Enlightenment or Revolution? The Next Market Phase
If you're a fan of workers' rights, I suggest taking a look at Fran Drescher's speech about SAG- AFTRA's unanimous decision to strike. It really gets at the pathos and the gravity of our current moment in history.
Markets are currently in an upwards trajectory. This is off the back of supposed cooling inflation, a strong labor force, and the emergence of AI into the mainstream. Much of the market gains are thanks to this newly hyped industry. Right now, the fundamentals of our economic system are being challenged. Many feel that their very livelihoods and relevance are in jeopardy. The irrelevance and the insidious depression which comes with it - something lower class Americans have been feeling for years - has come for the establishment. Oh, but the ultra-wealthy are still doing fine. Now, I think, begins the time for their reckoning as well.
Now, I'm not an economist. I'm just a social worker who thinks markets and psychology are essential in gauging the health of humanity. We are seeing declining education, declining healthcare, and ideological division. One must keep asking - where is this all headed? We really don't know. But, the SAG-AFTRA strike sends a strong message - it is perhaps a signal to other larger labor unions to protest. A general strike seems unlikely, but not out of the question. Whether you're on the political left or the political right, you don't want your job taken away.
What will be the result? On the optimistic end, perhaps we finally see "Trickle down" economics work as intended. After all that wealth-hoarding, finally some redistribution in the form of healthcare, wage increases, and other benefits. This is only if their hand is forced. In such a circumstance, what would happen to markets? I'm guessing it would require a slowdown in capital/asset preservation. Profits for major corporations may initially take a beating, which could send stock prices tumbling at first. On my SPX chart, there is a lower trendline for term uptrend channel which hasn't been tested in a while. It is perfectly possible to see the upper trendline tested first.
Yeah, yeah, me and other "doomers" have been calling for a big crash for the last 5 years. We got one during the pandemic, but it didn't last long, did it? We got another one during the inflation crisis, but that also didn't last terribly long.
Markets cannot continue up in the long term without population growth. Bitcoiners think Bitcoin is the answer to this, and an ideal currency for a deflationary future. This might be the case, if it weren't for greed, and if it weren't for Bitcoin's many flaws. Humans must remain flexible to change, and as such the currency must also be fluid. Bitcoin is rigid. It is possible the ETF filings come through, and Bitcoin has newly accessible institutional products. But yet again, doesn't that defeat its original purpose? The cat's out of the bag - it's all about greed, not about financial inclusion or freedom.
Due to a variety of factors (including the death wave for the baby boomer generation and the unaffordable nature of childcare), the same rate of population growth is quite unlikely. What, then, would allow markets to continue upwards? The extraction of resources from the many for the benefit of the few. An increase in efficiency. Being able to just DO things faster and faster. Enter AI.
What AI, along with the rise of cryptocurrencies truly misses - is the importance of human-to-human connection, community, and trust. The medium of exchange is not the problem - it is greed and exploitation. Greed and exploitation come as a result of distrust - "I must take take take before someone else takes takes takes." In my ideal world, saving for retirement shouldn't even be a thing. You work long enough and support your community long enough that it supports you right back as you get older. Seems pretty simple to me. And saving for retirement is also one of the primary drivers for market growth. What happens when an entire generation of senior citizens moves on and distributes their wealth? Are struggling millennials simply going to reinvest all that en-masse? This is a good question for the next 20 years.
We are likely at the precipice of enormous market shifts. We don't precisely know which way things will turn, but I still suspect there will be a fairly deep decline in property/asset values. As things become faster and faster, one would expect things to also become cheaper, since the cost to produce them declines. Unless, of course prices are set by those ready and willing to exploit the masses. I think this dynamic will have to change over the coming years. This is just by natural laws of the universe. If we continue to ignore our problems and dysfunction, and fail to communicate with trust, our environment will enforce these natural laws.
