What If We DON’T Get a Market Setback This Summer?
Relatively speaking, there’s some stabling news on the US jobs front.
The headline number is improving.
And while the internals will be hotly debated and laced with political hemlock, methinks the headline writers will be looking for a new monster to capture the public’s eyeballs.
Keep in mind that watching this data roll through on an hourly, daily, or even weekly basis is just a waste of your time, energy, and angst.
What is important is the massive shift that’s happening in the world – an unavoidable change driven by technology and the generation that’s living, breathing, and driving it – which the arrival of the virus and the decisions of our leaders has rapidly sped up.
In other words, the change was always going to happen. It’s now just happening a lot faster than we expected.
The millions of jobs displaced by Covid, and our reaction to it, will not come back. And while these numbers are rough, figure around 11,000,000 to 12,000,000 of these jobs represent about 4% of the consumer service/spending base.
These will be used as part of a massive restructuring - like in 2009 – streamlining activity and productivity.
And anything that’s not absolutely required, nailed down, or that can now be addressed through technology will be.
As for those caught in these channels, they will require retraining and to adapt to the new normal ahead.
By the way, this happens after every crisis and major setback.
Oh, and more thing about jobs.
In the weekly jobless claim chatter, you often hear something like: "That is the XXX week of over a million jobless claims and that adds up to over 54 million since the virus began."
Understand this: If I were to file for a weekly jobless claim this week and next - I am counted both times. That means there are not 54 million people out of jobs. There are currently US 16.9 million unemployed, as per the freshly updated in the jobs data just released.
Now, the Good News
Investors remain a long, long way from bullish.
Bullishness only ever arrives after lengthy rallies when it becomes deeply seeded in the minds of the crowd that nothing bad will ever happen again.
For now, in America we have the vitriol, the virus, the street riots, and people burning some city buildings. Cap that off with media designed to stir up our collective feelings (for commercial viability) and you get a twisted, seriously fractured perspective.
Turn it off. Don’t listen to the garbage.
And keep in mind that August is the slowest, choppiest, most boring part of the year.
We live in a deflationary world and the tremendous technological development pressure will keep that underway.
The media will tell you to be terrified of inflation.
That’s why Gold, like cash levels, are rising because people are terrified.
Now on to Sentiment…
Read'em and reap (over the long-term)
Once again, the bears are on the march (which is excellent).
There are VERY few times in history where bullish feelings were lower than they are now.
And none of those periods represented a long-term high - they were all long-term lows.
It didn’t change over a day or a week.
There’s more as we dig into what it means when the "bad mojo" lasts this long:
We’re setting new records in the string of negative sentiment.
Check the 6-month rolling average in the second image above.
There have only been two other times in 33 years when it has been lower.
And each of those previous times - in retrospect - were "bet the ranch times" - and all that was required was having to wait for blast off.
Unfortunately, waiting is the worst part about being a stable, effective, long-term investor.
Waiting hobbles the consensus and even catches out the experienced hands.
But it works.
As noted above, folks, it’s August so please stay patient.
Choppy periods are normal.
If we don’t get a setback in the normal summer swoon pattern, this market is much stronger than even we have noted.
And, it’s set to fool everyone.