Help (Not) Wanted: Stock Highs Mean a “Bear Market for Humans”
No sector was spared in the bloodbath on Wall Street yesterday.
Technology was hit the hardest, but every other component of the S&P 500 Index declined with it.
Don’t assume we’re headed even lower just now … this could be a one-off adjustment gone haywire after options traders got crushed. The algorithms kicked in, as they always do, and turned it into a rout.
The formula that’s kept this bull market alive is still in place: Thanks to the Federal Reserve, there is no alternative to stocks.
But that same formula has created a “bear market for humans,” as a leading Wall Street analyst put it this week.
I illustrated the same point in a YouTube video, weeks before that Bloomberg report.
The companies doing best in this year’s stock market are those that have little need for human labor. The valuations of firms that rely on actual people to make money, meanwhile, have plunged.
It’s no time to panic sell when you see a sell-off such as yesterday’s. But in today’s video, I’ll show you the charts that prove there are momentous changes in store for the stock market down the road … watch to find out what they are.
A Preview of Things to Come
The pandemic has accelerated a long-term trend away from reliance on human labor and toward a greater concentration of wealth in the hands of owners of capital — especially “intangible capital” such as algorithms and intellectual property.
Today, I’ll explain why that same dynamic that’s driven a rally in tech stocks could ultimately be its undoing.
You’ll also discover:
- This chart shows an unbelievable divergence in the stock market … and it’s not growth versus cyclical or technology versus other sectors. (8:37-10:16)
- Economic weakness wasn’t enough to derail the stock rally so far this year, so there’s no reason to expect that to change in the short term. But there’s a twist in this plot that you don’t want to miss. (11:01-13:42)
- The Fed long used this simple concept to predict inflation, but it’s useless in today’s economy … and the reason why is also why Fed policy is doomed to fail. (0:43-5:56)
- And more
Click here to watch this week’s video or click the image below:
As a side note: We don’t provide transcripts for our YouTube videos. Many of you have asked. However, if you would like to see subtitles, you do have that option. Click the “cc” button in the bottom-right corner of the video. The transcription won’t be perfect, but it should help.
Editor, The Bauman Letter
An economist by training, I grew up in the U.S. but emigrated to South Africa in the mid-1980s where I became deeply involved in the development and implementation of post-apartheid economic and urbanization policy. During the 90s and 2000s, I was a consultant to a variety of entities, including African and European governments and the United Nations.