As for the charts - on the left, we have the SPX monthly. Could be a double top, but also it might push higher. Who knows? We'd likely need some black swan news to result in a breakdown - or a dramatic sentiment shift. On the right, the TOTAL crypto market cap monthly. Despite the positive news for Ripple and XRP yesterday, TOTAL remains stuck at major resistance. As much as I think Stellar and Ripple have somewhat useful tech (at least faster and cheaper than Bitcoin), there is too much long term sell pressure. I find it astounding that there hasn't been a clear statement implicating Ripple in enormous pump & dump behavior. We have also yet to see true stablecoin regulation. I find it equally astounding that Binance Coin remains in the top cryptocurrencies by market cap despite losing their entire business in the U.S., and the ongoing depegging of USDT on their exchange:
This is due to the cessation of customers' ability to trade in USD - so people sold all their crypto and USDT at a discount, ultimately getting less USD. If the depegging continues, I wonder how it might impact other exchanges? Perhaps it could result in some regulatory intervention.
In conclusion:
ENLIGHTENMENT
Optimistically, markets stagnate during a time of wealth/resource redistribution. We have a true "Soft landing," yet labor issues sort themselves out through striking/unionizing. Essentially, a mild revolution, or a second Enlightenment. Massive problem-solving occurs on a broad scale, including the handling of infrastructure, climate issues, education, healthcare, and transportation. Ultimately some things go up in value due to natural supply and demand. However, ultra-concentration and exploitation diminishes. As these things diminish, so does our distrust. People begin to accept differences even where they disagree. The moral panic recedes into the background.
REVOLUTION
Pessimistically, markets continue up and up until the next catastrophe. Violence and civil unrest increase until we reach a breaking point and restructuring naturally occurs, maybe even involving mass-migration due to irreconcilable ideological differences. Proper management of resources, infrastructure, healthcare, and education fail, further emphasizing divides between the rich and the poor. Then, one can only imagine what comes next.
As always, thank you for reading my speculative musings on the market. I know, I'm a little bananas and gloomy at times. But I've gotta get it all out somehow! This is not meant as financial advice.
-Victor Cobra
Markets are currently in an upwards trajectory. This is off the back of supposed cooling inflation, a strong labor force, and the emergence of AI into the mainstream. Much of the market gains are thanks to this newly hyped industry. Right now, the fundamentals of our economic system are being challenged. Many feel that their very livelihoods and relevance are in jeopardy. The irrelevance and the insidious depression which comes with it - something lower class Americans have been feeling for years - has come for the establishment. Oh, but the ultra-wealthy are still doing fine. Now, I think, begins the time for their reckoning as well.
Now, I'm not an economist. I'm just a social worker who thinks markets and psychology are essential in gauging the health of humanity. We are seeing declining education, declining healthcare, and ideological division. One must keep asking - where is this all headed? We really don't know. But, the SAG-AFTRA strike sends a strong message - it is perhaps a signal to other larger labor unions to protest. A general strike seems unlikely, but not out of the question. Whether you're on the political left or the political right, you don't want your job taken away.
What will be the result? On the optimistic end, perhaps we finally see "Trickle down" economics work as intended. After all that wealth-hoarding, finally some redistribution in the form of healthcare, wage increases, and other benefits. This is only if their hand is forced. In such a circumstance, what would happen to markets? I'm guessing it would require a slowdown in capital/asset preservation. Profits for major corporations may initially take a beating, which could send stock prices tumbling at first. On my SPX chart, there is a lower trendline for term uptrend channel which hasn't been tested in a while. It is perfectly possible to see the upper trendline tested first.
Yeah, yeah, me and other "doomers" have been calling for a big crash for the last 5 years. We got one during the pandemic, but it didn't last long, did it? We got another one during the inflation crisis, but that also didn't last terribly long.
