An investing story about the rest of this year:
Covid finally starts to diminish in the rest of the world.
I think most American’s think that because we have lots of vaccinated people and our lives mostly normally now, the rest of the world is similar, but they aren’t,
Covid finally starts to diminish in the rest of the world.
I think most American’s think that because we have lots of vaccinated people and our lives mostly normally now, the rest of the world is similar, but they aren’t,
Their vaccine levels are far below America’s and they have still been dealing with outbreaks and lockdowns as the USA has trended towards normal.
But that will change. They will get vaccinated, and go back to somewhat normal life as well. Here’s what’s going happen when they do.
But that will change. They will get vaccinated, and go back to somewhat normal life as well. Here’s what’s going happen when they do.
Capital and wealth that flowed into the USA as we opened up our economy more fully before the rest of the world will flow back out to the global countries that are getting back to normal.
This wealth outflow will cause the USA stock markets to go down.
This wealth outflow will cause the USA stock markets to go down.
But the economy won’t really slow and the labor market will continue to be tight.
(since we have all learned over the last year and half that the stock market can go up while the economy struggles, we shouldn't be surprised by the opposite).
(since we have all learned over the last year and half that the stock market can go up while the economy struggles, we shouldn't be surprised by the opposite).
However, because the wealth is flowing out of the USA, the dollar falls. This causes inflation to get worse, as the $$ is falling and the labor market is tight.
Now with a falling stock market, a tight labor market, rising inflation, and a falling $, what is the fed going to do?
Now with a falling stock market, a tight labor market, rising inflation, and a falling $, what is the fed going to do?
Are they going to try and save the market and make inflation worse? Would they raise rates to counteract pressure on the dollar?
Do markets react to the rising inflation with fear that it will erode profits, declining further?
When was the last time the fed faced this choice?
Do markets react to the rising inflation with fear that it will erode profits, declining further?
When was the last time the fed faced this choice?
Now I made all this up, and It’s not what I think will happen, but it’s sounds plausible doesn't it?
How many people see this as a possible near term outcome?
How many people see this as a possible near term outcome?
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