Stocks are gaining today in Europe and USA with Dow Jones and S&P500 both up by about 1%.
UK is doing better with FTSE100 gaining 1.2%, while European stocks as a whole added 0.45%, with Nasdaq gaining 0.6%.
Shanghai saw its stocks fall however by close to 1.8% with local media there blaming it on Powell who commentators are now calling hawkish.
Yet US stocks are seemingly brushing that aside now, with even growth stocks like C3.ai and PLTR gaining today.
Bitcoin is down however, although depends how you measure it with it rising from $35,500 to $37,200 prior to market open.
But then it went to $36,400 with it now trading at $36,700, not quite fully sharing in the stock market green.
Part of the reason might be that we could be in a sort of ‘disbelief’ as after months of red with only down without end, you’d expect investors to be a bit cautious.
The euphoria is obviously no where there, and we might be back to where you expect more down to follow a bit of up.
At some stage, more up follows instead, but after such a huge crash, we might get a bit of a more quiet period for bitcoin presuming it holds these levels.
Narratively, a lot of the Powell blaming is probably overdone as there’s so much FUD, you have mainstream commentators saying don’t buy the dip, sell the tip instead.
For perspective, even if interest rates are 1%, at an inflation rate of 7%, you’re being paid about 6% to borrow.
We are currently therefore, including the three rate hikes, in the most accommodative environment for growth in living memory.
Hence the economy is expected to grow and quite a bit this year, with that unlikely to change as where growth stocks are concerned, innovation stocks, they’re a bit of a strategic and even potentially a national security matter, so US and European governments are investing in them.
The advice of some thus, like Cramer, to go to boring old stocks like Dell, ignores the overblown narrative and more importantly, ignores a potential generational shift where the millennials more and more invest not just to make money but also to fund the future.
For boomers like Jim Cramer (66 year old) who might not care too much about the future as he is getting a bit old to see much of it, parking money on the companies of yesterday may make sense because he doesn’t care about tomorrow too much.
For a millennial however who may be looking at 40 years ahead, funding something like Rocket Labs or flying cars in Lilium and Joby or AI, cryptos obviously, etc., may well be partially about doing their part to bring forward the future they want.
The allocation of money therefore needs to account for the effects that has on mainstreet and day to day life. Not to just prop up old dinosaurs like Warren Buffet’s favorite sugary Coca Cola, or Cramer’s uninspiring Dell.
Because that money you put in stocks or in crypto, is going to someone. And by the act of investing you are exercising even ultimate power in decision making regarding pretty much all things.
The narrative thus that you shouldn’t fund innovation, that you should get out of growth stocks, is insidious and an anting of the hive so to speak because if everyone does that then of course it becomes a self fulfilling prophecy with potentially huge consequences for this generation as the future is delayed.
It also gives far too much power to one man, Powell, who of course relies on this anting to concerto the global economy with even threats of crashing it.
Future generations were maybe happy to just accept such orders and direction, in part because they just gave their money to people like Cramer to exercise investing power on their behalf.
But this generation does not have to accept it, without significant persuasion in any event, especially because when it comes to innovative or growth companies they do not have to rely on borrowing or Powell as they can rely on us to give them money through public capital formation.
Pension funds have a duty on that part, and a responsibility to this generation, if they do not want the public to exercise some oversight over their operations due to a duty of care that necessarily comes with any fiduciary position of delegated power.
The Fed also has a duty to explain what role interest plays in money formation as they do stand open to the criticism of debt traps in extending tons of money on ostensibly zero interest rates to only raise them once everyone is fully in debt, especially the politically accountable government.
But more than that this generation has a duty to itself to fund the world we want to see, and if we’re made poor in that process than so much the incentive to exercise political capital towards it.
Because there can be no pause towards funding innovation and bringing forward our future. To the contrary, it should be accelerated.
All meaning, this is ultimately very political and except for voting itself, there is nothing more political or a higher exercise of public power than investing.
And if that political judgment is to kick innovation itself, then retail maybe should rebel by reducing the delegation of their money, and by breaking from the anting to keep funding that innovation anyway so that these investment czars can be shown they only have say by consent.
Because there has clearly been a decision, not by Powell but these czars, to take profits from growth stocks and give them to dinosaurs without care of all the nice things that this generation might miss upon if we all went to boring Dell in a regression of sorts.