Markets cannot continue up in the long term without population growth. Bitcoiners think Bitcoin is the answer to this, and an ideal currency for a deflationary future. This might be the case, if it weren't for greed, and if it weren't for Bitcoin's many flaws. Humans must remain flexible to change, and as such the currency must also be fluid. Bitcoin is rigid. It is possible the ETF filings come through, and Bitcoin has newly accessible institutional products. But yet again, doesn't that defeat its original purpose? The cat's out of the bag - it's all about greed, not about financial inclusion or freedom.
Due to a variety of factors (including the death wave for the baby boomer generation and the unaffordable nature of childcare), the same rate of population growth is quite unlikely. What, then, would allow markets to continue upwards? The extraction of resources from the many for the benefit of the few. An increase in efficiency. Being able to just DO things faster and faster. Enter AI.
What AI, along with the rise of cryptocurrencies truly misses - is the importance of human-to-human connection, community, and trust. The medium of exchange is not the problem - it is greed and exploitation. Greed and exploitation come as a result of distrust - "I must take take take before someone else takes takes takes." In my ideal world, saving for retirement shouldn't even be a thing. You work long enough and support your community long enough that it supports you right back as you get older. Seems pretty simple to me. And saving for retirement is also one of the primary drivers for market growth. What happens when an entire generation of senior citizens moves on and distributes their wealth? Are struggling millennials simply going to reinvest all that en-masse? This is a good question for the next 20 years.
We are likely at the precipice of enormous market shifts. We don't precisely know which way things will turn, but I still suspect there will be a fairly deep decline in property/asset values. As things become faster and faster, one would expect things to also become cheaper, since the cost to produce them declines. Unless, of course prices are set by those ready and willing to exploit the masses. I think this dynamic will have to change over the coming years. This is just by natural laws of the universe. If we continue to ignore our problems and dysfunction, and fail to communicate with trust, our environment will enforce these natural laws.
As for the charts - on the left, we have the SPX monthly. Could be a double top, but also it might push higher. Who knows? We'd likely need some black swan news to result in a breakdown - or a dramatic sentiment shift. On the right, the TOTAL crypto market cap monthly. Despite the positive news for Ripple and XRP yesterday, TOTAL remains stuck at major resistance. As much as I think Stellar and Ripple have somewhat useful tech (at least faster and cheaper than Bitcoin), there is too much long term sell pressure. I find it astounding that there hasn't been a clear statement implicating Ripple in enormous pump & dump behavior. We have also yet to see true stablecoin regulation. I find it equally astounding that Binance Coin remains in the top cryptocurrencies by market cap despite losing their entire business in the U.S., and the ongoing depegging of USDT on their exchange:
This is due to the cessation of customers' ability to trade in USD - so people sold all their crypto and USDT at a discount, ultimately getting less USD. If the depegging continues, I wonder how it might impact other exchanges? Perhaps it could result in some regulatory intervention.
In conclusion:
ENLIGHTENMENT
Optimistically, markets stagnate during a time of wealth/resource redistribution. We have a true "Soft landing," yet labor issues sort themselves out through striking/unionizing. Essentially, a mild revolution, or a second Enlightenment. Massive problem-solving occurs on a broad scale, including the handling of infrastructure, climate issues, education, healthcare, and transportation. Ultimately some things go up in value due to natural supply and demand. However, ultra-concentration and exploitation diminishes. As these things diminish, so does our distrust. People begin to accept differences even where they disagree. The moral panic recedes into the background.
REVOLUTION
Pessimistically, markets continue up and up until the next catastrophe. Violence and civil unrest increase until we reach a breaking point and restructuring naturally occurs, maybe even involving mass-migration due to irreconcilable ideological differences. Proper management of resources, infrastructure, healthcare, and education fail, further emphasizing divides between the rich and the poor. Then, one can only imagine what comes next.
As always, thank you for reading my speculative musings on the market. I know, I'm a little bananas and gloomy at times. But I've gotta get it all out somehow! This is not meant as financial advice.
-Victor Cobra
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