Finance – On a roll for now!


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November 22, 2021 by Scott Crosby - Views: 24

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Finance – On a roll for now!

October is behind us, and the month has been an unusual one in a number of ways.   

S202-1.jpgTypically, October has had its share of “Black Mondays” – a Monday trading session which turns into a panic-selling major dip.  Some are the result of legitimate fears, but others seem to be instigated simply by fear:  “It’s happening again!”

That pattern broke this year.  Perhaps the events of the COVID pandemic have somewhat inured the investing public from panic-stricken reactions.  Repeated bad news and delays of an economic and financial recovery may have dulled investors’ knee-jerk reactions.

Certainly economic growth has been stalled by COVID, and the stock market has reflected that.  

But October’s third-quarter earnings announcements have been cause for celebration.  Company after company has been announcing solid economic growth over the last three months.  People are seeing a light at the end of the COVID tunnel.

Both the Dow Jones Industrial Average and the S&P 500 have repeatedly set new all-time record highs in October’s final week.  With COVID beginning to fade and economic meddling by Congress and the President kept at bay by the stalemated efforts to pass the Democrats’ Socialist agenda, people are devoting their energies into improving their lives – i.e.: “economic growth”.

 

Will it last?

Obviously, people hope so.  Announcements and quarterly reports by large corporations have the biggest impacts on the stock market, but the vast majority of businesses are small mom-and-pop outfits.  Their purchases include goods sold by those large companies, impacting those headlined bottom lines.  

All those purchases are only proportionate to the sales successes by those small businesses.  The amount of sales required to keep a big corporation operating and growing depend on the composite successes of small businesses.  

 

What is Ahead?

Will the stock market’s upward trend continue?  Obviously, it cannot go up indefinitely.  November will bring a focus on Christmas sales.  

The ongoing supply-chain debacle, with so many cargo ships sitting at anchor while waiting to be unloaded, will continue to cost wasted money and prevent the sales of the goods sitting on those ships.  Will Santa be able to fill his sleigh with all the presents he would normally carry?

The Republicans have generally been doing a good job of slowing the Democrats’ passage of key parts of their Socialist agenda.  But will their dam break in the coming months?  The next Congressional election is a year away.  The level of politicking and rhetoric will soon intensify as primary elections begin in February.

China’s struggle for world dominance through force and intimidation will continue to impact the world economy.  But its own economy is having problems.  How will that affect  our economic well-being in the coming year?  

Europe’s and Britain’s attempts to reduce their “carbon footprint” – however dubious or questionable we might think that effort – is already having severely negative impacts on their economies.  The lack of availability of carbon-dioxide gas limits the shipments of frozen foods, and the reduced supply of natural gas, could be so severe that many people will at times be without heat this winter.

These are the obvious factors that will affect stock prices and economic successes and well-being for the coming year.  

But like the COVID pandemic, there is always a possibility of something unexpected rising to importance.  War seems unlikely, barring a Chinese attack on Taiwan.  Too, China is having its own economic problems, as it continues to try to make its centralized economy work as well as free markets, and to make its policy of political intimidation work as well as mutual international cooperation.  

COVID keeps resurfacing via its numerous mutated variants, but it is slowly fading into the background.  The resulting breaks in the world’s supply-chains are declining.  Companies are learning that keeping storehouses of inventory may have its advantages over true just-in-time delivery of raw materials.  

These potential problems all pose not only an economic threat, but they can also be tools to be used by power-hungry politicians who want to seize power and stifle freedom.  However, if freedom’s antagonists have grown in strength, so has the visibility of freedom’s advocates, and those advocates seem determined to forestall would-be dictators.  The political arena seems to be splitting into two radicalized camps.

Baby-boomers, dominant since the 1960s, are beginning their slow retirement and final fade-out from the scene.  Trump and Biden will be the last Baby-Boomer Presidents, just as George H. W. Bush was the last WWII-era President in 1992.  The Millennials – the first generation larger than the Baby-Boomers, are learning the political realities, and youthful naivety is giving way to real-world experience.   Will Socialism’s attraction weaken as they face the reality of higher taxation and other consequences?  Will they realize in time that Socialism is functionally destructive, and unable to offer anything in return for its cost in human tragedy and economic decline?  

Likewise, perhaps experience will teach the “woke” contingent that the people who incite them to violence and riots are after only one thing:  power.  They are not interested in others’ welfare. How soon will they realize that violence, and they themselves, are just tools to be used and then discarded?  

Those “leaders” are only interested in their own greater control of all people, “friends” and enemies alike.  When those puppets discover that a mindless mob’s only value is to steam-roller over the people smart enough to oppose the desires of the power-mad, then “woke” can die the slow death it deserves.  

These are the intertwined issues that face the current generations, and the crystal ball is no clearer than it ever is.  ■

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