Economic Overview | The "Yellowstone Bubble"On Thursday, May 16th, I was sipping coffee and watching The Today Show , when a guest appeared on the program to talk about how much money YOU are supposedly making in your 401(k). Oddly enough the commentator - who was identified as the "chief business correspondent for CNN" - then reminded viewers that "you really should only look at your 401(k) once or twice a year"....
What?....WHAT?
My first thought: we don't need to be lectured on how often we should be checking on our retirement funds.
But this got me thinking, WHY do these "professional money managers" insist that working people not pay attention to their money??
I am speculating here, but I assume it is because retirement fund managers (large investment institutions) are also in the business of making money and therefore TAKING PROFIT.
Is there any evidence for this?... Well, yes:
Now factor in all of the nonsense that is constantly pumped by television commentators, meme stock pumpers, crypto fantasies, immature CEOs, and more recently - celebrities and professional athletes.
Have you ever stopped to think about the fact that there is a television commercial for $QQQ... Things have become so obscene that money managers are paying for airtime to deceptively lure regular people into buying their securities, so they can take profits, after already receiving bailouts. You've seen it, there are several versions of the same commercial and the narrative goes something like "I'm investing in QQQ for the future".
The Unemployment Rate has bottomed - there is no more growth to be had and even if we were to see unemployment trend below 3%, we can go back to the early 1950s and 1960s to see that financial markets really DON'T return much more below 3% unemployment; again this is because there is no more growth below 3% and therefore marginally less return.
Credit card delinquency is rising rapidly, thanks to inflation from Covid helicopter money.
And Household Debt-to-GDP has also bottomed. This one is particularly concerning because as we just explained, there is no more growth to be achieved from here (UNRATE). So, ask yourself: what happens if GDP falls ? Answer: household debt as a proportion of GDP rises by at leas that amount (it's a ratio - it has no choice). Expanding on this question, ask yourself: what happens if household debt continues to rise, amid maxed out unemployment? Answer: the already record profit-margins of investment banks increase to highly unstable levels, thereby further incentivizing profit-taking.
Anyway, I am calling this market the Yellowstone Bubble . Everyone is a rich tough-guy cattle rancher, everyone is a crypto professional, everyone thinks "Tesla is the future" (LOL), everyone is an AI expert, everyone is a pro because they scroll forums and listen to some podcast.
In a world that runs on "users" and "clicks" and web traffic, you must remain vigilant!
Take care!
