Flagship Pod 5/20: Stock & Crypto Market 1 Year OutlookMay 20, 2022
Published on May 20th, 2022
Every single Thursday we host a live discussion in our Discord channel at 5:00pm EST. This gives you the opportunity to ask us questions and hear our thoughts on the things you want answers to!
Here's what we went over:
What's going to happen to the markets over the next 6-12 months.
The continued fallout from the historic Terra collapse.
Which "fallen angel" stocks should see recovery & more!
By the way, this podcast references the failure of Terra. For more info on that crash, check out our Youtube video below:
Keep reading below for the entire transcript!
From Moby.co, this is the Flagship Pod, a weekly podcast exploring the market, the economy, and the various market forces powering the world around you. As always, I'm your host, Peter Starr, bringing you this time. It's another pretty intense downturn here in the markets. Target and Walmart are down huge percentages after not quite making their way through to their exact numbers in terms of expectations. So inflation finally claiming retail as we roll through this, ladies and gentlemen.
Very wild moment here in the market. We're still dealing with the fallout from the Terra collapse here in the crypto space as well and just generally just trying to see how the market is responding to inflation. We're trying to finally decide if this is really a bear market or if this is volatility season. There's still a bunch of factors at play. To help us get through the complications there, as always, ladies and gentlemen, I am joined by Justin Kramer, CEO, co-founder, and chief analyst here at Moby.co. Justin, man, what's good? Take me more through this. Finally, retail has been claimed, right? Retail's next up. First, they came for Apple, then they came for various growth stocks, and now finally retail takes its turn up to the plate for these downturns. What happened this week with these Target and Walmart earnings calls? Is it serving as a contagion event for the rest of retail?
Yeah, it's a good point. To your point, we saw some tech names sell off. Now it's these other names. So we actually did a little bit of a tweet storm on this morning. But in case you missed it, effectively, two things happened. One, retail sales growth... I mean, it's definitely slowed down, but it's still better than people were expecting. But a lot of these companies like Target, like Walmart, ultimately missed big on earnings. The reason being margins fell and margins fell due to supply chain and basically just costs become significantly more expensive.
So you're seeing inflation now gets to the point where they can't necessarily pass it on to the consumers in a way that they once were. Target came out and said they wanted to plan on absorbing the higher costs. So this is ultimately why we're seeing this retail sell-off. First, it started with tech, then it started with retail. The rest of the market, there's like this contagion event. I mean, we've been saying this since last year. '08, '09, no one could see coming. I mean, I guess minus is Michael Burry and a handful of folks.
But this was bad policy over the last few years setting this up to an environment that was inevitable. So what we mean by that is, when you keep rates crazy low, you have supply chains being stunted, and you're pouring billions into the market. Eventually, inflation will kick in. Inflation kicks in, the Fed fails to move, and then inflation keeps getting out of control, keeps getting out of control. They finally admit it's a problem, they move, they still don't even move strong enough, and now it's the point where it's around 8%. Their target's two, so 4X their target, and now they have to move rates.
So rates go up and then... I mean, you just have this effect where we are headed towards a recession in some capacity. The Fed has not helped out. They supercharged the market too quick and now there is a cooling-off effect. Ultimately healthy in the long run, but it's a long-winded way of saying the next six to 12 months are going to be very rocky. And that's why over the last six to eight months, we've been recommending a lot of defensive stocks, stocks that do well in these kind of environments, healthcare being one of them. We just published it today.
We also talk through utilities, consumer staples, and just overall more AI quantitative-based strategies as well where you can invest from a portfolio standpoint. Now, gone are the days where you just pick a tech stock, it goes up. Being smart, listening to the right people, and understanding what to do is now more important than it's been in the last decade.