It's coming folks.
The market has been running on hope for a long time. It's often said (and its true) that greed and fear are what drives the stock market. Greed makes you buy, fear makes you sell. Unfortunately both tend to peak at the exact wrong time; you have maximum fear at the bottom, and maximum greed at the top. If you listen to the little demon screaming in your ear at either time you will be ruined.
It's very, very hard not to listen to the demon, which is why for most people the advice is don't trade. You'll lose. Not because you can't analyze what's going on, but because the demon will get you.
We've had an unprecedented run over the last 30 or so years. The late 1980s up through today have had their fits and starts, but the ramp job from the pandemic "sell off" in early 2020 is just flat-out crazy. It rivals that of the late 1990s, and we know how that ended.
Chief got into that a bit on Stocks-n-Jocks Friday before my segment, pointing out that he did a bit of analysis looking at valuations of a handful of companies in the late 1990s and deduced that GDP would have to double to make them reasonable. Part of the reason I got out of the markets entirely in early 1999 was that by then it was clear from my work in the tech sector, which I had specialized and personal knowledge of as I was a part of it, had claimed on a reasonable valuation basis the entire GDP of the world ten times over. That was obviously going to end in tears -- and it did.
People always claim "nobody saw it coming", as they tried to claim in 2007. Baloney. Anyone who wasn't hitting the crack pipe on a daily basis saw it coming and knew damn well it would blow. They just didn't know when and greed -- that demon on their shoulder -- kept them in the game.
And, by the way, they kept the public in the game too despite the absurdity of it all, but it didn't end there.
They kept the public in because that was necessary for the insanity to continue. In other words they deliberately lied in the media knowing damn well that the purpose of their lie was to suck ordinary people into their intentional charade so they could make the "next dollar", fully aware that the game would fail and when it did the outcome would be horrific. You see, without the next sucker, eh, "buyer", the game ends.
They're doing the same thing now.
And so, in all probability, are you.
Corporate America has ruined the work ethic in this country over the last 18 months. First it was calling people essential. Then it was abusing them by demanding they work in what the employers called dangerous conditions (e.g. a viral pandemic) without proper PPE and/or wildly-elevated pay to cover the risk. At the same time the neighbor next door who was not deemed "essential" was given $600/wk to sit at home and get stoned, an equivalent of $30,000 a year, all tax free where the worker had to pay taxes on every penny they earned during that time!
Then Corporate went even further, as I documented recently, and in many cases was given authorization to take what were payroll tax funds the employee actually earned and keep them for themselves. I remind you that's about 15% of every dollar for most employees and applies from the first dollar, even for those who pay no income tax at the end of the year as they don't make enough.
And finally said corporations, having ridiculously abused employees for the last 18 months then turned that abuse into literal assault and battery by demanding employees take an experimental drug in the name of "safety" despite a complete lack of knowledge of the intermediate and long-term risks -- or be fired.
Many complied due to their financial situation, not because they believed the medication was safe and effective, only to find that (as I expected and pointed out) the courts would eventually rule that such mandates from the government were illegal and, further, that the courts would note that even if the employer could do it they're still on the hook for liability including potential punitive damages.
But the courts and Biden aren't the issue here. The issue is abuse of employees that has been going on for a long time. Many firms "offshored" their IT departments over the last 20 years and in several cases forced employees to train their replacements if they wanted any sort of severance. In other words "train this dude to do your job at half your salary" -- and then get fired.
That's not abuse? Excuse me?
Yet it went on dozens of times all over the country.
Today employers use all manner of ruse to get around labor laws. For example they will "outsource" customer service to contract houses that then, in turn, have contract workers. These "contract houses" set the terms of employment yet are somehow not held to be employers and thus forced to provide all the benefits of one, including federal wage and hour protections, tax withholding and similar, along with (under Obamacare) the PPACA health insurance requirements. Technology has made this all possible; you call "customer service" and the odds are very high the person you're talking to is not actually employed by the firm at all; they're a contract worker for some shop set up somewhere.
You can push this crap too far, and corporate America has. The backlash, when it blows, is going to be ridiculous.
The Government, in concert with The Fed, has run this scheme where "let's print up some more credit!" is the answer to everything. Both sides of the political aisle are involved up their necks. Fully one dollar in five goes to the medical monopolists in this country today and so anything that helps them passes and is left alone. Moscow Mitch refused to shut that crap down with the most-recent "debt ceiling" charade and its not surprising why: Forcing an end to the abuse on a "sudden stop" basis would crash the stock market.
Well, the market is going to crash anyway folks, because the abuse is so rank and outrageous that it will not be maintained -- because it can't be.
I would not be even slightly surprised if the plates stay in the air through Christmas. Seasonally, that's rather likely. But come 2022 all bets are off. The courts are headed in the "wrong" direction to give license to this crap in the private sector and the number of pissed-off employees who will now slow-walk everything, doing just enough to not be fired on a permanent basis, is likely in excess of a quarter of the workforce.
That will hammer productivity and costs and there's no more to offshore, really, when you get down to it as we already did that, just like we already used pushing the second adult (usually the woman) in a household into the workforce in the first place.
Buckle up folks: This ride is going to get a little rough.