Sorry, The Roaring 20’s are Cancelled

Major indexes continue to get upended in the start of 2022, a very stark contrast to 2021. The S&P is down over 9% YTD, and the DOW down over 6%. Selloffs in tech and healthcare are driving indexes down, and pushing p(ain) for individuals heavily allocated in those sectors. Many knew that the writing was on the wall, with every major index notching double digits gains for 2021, with a flurry of liquidity coming from the Fed, which ultimately proved to be the driving force. Imminent rate hikes and a slowdown of asset purchases (U.S. Treasuries and Mortgage Backed Securities), will certainly impede stocks throughout the year.

The CPI (Consumer Price Index) yielded a 7% increase year-over-year in 2021. Virtually every asset class and commodity in existence costs more. We’ve seen rising prices across the board in housing, equities (love that), energy, etc. Ultimately we’re due for a year(s) of pain as consumers will begin to wane down spending, potentially affecting revenue streams, which will show up on companies’ bottom lines. This, coupled with rising real rates will slow down the amount of money flying around the system.

2020 and 2021 were truly an historical moment in the monetary world, with an obscene amount of liquidity within the greater financial system, and absolutely no remorse shown by the Fed or any central banking syndicate for that matter. The bottom line is, the new roaring 20’s have unfortunately been cancelled. Enter just about every disinflationary force known to man. The only thing inflated will be the pain.