RIP Good Times Is Over*

*Who knows? I really don’t. But over dinner with a public markets hedge fund person, we both *felt* that the great crash of 2022 might be over now, and that another 6-12 months from now we may see new highs.

Why did we think this? Well, most obviously, because the market has been up for the last month after terror since Nov 2021.

The terror was…fall of meme stocks, fall of covid darlings, signs of persistent inflation, higher interest rates and signs of more high interest rates over time but slowly rolling out (e.g. Europe is raising at a lag, not decisively), which means lower liquidity, Ukraine invasion, risk of breakout, risk of major war, war contagion to China eyeing Taiwan, China lockdowns, Covid part 4, monkeypox, chip shortages for cars and appliances and everything, US government paralysis, our own political thin skins hurt by Supreme Court overreach and Joe Manchin, climate crisis heat wave across the map, skyrocketing oil prices, risk of massive recession and tech stocks in particular getting crushed, causing venture and startups to meltdown, and therefore a general buzzkill.

It was really bad out there in July!

But we agreed on a few things, kind of factual things, that might be behind the feeling that the worst is over:

  • Russia is stuck and won’t be invading anyone *besides* Ukraine
  • Ukraine is at least at stalemate, and is acting on offense
  • Oil prices have started falling, weakening Russia
  • China is chastised; won’t want to try that gameplan in Taiwan
  • China finally flinched on lockdowns and is opening back up
  • Inflation ticked lower, suggesting a top, end of rate hikes, return of liquidity…at some point soon, not indefinitely in the future
  • Which also means we weren’t “just getting started” on inflation, it maybe was transitory after all (though over 1 year, not 3 months)
  • Covid continues to ease
  • Monkeypox isn’t too bad
  • US politics: voters struck back on abortion, and polls show big momentum for Dems, plus Congress/Biden passed a climate bill + infrastructure bill + health care bill, and are generally doing stuff
  • Companies are doing lots of business, hiring shortages prevail (high employment, wage growth), shortages of lots of stuff (gas, cars, chips), and this all means the economy is very strong — so no recession signs at all
  • Which all means: maybe this latest economic crisis was yet another ‘flash crash’ like March 2020 and Sep 2019 and Sep 2018 and all that.

Maybe by January we’ll be back to the January 2022 mood…