Wall Street – a snapshot of the end of September 2022
Before we try to understand what is happening in the financial markets, let’s start with ticker tape(The videotape that displays, during trading and in real time, the prices of stocks, bonds and other investment instruments and indexes). What stood out during Friday’s trading in New York, at least in our eyes, were not the sharp declines in the stocks but the fact cerebro The investment instruments themselves went down, the shares, bonds, oil, gold and other commodities. We haven’t seen such “unity” in a long time.
This phenomenon, if it continues, basically means that we have reached a stage where investors are convinced that a real/serious recession is indeed approaching. This does not mean that there will really be a serious recession, it means that this was the atmosphere on Friday. This atmosphere took command with the conclusion of Governor Powell’s remarks and the endless commentaries (mainly headlines) that fill the media, written, digital and photographed.
This is the stage where all the commentators, both serious and non-serious, explain to those who are interested in listening (the number of those are constantly decreasing) or reading, that “this is it, the recession is certain and will be a heavy recession!”. No one is talking about the “soft landing” of the American economy anymore.
Sorry, there are those who continue to believe in a “soft landing” and even if there is no recession, but you won’t find them on the “leading” websites and media channels. The stock market, in terms of expectations, entered on Friday what is called “total surrender to pessimism”, a situation similar to its situation on the way to all-time highs which is then in “total surrender to optimism”, everyone agrees that stocks will continue to fall. This is the picture reflected from Wall Street last Friday.
The chances are that this atmosphere will continue to prevail for at least another two weeks, because on October 7, the employment data for September 2022 will be published, and if God forbid they surprise badly (below the consensus), then the last line of defense that is still “keeping alive” those who believe that there is no serious recession when employment is full, will also be occupied by The pessimists and the decline will even intensify And all this, gentlemen, before mentioning what month we are entering, “Black October”. It doesn’t matter that both October and September are usually great months on Wall Street, but after this September and if employment disappoints and Biden continues to act as if clean energy is able to replace the polluting one with chic, then, as the Americans say, “All hopes are goneThis is the picture reflected from Wall Street after the commentators and experts chewed the data over the weekend.
The last so-called ray of optimism that the battered bulls are clinging to is the 8/11 elections that may return the “Patriots” to control of Congress. We used the word “patriots” because of the amazing similarity between American and Israeli politics. An ideology based on “only not Bibi” is not an Israeli patent. “Just not Trump” was the ideology of the American “left” from the moment Trump announced that he was running for the presidency of the Republican Party back in 2014.
The fact that the November elections are for the Houses of Representatives only does not change anything for either side. Trump does not participate in the spin at all but his spirit is floating and the evangelical friends are trying to turn the spirit into a tornado. This issue, of the elections and the possibility that the Congress will be under Republican control, also plays an important role in the conduct of investors. A Republican Congress can, for example, force the termination of a project Keystone XL pipeline Or the renewal of drilling permits in the US, which will immediately (psychologically) reduce the fear of inflation and energy prices and prevent the need for further aggressive interest rate increases.
Don’t believe? Did you know that Friday, September 23, 2022, Friday, October 21, 2022 and Sunday, November 6, 2022 will be “firm days of prayer that our country may be worthy of the blessings of the covenant; freedom, protection and prosperity. The next general election to be held on November 8 2022, will likely be the most important election ever held to protect our constitutional republic and the future of our country, Americans will pray that we get the right leaders for the job.” You probably know who issued such a “call”. The “right ones for the job” in this case are the Republicans of course and this message came out of the district Maricopa In Arizona, a strong Republican/Evangelical stronghold. By the way, since the 2016 election campaign, the district has been boycotting theFBI, no less! they define theFBI As a “den of crooks” and this following the attitude of the police to President Trump.
It started with the accusations that Trump is a Russian agent and the investigations opened by theFBI Following these accusations, continued with the accusations that Trump cheated in the 2016 election and intensified after their raid on the Trump estate, Mar-a-Lago in Florida, in search of documents, remind you of something?.
I suppose that in the churches of the evangelicals they will preach flame-cutting sermons on this subject and those who have not seen the prayers of these members have missed a musical-spiritual thrill of the kind of concerts given by the Beatles or Elvis. The success of the Republicans depends not a little on the vote of the evangelicals who are incidentally also the biggest supporters of Israel.
We have quite a few friends of this type in Florida and they believe that the current atmosphere in the United States, of depression, fears and lack of confidence in the leadership “must continue until the election”. As James Carville, Clinton’s political adviser, said when asked what would win the election, “ “It’s the economy, stupid. aboutThe more gloomy the atmosphere becomes, especially in the economic field (inflation, recession, etc.), the more the Republicans’ chances of recapturing Congress increase. In a significant way and not because the Republicans are back. The market will start to rise because then in November, after the two historically scary months, on the eve of the big shopping months and the Thanksgiving, Christmas and New Year’s holidays, and most importantly, the White House will become a ‘lame duck’ and this is a situation where prices will be level at the end of October There is only one direction, up.”
Well, let’s try to analyze the situation: There is no doubt that Wall Street is in trouble, and this in light of the situation that actually led to the beginning of the correction from the last all-time high that was in November 2021. The correction, it is important to remember, started from crazy price levels (especially in the technological field) that were at the end of 2021 when the war in Ukraine “joined” this, which led to an increase in prices Energy and commodities, the disruption of the global supply system, the inflation that reared its head quickly, the sharp interest rate hikes and the expectations for continued hikes.
And let’s not forget the coverage of all these problems by the media, and all this before we mentioned the danger of invading Taiwan, the situation in China and Putin’s recent threats, and a few other problems that we forgot. Alongside these problems, there is the atmosphere of depression, which may worsen because it feeds itself. The Wall Street Journal Summed it up nicely, “The global economy is faltering and financial markets are flashing red, reflecting a sense on Wall Street that a sharper slowdown in global economic activity is likely inevitable.” the rest of the world at a time when price increases in many places are already outpacing incomes”, they quote David Costin from Goldman Sachs who states, “the outlook for the markets is unusually murky” and it is very difficult to argue with this statement.
The Republicans take advantage of the emotions and launch a big campaign of “(our) pledge to America” based on Newt Gingridge’s 1994 campaign, “Contract with America” which succeeded in a big way. When, among other things, they commit to bringing back the drilling activity in a big way. As mentioned, it is very difficult to argue with the gloomy atmosphere But we stand our ground that the source of the current crisis is not economic and is not related to the long growth cycle created by the technology revolution.
This is a crisis that resulted from non-economic political activity and the more the problems with Russia and China continue and the domestic American politics continue to behave contrary to economic logic (like the climate crisis) the more this crisis may become extremely difficult because at the end of the day what determines Wall Street are expectations and the crisis has a stronger effect on them a day. But it is possible (also politically) to correct the source of the crisis and relatively quickly (yet) and then the market will react positively and the growth cycle will return to its course.
So what is the conclusion?? right now? sit on the fence and have as much cash as possible (who can) because the problem that led to the strength of the decline in the shares, the estimates at the end of 2021, almost no longer exists and as soon as political and economic sanity returns (which of course will happen) the shares will return to “The only game in townAnd then there will be opportunities – happy new year everyone!
* The above should not be seen as a recommendation to carry out actions and/or investment advice and/or investment marketing and/or advice of any kind. The information presented is for information only and is not a substitute for advice that takes into account the data and needs of each person. The one who makes use of the above information – does so at his own discretion and sole responsibility. The authors may hold some of the papers mentioned above.