla’s US car & battery manufacturing plants), the impact of a drop in share price may be less than we think. Where there are fewer Real US assets behind the stock (eg Apple’s contracts with overseas manufacturers) … well, we shall have to wait & see.
This time really is different — because so much of the US manufacturing base has been offshored. If businesses hit a bad patch, they are going to be effectively laying off workers in China instead of the US. The historic strong link between the US Stock Market and the Real US economy may now be much weaker than we think.
Of course, if Biden* pushes us into a war in the Ukraine, all bets are off.
Looks like the italics command is not closed.
In the case of the trucking problems, some of this may be overcome-able by using rail shipping instead.
Tesla’s total property, plant, & equipment assets are about $36 billion at original cost, $29 billion net of depreciation. They also have about $16 billion in cash and equivalent…about $6 billion is debt. Their market capitalization (basically, what you could buy the company for if all the shareholders would sell at the current price) is about a trillion.
The asset value of a company like Tesla is all but irrelevant in two directions. The first is that the only company that will sell for net asset value is already bankrupt and will actually get only some fraction of what’s on the books. The second is that it would imply that you could duplicate Tesla’s business for $40 gigadollars which ignores the value derived from learning just how to make what they sell and how to sell it, the real business.
The trillion dollar (terradollar) valuation implies that you would have to spend that to duplicate the business which is equally absurd. A quick look shows that Tesla doesn’t pay a dividend, so you can’t look at any money returned to the investors to give a hint of what a true value should be.
When you buy Tesla, what you’re really doing is betting that someone else will pay you more for the privilege in the future.
With the current shortage of drivers, 5% parking their trucks will thoroughly foul up the works. You really have to give Biden credit for consistency. You’d think just the law of averages would allow him to do one thing that wasn’t a total disaster but he powers through.
The stock market has been ‘effing insane since before I was born. It’s basically legalized gambling for “serious people” who think they understand things, when in fact, they don’t.
Go ask the average “investor” what they know about the companies they’re buying in with: Do they know what they are actually doing? Do they understand the market that those companies are in? Do they know much more about the people running those companies in their names? Nope, nope, and even more “NOPE”.
Root problem with all of this is that the overall system has gotten too damn big, too impersonal for it to really function in a sane manner. It’s the Tulip Craze, all over again, and writ large across an entire economy. Same insanity in China, with the Evergrande deal; if you think American or European corporations are any better off, I’d like to introduce you to this insane valuation of Tesla. Which isn’t the first, or even remotely close to, the first time that the stock market has done this kind of nutball insanity. Look at the last Internet bubble, fercryin’outloud…
The vast majority of human market-related behavior is fundamentally insane. You have no way of knowing what the hell your money is doing, when you hand it off to the stock market. Hell, half the people out there are really just playing games with themselves, not actually investing in something. The idea behind a stock operation was to spread risk and enable the creation of wealth through the power of collective investment. We’ve gotten so far away from that at this point that it’s insane anyone is still putting money into these things–It’s not like you even have a check on some idiot like Jeff Immelt when he decides to destroy the company you’ve put your money into. Hell, look at Boeing…
Overall, we’re due for a correction. And, it’s gonna be ugly, coinciding as it will with the likely collapse of the current paradigm of governance here in the US. All I can do is laugh, considering. You can hear the creaking of the tumbrils as I write this…
@Kirk – do you even know what a common stock represents? I think that statement is ridiculous, but everyone is entitled to their opinions.
Have you ever held any stock?
I doubt it.
Or if you have, you were one of those who simply bought into a frenzy and then were mad when the inevitable correction came and you got burned.
Yes, there will be a correction sooner or later.
But compare stocks – the S & P 500 from the 50-s, 60s, 70s, or 90-s and compare it today.
Would you have been better off holding an average or as you say, it was all just a roulette wheel?
I’ve had stocks since I was 15 and yes, I know what all of the companies do.
To get back to the question of whether the Bear Market starts tomorrow — of course no-one can predict the exact timing, but there is no doubt that markets are currently highly over-valued, and thus a Bear Market will certainly arrive at some point, whether tomorrow or later. Prices of assets (paper assets and Real assets) will fall.
That will be bad for those who hold those assets with dropping prices, eg the Democrat insider 0.01%. But most Americans don’t hold such assets (although more of us are exposed to them through retirement plans). If the price of a super-yacht anchored in the Virgin Islands drops dramatically — well, I can be sympathetic.
The interesting issue is what impact the coming Bear Market will have on the great majority of the US population. Will we see Great Depression hobos wandering the countryside? Or will it be more like Japan, where markets fell and yet life for most Japanese people went on?
