US Econ Wall St Relationship?
Good morning,
What the Wall Street group-think, WSJ article "Why Americans Are So Down On A Strong Economy" above, do not get, is the splitting of US society into two, or three entirely separate sections or strata.
The wealth gap is growing like never before. Those with significant property and stocks are enjoying heady days indeed. Driven by both the record spending of the Biden Administration and the Tech boom.
Below this top level is middle America. Holding on with lower levels of property and stock holdings benefit, but still struggling with higher rates and the leap in prices for goods and services that has occurred over the past few years. A situation that continues to worsen.
The third strata is the 'almost forgotten'. The aggregate data completed hides their perilous state.
10% of Americans now do not call an Ambulance even if one is needed. Due to the frightening cost involved. The anecdotes are never-ending. The number one cause of death for 18-45 year olds, both sexes, is now drug overdose. Eclipsing cancer and heart disease. This shows the sorrowful level of stress and desperation that currently pervades much of the US population.
The aggregate economic data is what Wall Street is looking at, instead of the reality on Main Street. And even here, clear industry specific recession data, such as is the case in manufacturing and housing, is completely ignored too.
It is all about keeping the party going. The financial media industry has never been more primarily driven by the financial industry itself.
Only the global brands and big tech continue to do well. While the more narrow stock indices make record highs, most stocks actually remain in decline.
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Yes, there is always a strata to society. The point is that in the US right now, the nation is reaching extreme separation levels not seen since the Great Depression. These three strata remain on completely different trajectories. The top level is still seeing blue sky. The middle class is in an inescapable slow decline phase. The forgotten class is much bigger than most economists appreciate, and remains in free fall.
The Wall Street economic group-think and financial media simply choose to look away or even purposefully disguise the true nature of things. They continue to declare how strong the economy is. They do this to maintain investment in Wall Street itself. From which they derive their wealth.
Not a conspiracy. Just simple self interest, but perhaps this too, the human emotion level of self-interest is also reaching extreme and potentially dangerous levels.
As traders and investors, it has never been more helpful to recognise the fallibility of the more narrow indices, and the now greatly reduced reflective power of the real economy that they represent.
Having a ‘view', is to understand that dangerous pressures are indeed climbing in the US economy itself. While some stocks will continue to rally in spectacular fashion.
"Trading' is being aware that there is a greater than ever bullish bias now built into the economics and media group-think of Wall Street. To enjoy upward price action where it is available. While already having in place a bearish protection and opportunity plan.
One that will place you well ahead of the crowd should reality begin to bite across the full spectrum.
Clifford Bennett