Thus, the plunging stock market finally fell into bear market territory – a full-fledged bear market of nearly 20%. This is not surprising.
The market has been down all year. I’m not happy about it. More than 100 million Americans are invested in retirement accounts in one way or another.
The vast majority of these retirement savings investors are middle-income workers. They are not rich.they don’t own most of market wealth, but for them monthly reports from various financial planners or brokerages are important – very important.
For most of my career, I have always believed that the best investment strategy is long-term stocks. Professor Jeremy Siegel and Professor Burton Malkiel both wrote the book. Jeremy is from Pennsylvania. Malkiel is from Princeton, and I think people who follow their advice to buy and hold on weakness for 40 or 50 years are doing well.
The current bear market correction is certainly not the end of the world. For the faint of heart, I recommend not opening monthly statements when they arrive, at least not yet.
For others, I recommend deep prayer and meditation. We will get through this, but there is no doubt in my mind that these radical, progressive, big-government, socialist economic policies of Biden have been driving the stock market down, excessive federal spending, The war on fossil fuels and the Fed’s money printing. All of these contributed greatly to the sharp rise in inflation.
This has led to a recovery in market interest rates and a significant drop in the standard of living for the typical American household, with soaring inflation completely undermining solid wage and salary growth.
According to some indicators, real wages have fallen for 13 consecutive months, which is clearly seen if you dig into the averages of the major stock markets.
The S&P 500 retail index has fallen more than 31% year-to-date, and if you add an 11% gain in the producer price index, these consumption-related stocks are down more than 40% this year, as has the homebuilder index, which is now close to a 50% loss . Semiconductors fell nearly 40%. Consumer discretionary cyclical stocks fell more than 40%. Information technology fell more than 35%.
I’m not trying to bore you with numbers, but what I’m trying to explain is that if you look behind the scenes of the major averages, key economically sensitive sectors have been in a deep bear market for quite some time.
They point to recession. They may be discounting an inflation recession, the worst in the world.
The 30-year mortgage rate is 5.5%. The yield on 10-year U.S. Treasuries nearly doubled to 3%.this Fed’s The target rate, currently hovering just below 1 percent, could rise to 3.5 percent by the end of the year, according to Jim Bullard, president of the Federal Reserve Bank of St. Louis and an advocate for sound money.
Unfortunately, the Fed is caught in the wake of Biden economics—consumption, borrowing, printing—and still denies the inflationary threat of these left-wing policies.
Now, we all have to pay pipers because the reality around them is getting closer. I’ll say it again: the only way to stop inflation is to abandon the progressive agenda. Stop spending huge sums of money. Stop regulatory control of the economy. Stop aggressive climate policies that generate less energy, higher gasoline prices, and great consumer anxiety.
Those in the Biden White House chose to ignore the stock market — a big mistake on their own. Stocks mirrored the rhetoric from the rest of the country.
The latest Associated Press poll showed Biden with 39 percent approval and 60 percent disapproval.
A CNN poll found that 86% were “concerned” or “frightened” about the direction of the country, while 14% were “excited” or “optimistic.” I really want to meet that “excited” crowd. That’s just a joke.
This is serious business.If I can summarize these feelings, the key point — whether it’s the stock market or consumers, working families or wealthy businesses — is that no one Biden administrationalmost no one, confidence is important.
A free market economy is built on confidence, but confidence must be built on the rule of law, limited government, sound money, minimum tax rates, and great American ideas in the future.
We lost it temporarily, but we will get it back. Trust me, here comes the cavalry.
This article is adapted from Larry Kudlow’s opening comments in the May 20, 2022 edition of “Kudlow.”