Japan had a strong manufacturing economy and ran a trade surplus when their markets went south. The US no longer is in that category. This time is different, and it is tough to predict whether a Bear Market will be the beginning of a return to sense (and eventual solid prosperity) for the US — or the end of the road. Or merely another bump in that road?
Not many comments from dependents. Try 10 different schools in 12 years. Absentee father much of the time and 12 hour days when home. Food stamp level pay for enlisted. Not all dependent lives are equal.
Gavin…”That will be bad for those who hold those assets with dropping prices, eg the Democrat insider 0.01%. But most Americans don’t hold such assets (although more of us are exposed to them through retirement plans)”
Way overstated. There are 14.3 million US households with $500K or more in investible assets. Yeah, not all of these are in stocks/bonds, some of them are in bank accounts, money market funds, physical gold, actual cash, etc, but surely a big part of that is exposed to the financial markets.
https://advisor.johnhancockinsurance.com/content/dam/JHINS/images/NLI/Home%20Log%20Out/Life%20Insurance/Collateral/large-case/day-2/2019_sri_wealth_segments.pdf
Concerning retirement plans, I’m not sure whether or not fixed-benefit plans are considered ‘investible assets’ for purposes of the above analysis…I’m guessing not…but a good retirement plan such as many government employees and tenured professors have can be worth as much as $500K to $1MM or more in present value.
Important to note that the financial markets are not just the *stock* markets. The bond markets are very large and very important. Pension funds and insurance companies, for example, have a lot of their assets in bonds.
Bonds are quite exposed to inflation risk and interest-rate risk as well as credit risk. If you have a 20-year bond that matures without the company (or the government) that issued it going broke, then you *will* get your money back…but how much will that money actually be worth, given inflation over that time frame? And if you want to sell the bond before it matures…and the then-current interest rates are higher than the ones on your bond…then it will be less-valuable than what you paid for it.
David F: “Way overstated. There are 14.3 million US households with $500K or more in investible assets.”
But, but, but … the sainted Hillary Rodham Clinton assured us that most Americans are only one paycheck away from disaster! And more seriously, there have been repeated reports that large numbers of Americans do not have enough savings to cover a $500 emergency payment.
What interests me is whether a Bear Market will have a big impact on most people, or not? For example, if a person’s house drops in price, will it be a disaster or a disappointment? He still has the house, and still needs someplace to live. If he needs to move, his house sells for fewer dollars — but the house he buys will also have gone down in price. As long as a person has an income stream and can cover his bills, maybe he just shrugs when property prices fall and carries on.
The analogy continues on to paper assets, like stocks & bonds. When the markets crashed around 2008, some people panicked and sold at a great loss, while other people shrugged and held on to those paper assets and watched while they recovered in price. The impact of market price drops on real life may not be what we expect.
There needs to be a different term used to reflect that the “stock” “market” of recent times is just the Fed doing what it has to to pump those prices up. It’s not been a “market” in any real sense. Anyone sitting it out is a sucker. The government’s been quite open that it wants those values to go to the moon, so why wouldn’t you go along for the ride? If and when the government becomes unable to keep it going, there won’t be any safe ground anyway…
My intent here was to speculate whether the trucker collapse will be the last straw. The stock market has been the only place to invest money since ZIRP became the Fed policy. Will anyone have the guts to raise interest rates to slow inflation ? I doubt it but maybe the economy is too fragile to tolerate another blow. I don’t know. As far as Tesla is concerned, my opinion is that it is built upon a foundation of sand. If electric cars and trucks really become a major method of transportation, where does the electricity come from ? It seems to me to resemble the California “bullet train.” The environmentalist left seems to be another example of people who have never made anything and who believe in magic. I just don’t see how we get out of this without a serious “correction,” whatever that may be.
This is just one more opportunity to separate the men from the boys. The latest of many courtesy of the Biden maladministration. Those businesses with the most nimble management and adaptable business plans will do best.
Over at Dan from Madison’s latest update about the supply chain, the holes showing up so far are a little surprising, not what we guessed going in.
One topic that’s come up repeatedly is fasteners and our supposed dependence on China for them. For the more generic types, the supply is actually very diverse, spread throughout Asia and Europe primarily with China being important but not dominant. For high grade parts, China is hardly there at all. So there will be some scrambling but probably not long lasting disruption. It doesn’t take years of planning to install a cold heading machine.
