Is the Bloodbath Over in the Stock Market?
The Federal Reserve has raised interest rates four times this year. Fed officials are displaying a rare unanimity that more rate hikes are coming. Higher mortgage rates have residential real estate reeling. Inflation is at the highest level in 40 years. The official GDP numbers say the economy has entered a recession. War drums are beating to our East and to our West.
Of course, gold is inching higher day after day as money seeks a safe haven from the chaos.
So, is this really a time to be in stocks? Is the bloodbath we have already experienced this year over? Or is the stock bear market just pausing before the next round?
It looks like there is more carnage ahead in the stock market. Here are a few snippets that we think confirm that outlook:
I expect the Fed to be behind the curve… it doesn’t really have a clue about market bubbles and the damage they do when they break.–Jeremy Grantham interview, Investors Podcast’s 7/29/2022
It’s Happening: Here Is A List Of 12 Big Companies That Have Announced Layoffs Within The Last 2 Weeks:
#1 Ultratec Inc. says that it will be laying off more than 600 workers.
#2 Electric truck maker Rivian will be laying off approximately 840 workers.
#3 7-Eleven has announced that it will be eliminating 880 corporate jobs.
#4 Shopify is laying off about 1,000 people.
#5 Vimeo says that it will be eliminating 6 percent of its current workforce.
#6 Redfin will be reducing the size of its workforce by 8 percent.
#7 Compass will be reducing the size of its workforce by 10 percent.
#8 RE/MAX will be reducing the size of its workforce by 17 percent.
#9 Robinhood will be reducing the size of its workforce by 23 percent.
#10 It is being reported that Ford “is preparing to cut as many as 8,000 jobs in the coming weeks”.
#11 Geico has closed every single one of its offices in the state of California, and that will result in vast numbers of workers losing their jobs…
#12 Fender, the USA musical instrument giant, has reportedly laid off 300 California plant workers this past week without any notice or severance pay.
On top of everything else, Amazon has announced that it reduced the size of its workforce by approximately 100,000 workers in just one quarter.–The Economic Collapse Blog. Com, 8/3/2022
The problem is that after a decade of deranged monetary policies that ultimately amplified speculation beyond 1929 and 2000 extremes, we are so far from “normal’ that arriving anywhere near that neighborhood will be a journey. The recent market decline has simply retraced the frothiest portion of the recent bubble, bringing the most reliable market valuation measures back toward their 1929 and 2000 extremes– John Hussman, Hussman Funds, 7/7/2022
Adjusted for inflation, 2022 first-half S&P 500 down 25-26%, and Nasdaq down 34-35%, Bitcoin down 64-65%. That was multiple compression. Next up, earnings compression. So, maybe halfway there.– “Big Short” Michael Burry, 7/30/2022
Stocks were in a primary downtrend from 1966 to 1982. Before that, the primary trend was up, from the bottom of the Great Depression until the mid-‘60s. The most recent bull market primary trend began in August of 1982 and continued until December of 2021.
If a new, bear market primary trend has begun, we’ll see real values for stocks go down for many years. Few baby boomers will ever again see equities so richly priced as they were at the close of 2021….
A primary trend is relentless. And now, after 4 decades of rising stocks and falling interest rates, have we just witnessed the beginning of a new one? Probably. Because, it’s about the money. The trend of the last 42 years was sustained by borrowing at lower and lower interest rates…with dramatic ‘saves’ by the Fed whenever a correction threatened. But those rescues are no longer possible.–Bill Bonner, Bonner Private Research, 8/2/2022
Take steps now to prepare for growing stock market turbulence in the remainder of 2022. Speak with a Republic Monetary Exchange gold and silver professional without delay.