Friday March 24 2023
Social Mood Turning Negative
Å recession in the US is upon us. I expect some countries to default on their debt this year.
Kevin Hassett to Maria Bartiromo this morning, he is a former Chair of the Councill of Economic Advisers under Trump
If a recession is upon us, how is it that the stock market has managed to stay over 30,00 all year?
The answer is that the indexes are weighted in favor of the more popular and widely held stocks. On the way up the FANG stocks held sway. Now Apple and Microsoft account for some 25% of the value of the SPX. No wonder the averages seem higher than the should be
To illustrate just how broad the weakness is, consider these statistics. The NASD is up about 12% this year, thanks to those two stocks. But only 18% of the entire NASD trades over its respective 50 day moving average. the DOW and SPX re now negative for the year.
Positive social mood is expansive and inclusive People are happy and optimistic. They invest in stocks and real estate with no memory of even recent down turns. Negative mood is exclusive and skeptical causing people not to invest. Hence Amazon has lost half its value since peaking in late 2021. Facebook or Meta has fallen from 375 to 200 in the same time period.
On the popular culture front, signs of a downturn are here and world-wide. The Manhattan District Attorney looks set to indict and possible arrest former President Trump. The charge involves an illegal payment as hush money, hardly national crime. This will be a first time ever event. President Ford pardoned Nixon to avoid just such a circumstance. Ford realized the country had been through enough. This is the equivalent of banana republics to the south famous for jailing their political opposition. Thounsands protest in both France, and now, hello, Peru!
This matters for at least two reasons. First it sets a terrible precedent. Does Democrat Alvin Bragg believe Republican prosecutors will not fixate on some future Democrat, apparently not.
The modern timeline dates back to the Watergate investigation and threats of impeachment. Fast forward to actually impeaching Bill Clinton but no conviction. Sure enough, tit for tat, Pelosi et all impeaches Trump not once but twice. Recall the video of her tearing up Trump’s State of the Union speech. Now both the Manhattan DA and New York Attorney General are promising to convict a former President.
Imagine you are in the intelligence office of Russian or China. You have spent actual time in the US studying American culture. How would you report this to Putin or Xi? No wonder China thinks the US is in decline.
Oil prices challenged the $70 level but fell back over $2 today. Not much else to report on the energy front.
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