On the other hand, if you’ve worked on a car lately, you’d see that about every fastener is bespoke with the manufacturers in an apparent contest to see just how many ways there are to design the driving heads and just how many sets of wrenches they can force mechanics to buy. We’re seeing lines shut down and new cars parked, waiting for the bespoke computer parts that are unavailable now, it will only take a supply chain that works slightly worse before it becomes impossible to have all the parts in one place to build any cars at all. The computers can be installed in a matter of minutes once they are available, a cylinder head bolt, not so easy.
As for the stock market. The fact remains that for the great majority of stocks, no matter how well the company does and how much profit it generates, none of the money devolves to the stock holders. Their profit or loss depends entirely on the sentiment of some nebulous entity called “The Market”.
More news today of the Canadian truckers’ actions.
Truckers will be travelling to Ottawa saying they want to vocally protest Ottawa’s new vaccine rule. And support for Monday’s convoy is strong, say organizers.
“My email and phone is blowing up, because of people like you who have simply had enough of this government,” Valentim said.
As part of the new mandate, truck drivers must be fully vaccinated against COVID-19 or face a two week quarantine when crossing into Canada, however the trucking industry is facing challenges including supply chain disruptions and a driver shortage.
The Canadian Trucking Alliance estimates the vaccine mandate could result in a loss of up to 16 thousand cross border drivers.
Mike K: “My intent here was to speculate whether the trucker collapse will be the last straw.”
There is a lot of ruin in a nation — a lot of last straws too. Foolish rules about truckers needing to be injected are just that — foolish rules. They can be rescinded even faster than they were introduced. If the rules really start to cause problems for the Political Class, the rules will be changed.
What we do know with absolute certainty is that the current financial situation for the US and most of the West is unsustainable. Things which cannot continue …won’t! What eventually brings the unstable structure down, and which way it falls — we will have to see. But we know it is going to crumble eventually.
Maybe the last straw will be the injection rule for truckers. Maybe it will be some damn fool Biden* thing in the Ukraine. I am still betting that the last straw will be a drop in the Dollar exchange rate — but so far I have been wrong.
There were stories months ago claiming that the “truckies” in Australia were going to force an end to their mandates, but that was a dud, so I’m skeptical that things will be any different here, but who knows. Australia seems to be a well-functioning penal colony, which isn’t quite the case for other Anglosphere countries.
Ditto for stories about health care workers here, and now these stories that the UK is thinking of backing down instead of forging ahead:
https://inews.co.uk/news/politics/covid-vaccine-mandate-nhs-staff-paused-government-workers-sacked-1416578
In NY they went ahead and fired those who refused, which turned out to be a pretty small number, of course, but the media and authorities never mention in the hysterical articles about the health care system being “overwhelmed” that there are fewer hospital beds now than there were before last fall. And of course the loyal opposition in the GOPe is nowhere to be found in pushing back or pointing out the obvious insanity.
I am extremely thankful to be an American, since there’s no way a general vaxx mandate can be imposed here, but I have had my eyes opened to how many sheep there are. I said in the early days of the “lockdowns” that I wasn’t that worried about things going overboard because people wouldn’t tolerate them being too onerous or long lasting, and there’s never been a bigger regret or bigger mistake I’ve ever made.
“Now is the end. Perish the world” Beyond The Fringe 1961. I’ll have to pick up the record.
So you think rounding up all the unvaccinated and putting them in gulags is too far? ;)
It has been said (credited, I believe, to Benjamin Graham) that “in the short run, the market is a voting machine, in the long run it is a weighing machine”
“There’s a lot of ruin in a nation.” Biden likes a challenge, just ask Corn Pop. He’s got three more years after all.
The Canadian trucker protest is continuing and getting bigger.
Will Trudeau try to stop it ?
If you can predict a bear market, it’s not likely to happen. As Eugene Fama said you only see bubbles in the rear view mirror. At the same time, it’s not hard to spot the difficulties the stock and bond markets might have to go higher as they have since 2009. Crashes happen when you least expect them.
My gut tells me we are in for really choppy trading and quick changes in sentiment. I can remember trading Eurodollars in the mid-1990s. I think the entire contract had a 60 point range for the year. It was brutal trading, death by a thousand cuts type trading.
One aspect no one is chatting about is margin. How many people own things on margin? When margin gets pushed, they are likely to sell exacerbating any decline. Already happening in crypto.
The other psychological factors are these. 1. Baby boomers are retiring. How much risk do they want in their nest egg? 2. How many people see the last few years market run and think it’s “free money”? They are likley to take a little pain, then sell.
Good to see you here, Jeff!
Gang, Jeff writes at Substack, linked in his comment. Very worth reading, especially for those interested in the markets.
