Keep Calm and Carry On: A level view of 2022 via /r/wallstreetbets #stocks #wallstreetbets #investing


Keep Calm and Carry On: A level view of 2022

Mass human psychology will always lag reality.

Consider the below bullets points and the TL/DR at the bottom. 2022 is going to turn out just fine.

  • Rate hikes will be slow and steady
    • Inflation is not out of control: the Biden admin is (admittedly) right that supply side shocks are heavily influencing key elements of the CPI basket. There is ZERO reason for the Fed to panic and drop a .5 bomb on everyone on Monday, or even in the near future. This is an extremely delicate process, and the Fed is going to continue to combine (1) hawkish language with (2) slow and steady rate hikes. I will borrow a phrase from Deng Xiaoping here and say that in 2022, the Fed is going to ‘cross a river feeling for stones’.
    • A slowly increasing rate hike environment is not destiny. Everyone here needs to move beyond the extraordinarily simple money printer paradigm. YES, QE absolutely contributed to high valuations, but NO, a slowly paced rate hike in combination with an easing in COVID/Supply Side issues (see below) is not the recipe for a crash. Are some companies going to be naked when the water slowly recedes? Yes–but corporate profitability is very high right now. If AMC and other bullshit fake companies go out of business, the huge employment needs in EVERY sector (not just Wendys) will catch those workers.
    • Everyone with an IQ above 80 has known that COVID QE was going to cause inflation, and require rate hikes. Retail capitulations over the past
  • COVID is fading away and becoming seasonal like the Flu
    • Look at the numbers, they are there for everyone to see. Already the Biden admin is talking about rolling mask mandates back. Sure, another variant could pop up, but we are on the brink of Summer and COVID is now becoming a seasonal phenomenon.
    • Therefore, people will start to go back to normal. This is beneficial for consumption, as well as for easing supply-shocks (particularly in China).
  • Supply Side issues are already easing and will continue to ease as COVID concerns globally start to lessen
  • Ukraine is not going to become the global crisis many here think it will
    • Read the room: major players in Europe and the U.S. are NOT going to throw down over Ukraine. Literally, Berlin runs Europe, and Berlin sent helmets to Ukraine. If that doesn’t tell you the degree of European resolve, I don’t know what else will.
    • If a conflict occurs, it is more likely limited (Think: Crimea lite) for Putin to save face. This means that limited war is possible without massive contagion. Far Western Ukraine (Donbass) already has political, culture, and linguistic splits with Kyiv, and in material terms, the only major consequence is that a larger % of the European grain supply will be Russian-owned. Now the French will have to start buying American grain for their pastries.
  • Incomes are pacing with inflation
    • I saw an advertisement at Chipotle for $15 an hour this week. I’m a big four bro on the services side, and I got a 10% raise this year. Salaries are up across the board: in Consulting, new hires are making WAY more than they did two years ago. McDonalds literally just came out and said at all company owned restaurants, its $13 an hour average, and will be $15 by 2024.
    • Yes, I know you can find articles like this (NYT) that says that prices are outpacing inflation, but we are in a SUPPLY SIDE crisis. This is NOT a demand side crisis. Logistics bottlenecks and COVID easing are critical to this going away.
  • Corporate profits are at all time highs
  • Biden is afraid of 2022 midterms and will not rock the boat with China this year.
    • Yes, shaking a sword at China is politically popular, but Biden is very unpopular right now and the DNC does NOT want to worsen the bloodletting its destined to suffer late this year by aggravating an already bad supply chain crisis.
    • The new tariff options the Admin is exploring are punitive measures. It is a continuation of the low level friction that will define U.S.-Sino relations for the next decade.

Mass human psychology will always lag reality. There are very, very good reasons to think that the bottom is in, and 2022 is going to be smooth and steady.

Submitted February 12, 2022 at 04:09PM by IS_JOKE_COMRADE2
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