More Pain Ahead
“I do anticipate that accomplishing price stability will require slower employment growth and a somewhat higher unemployment rate.”
– Susan Collins, president of the Federal Reserve Bank of Boston, quoted in a 9/26/22 CBS News article. The same article cited Oxford Economics as anticipating that the Fed’s rate hikes will lead to no net hiring in the first quarter of 2023 and job losses in the 800,000 to 900,000 range in the second and third quarter combined. Bank of America’s estimates are far higher. It anticipates 3.2 million job losses through next year. Read more at cbsn.ws/3SyOXwl.
Is “Buy the Dip” Dead?
“Instead of rebounding after a tumble, stocks have continued to fall, burning investors who stepped in to buy shares on sale. The S&P 500 has dropped 1.2% on average this year in the week after a one-day loss of at least 1%, according to Dow Jones Market Data. That is the biggest such decline since 1931.”
– Wall Street Journal reporter Gunjan Banerji, in a 9/25/22 article about what a different experience “buy the dip” investors have had this year compared to past years, such as 2020, when the market rebounded quickly. Read more at on.wsj.com/3E05JAJ.
This Too Shall Pass
“Stocks are now pricing in endless interest rate hikes, as far as the eye can see, inflation that simply will not abate, a collapse in the capital markets due to more expensive money, a wave of defaults and an epidemic of earnings cuts, layoffs, crashing home prices and energy shortages with a side order of nuclear war. Maybe they’ll be right. If so, the returns on your stocks won’t be particularly important, as we’ll all be crouched in an alleyway with the carcass of a raccoon pressed to our lips, grunting at each other in the darkness while atomic gray ash cascades down from the sky, settling on our shoulders as the dusk of humanity begins. I’d bet the other way. Things will be bad, but rarely as bad as the worst of our imaginations can conjure. And at the turn, the best and the brightest among us will emerge even stronger than we were before the crisis.”
– Josh Brown, putting today’s markets into perspective as only he can, in a 9/25/22 post on his blog, The Reformed Broker. Read more at bit.ly/3ReDnFJ.
An Energy Wake-Up Call
“[W]hen you shame oil and gas investors, dismantle oil- and coal-fired power plants, fail to diversify energy supplies—especially gas—oppose LNG receiving terminals, and reject nuclear power, your transition plan had better be right. Instead, as this crisis has shown, the plan was just a chain of sandcastles that waves of reality have washed away. And billions around the world now face the energy access and cost of living consequences that are likely to be severe and prolonged.”
– Saudi Aramco CEO Amin Nasser, quoted by the Journal of Petroleum Technology in a 9/20/22 article. He argued that Russia’s invasion of Ukraine may have made the energy crisis worse, but it is not the root cause. Read more at bit.ly/3fm2clV.