Jeffrey C: “Baby boomers are retiring. How much risk do they want in their nest egg?”
Retiring baby boomers are going to be liquidating their nest eggs to pay for their living expenses — changing supply & demand for assets, with an inevitable impact on asset prices. Falling prices for an asset tends to become a self-reinforcing cycle as people quite reasonably accelerate their plans to sell while the asset still commands a high price.
Long time ago, Ben Stein (yes, that Ben Stein) wrote a book about the “Never, Never Land” of retirement — in all human history, long comfortable retirements for the majority of the population never happened before, and will never happen again. He predicted that Ponzi schemes like Social Security would run into problems as the ratio of payers to payees drops to a critical level, while private pensions would run into the problem that selling by the massive Boomer generation will drive down the value of pension plan assets and hence pension payouts. It seems like we are approaching the time when Stein’s predictions will be put to the test.
Important to note that there are a lot of investors in the US stock markets who are not themselves Americans.
I don’t know how many “civilians” trade on margin but the one place that most will see an impact is on the interplay between home values and interest rates. If prevailing interest rates go from 3% to 4%, the monthly payment for a given principal will increase by about 1/3. This will not change the payment of the present owners but will almost certainly reduce the resale value. Since we seem to have reconstructed the circumstances that yielded such outstanding results in 2008, what could possibly go wrong?
Mike K.
Add this in:
https://amp.realagriculture.com/2022/01/elevators-working-in-reverse-as-alberta-cattle-feeders-face-increasingly-desperate-feed-shortage/
Note that in the article they say that trains across the border are being affected too.
Trudeau is going to find out what happens when the intertwined supply chains break down.
Another thing that is in your article cited. We are coming up on the day when welfare cards are filled up in this country. And already there are gaps in store shelves. In urban areas, what will the welfare recipient locals do if they cannot find groceries? Might be a good idea to stay clear of those areas and surrounding neighborhoods.
Subotai Bahadur
David F: “Important to note that there are a lot of investors in the US stock markets who are not themselves Americans.”
Indeed! Those foreign investors eventually plan to sell those US assets and repatriate their funds to their own country. That makes them VERY sensitive to projections of the US Dollar exchange rate versus their own currency, as well as to the Dollar value of their assets. That gives them two ways to lose, and makes them likely to be some of the first to run for the exits at any sign of trouble. The risks to American investors are obvious.
MCS…”If prevailing interest rates go from 3% to 4%, the monthly payment for a given principal will increase by about 1/3.”
At the same time, the entities that are *holding* those fixed-rate mortgages will see the value of those holdings drop.
“Will Trudeau try to stop it ?” God knows, he is flailing about.
As for the trucker antivaxxers … stupidity knows no boarders. ;)
in 99-01, the brief rate spike popped the subprime bubble, in 2004-06, the reset from greenspans gallop led to the subprime bubble popping, our debt levels are more precipitous now,
Here we go!
Here is an S+P 500 chart since November of 2021.
We are in a bear market. In early December, we tested it. Omicron happened in mid to late December. We have fundamentally turned a corner.
Instead of a big crash, we are losing .5% to slightly over 2% per day. That is death by a thousand cuts.
Meanwhile, look at Crude Oil. Let’s go Brandon!
we’re nearly at the starting point in october, having given up those gains, individual funds might be fairing differently same with nasdaq
Meanwhile, the trucker revolt grows in Canada.
However, cars, SUV’s, vans, and small commercial trucks are now included in the massive convoy lines and joined with the big rigs.
Along the routes people are gathered at intersections and highway overpasses to cheer on the effort. The scale of growth amid this grassroots movement is really quite remarkable. For the people of Canada, millions have latched on to this protest as an opportunity to tell the government and public officials that enough is enough.
Mike our country is 82% fully vaccinated. We are growing tired of the minority filling up our hospitals, and although we are nowhere near as dumb as Americans, who now have overwhelmed several areas with your unvaccinated, we are pretty stupid.
Still we in a very large majority, are getting more and more tired of the unvaccinated and are happily making life hard for them. This is about the vaccination passports so many of us have, and that more and more are required as time goes by. I go to a restaurant, pull out my phone and the attendant scans the picture to verify my status. Takes very little time and most of us are happy with this.
I’m triple vaxxed myself. ;)
“are happily making life hard for them”
That’s because you’re commie trash.
No idea why you’re not banned from posting here, I guess some people find you amusing lol.
Still we in a very large majority, are getting more and more tired of the unvaccinated and are happily making life hard for them.
