What Comes Next?

Now that the stock market has resumed its nosedive - joined by other assets like bonds, gold, commodities, even real estate, (Did I miss anything here?), it's only natural to ask: What's next?

A lot going on in the world these days - not that there isn't always something going on somewhere. It's just that sometimes it seems that a lot more is happening. This is one of those sometimes - I think.

I think because the only way to say there's a lot more going on is to have some sort of standard, like a checklist of items that makes up "what's going on." Something like: war, economic recession, social unrest, palpable increase in crime, petty and violent, market declines leading to significant losses in the value of assets that people typically own, inflation, etc. Hmmm...not a bad list.

If we use that list - and there's nothing "official about it," we'd then measure what's going on now against what's happened in the past, perhaps the more recent past. And if we could measure this in some reasonably accurate manner - past and present - we might be able to say: "x,y,and z" has increase in frequency. Get the picture?

I don't have such measurements at my fingertips. Do you? If so, please forward the data. If not, well, I guess we're stuck with what seems to be. And it sure does seem like all of the items in that list are on the increase. Doesn't it?

Not that it's unique for these items to all be creating trouble for us folks, but all of them usually don't cause trouble at the same time. A good example: recession with inflation.

That's usually called "stagflation." It's rare. Rare enough such that the last time it happened - in the 1970s - no one was sure what to make of it. Some said it wasn't possible even as it unfolded. But there was no denying it after a while. The economy was in the doldrums - a combo of declining years and years of no/slow growth. Inflation was rising, spiking at the end of the 1970s/early 1980s. Stagflation.

Sound familiar? It should. Despite claims that the economy is going gangbusters - the current claim of the current administration in good ol' Washington D.C. - some of us don't see it. 

Sure, unemployment is low. But look at history. It's always at its lowest as recessions begin. There are plenty of jobs - they say. But if there are lots of job openings but few who qualify to fill them, what good are they?

But let's not get sidetracked by a current administration claiming all is well, even better than well, even gangbusters. That's what current administrations do. What do you expect politicians who spend their money and time on getting reelected to say - that the economy sucks?

So if you're seeing an increase in that informal list we slapped together, what about that quesiton: What's next?

The obvious: the next leg of the Bear Market in stocks. Look out below

What about bonds? They've not provided any counter-balance to stocks so far. It's just been loss upon loss. Then again, a review of the 2007-2009 crisis reveals that bonds declined in the first part of the stock market bear, but then turned around and did provide some respite to the stock losses. Will that be the case this time? Maybe. Maybe because if the bond market bull that began in the early 80's has ended and a long-term bear has begun, it could be different this time. That wasn't the case in the the 2007-2009 debacle. 

The real killer, though has been precious metals. They were the great counter to the 1970s when stocks and bond descended into Hades. "Everyone" figured they'd be a good bet this time around (Count me in.). To say they've been a disappointment would be an understatement. They're a downright mystery.

What about Bitcoin/Cryptos? Seriously?

Oh, and let's not forget real estate. Yeah, it's a local thing, for the most part. But if the legendary Jerry Grantham is right about this being not just a Bubble, but a Super-Bubble (Sheesh!), then real estate may be in for a bigger reckoning that a lot of the RE experts are willing to concede. 

So what's next remains somewhat certain, somewhat mystery. We'll surely soon find out. Tempus fugit!