Because you are tolerated here don’t believe for a moment that anyone pays attention to you and what you post. While you are preening yourself watch out for the virus that doesn’t care a whit about your vaccination status.
I’m triple vaxxed Mike. Its not unlikely, that I will have no symptoms from Omicron. ;)
re: covid, try to look at the Israeli numbers and make the case with a straight face that never-ending boosters is “the answer”:
https://ourworldindata.org/explorers/coronavirus-data-explorer?zoomToSelection=true&time=2020-03-01..latest&uniformYAxis=0&pickerSort=asc&pickerMetric=location&Metric=Cases+and+deaths&Interval=7-day+rolling+average&Relative+to+Population=true&Color+by+test+positivity=false&country=~ISR
Current case rates (numbers, not rates) are 10x higher than ever before. You can also see positivity rates, in the dropdown, to see it’s not just a testing effect–this is their highest ever positivity rate. Deaths are approaching their fall bump already.
It’s time for everyone to accept what some of us were mocked for pointing out last summer–the “vaccines” have an extremely short effective time, and it seems to be getting shorter. You can handwave this away by saying it’s due to variants rather than vaccine effectiveness waning (I’m not sure how to test this, but it sure seems like no one is actually trying), but the implications are exactly the same, that they’re no panacea and will never end this, even if everyone gets jabbed.
And yes there are age-related effects that can make vaccine “success” “look like” vaccine “failure” but at some point you have to admit that these shots are nothing at all like what we’ve all accepted as the definition of a vaccine, i.e., measles, etc., don’t behave like this at all.
The world went absolutely insane, and it’s going to be very difficult to try to recover.
Just confirming the attribution:
“In the short run, the market is a voting machine but in the long run, it is a weighing machine.”
― Benjamin Graham
Pengun:
As for the trucker antivaxxers … stupidity knows no boarders. ;)
“Boarders”? Seriously?
Methinks you board there a hell of a lot. :-P
}}} For the people of Canada, millions have latched on to this protest as an opportunity to tell the government and public officials that enough is enough.
What, you mean the same idiots who allowed a recall opportunity to pass them by only a couple months ago?
SMH — either the Canadian elections are even more invalid than ours, or too many Canadians are total morons.
Possibly both, I am quite able to admit.
}}} We are growing tired of the minority filling up our hospitals, and although we are nowhere near as dumb as Americans, who now have overwhelmed several areas with your unvaccinated, we are pretty stupid.
Yup. Definitely a long-term boarder.
Your mindless parrotry of ignorantly invalid statistics is amply demonstrative of where you live all the time, Penny.
Your hospitals problems tie far more to the fact that you are obstructing workers from working by attempting to ram vaccinations that have legitimately serious concerns to anyone who ACTUALLY pays attention to FACTS instead of just blathering on whatever idiocy the media has told them — because the MEDIA knows more than anyone in the medical profession about the subject… sure. “Science!” — as well as the fact that your vaxes are less and less effective as the virus drifts away from the original form — and the fact that the newer forms are consistently less virulent…
To say nothing of the fact that it’s finally getting out that there is — as the “idiots in opposition” have been asking all along — a distinct difference between dying FROM Covid and dying WITH Covid. Likewise “Hospitalized” WITH vs FOR.
All your sources are inflammatory prevaricating containers of excreta, using your clueless putzery to get you to believe absurdly inaccurate mistruths which do not reflect actual risks or concerns glaringly obvious to any rational, intelligent, and properly skeptical individual.
You won’t ever figure this out, but I note it for the consideration of whatever lurkers there may be to consider when dealing with “boarders” like yourself.
Well, Casto Jr’s party won less than a third of the votes, and fewer than the “Conservative” party did. I don’t know or care the details about how that gave them almost half the seats, plus presumably a governing majority with partner parties I assume.
I expect Canada is about as far down the road of craven compliance to anybody with a hi-vis vest and clipboard as England and Australia.
I don’t like to get into the vaccine debate but 82% vaccination rate coupled with higher infection and hospitalization rates than when the vaccination rate was 0 don’t add up to a strong case for the vaccines. Evidence whether or not there is some value in avoiding serious complications rests with the statistics released that most of us don’t have much faith in as well.
In Canada, BC specifically, people not vaccinated are 35.7 times more likely to be hospitalized than those fully vaccinated. These numbers are pretty well the same across most of the first world.
This is what is plugging up both our and your hospitals, the unvaccinated. This is why people with afflictions that have nothing to do with Covid are dying, in your country, because the hospitals are full. This is why many countries have what you would call a harsh response to the unvaccinated as they are trying to protect their medical systems.