The question of the month…. Is Rink Rats turning into a
quarterly blog?
The answer is no. A late winter and spring of family visits,
too many faculty meetings, writer’s block, vodka tonics, and general laziness.
But we are back and hopefully ready to inform and entertain our loyal
following.
MARKET WEEK - The US stock market just had
its worst month since March 2020, when the world shut down due the pandemic. In
April, the S&P dropped 8.8%, the Dow 4.9%, and the Nasdaq, 13.3%—which
marks that index’s worst month since 2008.
But…the world isn’t shut down now, nor is there a financial
meltdown. So why are stocks acting as if we’re in crisis? Because the market
has bleaker growth prospects than an air mattress after you fall asleep.
The primary headwind for growth, of course, is the Fed’s plan
to hike interest rates in order to cool inflation. This hawkish turn has been
especially painful for high-flying tech companies, which become less attractive
as interest rates move higher.
Cathie Wood’s ARK Innovation fund, which is perhaps the
best-known fund for futuristic tech stocks, just had its worst month ever,
falling 26%. Note: RR owns some shares of this fund, “Ouch”.
That fund includes Zoom (down 82% from an all-time high), Roku
(–80%), and Coinbase (–67%).
A secondary concern: Supply chain bottlenecks are still
stinging corporate giants. With China locking down cities at the first trace of
Covid, American companies whose products are made in Chinese factories aren’t
able to fulfill orders. Apple said Thursday that it would face up to $8 billion
in losses due to restrictions in Shanghai.
As if all that didn’t provide a bearish enough environment for
investors, the war in Ukraine has introduced challenges for companies across
virtually every sector. For evidence, just note how Snapchat said its sales
were hit when advertisers paused campaigns following the outbreak of the war.
The stock market plunge of March 2020 was followed by
skyrocketing growth. Don’t expect a rapid recovery this time around, many
analysts predict. The Fed, which is playing catch-up on inflation, will have to
hike it until it hurts.
• ExxonMobil and
Chevron posted meaty profits last quarter thanks in large part to rising oil
prices.
• The FBI
rummaged through the electronic communications of up to 3.4 million US
residents for a year without a warrant, per a new report from the Office of the
Director of National Intelligence.
• Tennis great
Boris Becker is going to jail for two-and-a-half years for hiding assets to
avoid paying debts.
• The French are
drinking a lot less alcohol than they used to.
FED BLAME GAME - It's high season for
being mad at the Federal Reserve. Critics say the Fed was feckless as inflation
built last year — and as a result, the U.S. faces prolonged inflation, a
painful recession or both.
In reality, the Fed didn't create the current inflationary
surge by itself — but it was too complacent as prices spiked last year.
Now the economic future depends on the central bank's ability
to make up for lost time, and navigate a tightrope-thin path to bringing
inflation down without tanking the economy.
The Fed always takes heat for its decisions. That is to be
expected when a handful of technocrats make decisions, behind closed doors,
that shape a $24 trillion economy.
Think of it as the Supreme Court, but with no robes and more
math.
Last year, even as inflation started to surge, the Fed kept
its aggressive monetary stimulus — interest rates near zero and buying billions
of dollars in bonds — in place, only ending it last month.
Insiders at the central bank don't really dispute that they
should have begun withdrawing that stimulus earlier.
The Fed was lulled by the fact that the initial surge of
inflation last spring was concentrated in a handful of categories, then by a
temporary softening in inflation last summer.
At the same time, it's not clear that inflation right now
would be radically different in an alternate universe where they had moved to
tighten money earlier.
"It is unlikely that the Fed could have lowered the
inflation rate in 2021, because the fiscal support was so massive and its tools
work with a lag," Jason Furman, the Harvard economist and former White House
economist.
But by not acting sooner, the Fed has increased the risk that
inflation will remain high through 2022, and beyond: “If it had been more
aggressive last year, we would be seeing the effects more this year.”
Countries with central banks that did tighten faster are also
experiencing high inflation. (In New Zealand, which raised rates back in
October, it's 6.9%.)
The real risk is that by waiting as long as it did to pivot to
tighter money, the Fed will have to move so quickly to catch up that it
triggers a breakdown, as the economy struggles to adapt to a world of less
abundant cash.
The Fed has been assigned a task by Congress that's easy to
describe, yet fiendishly difficult to achieve. It's known as the dual mandate:
to achieve both price stability and maximum employment.
During the high unemployment and low inflation of the 2010s,
both parts of that dual mandate pointed in the same direction. Not anymore.
The Fed is in a new world in which it faces more explicit
tradeoffs. That will make achieving assigned goals harder — and maybe
impossible.
How it works: The central bank now formally defines price
stability as inflation of 2% per year, as measured by the core personal
consumption expenditures price index.
This is the part where the Fed is failing. Inflation was up
5.4% over the 12 months ended in February, far overshooting the central bank's
target, though by less of a margin than the more widely covered Consumer Price
Index.
The definition of "maximum employment" is squishier.
Median official Fed estimates show the longer-run unemployment rate is 4%,
though policymakers also emphasize a lot of uncertainty around how low
unemployment can go without sparking excessive inflation.
In any event, the view at the Fed at the moment is that the
job market is too hot — "tight to an unhealthy level," as Chair
Jerome Powell put it in his news conference last month.
GRAD SCHOOL OF HARD KNOCKS -
There's nothing like living something to turn you into an activist determined to
fix it. That's an experience that has been shared by a lot of college graduates
who find themselves working hourly gigs at Starbucks and Amazon. During the
years this has become a more common post-grad experience, "support for
labor unions among college graduates has increased from 55 percent in the late
1990s to around 70 percent in the last few years." And this experience has
"united many young college-educated workers around two core beliefs: They
have a sense that the economic grand bargain available to their parents — go to
college, work hard, enjoy a comfortable lifestyle — has broken down. And they
see unionizing as a way to resurrect it..
It would have been nice if we had listened to the revolt of
the working class before it included so many college graduates. They've been
getting the shaft for decades and almost every massive American problem can be
traced to the now sickeningly wide economic divide.
BIRTHDAYS THIS WEEK –
Birthday wishes and thoughts this week to Judy Collins (83), Christina Hendricks
(45), Chris Krich ….famous leader,
Willie Nelson (89), Michelle Pfeiffer (64), Jerry Seinfeld (68), Robb
Suffredini ….need good employees, he is your man, Sula Vanderplank …..famous
botanist,
CHRONICLES OF HIGHER EDUCATION - BIDEN
SAYS HE’S CONSIDERING CANCELING SOME STUDENT LOAN DEBT —- President Joe Biden
confirmed on Thursday that he’s considering canceling “some” amount of federal
student loan debt but emphatically ruled out acceding to progressive demands to
forgive as much as $50,000 per borrower.”
WAPO: BIDEN SHOULD RESIST CANCELING STUDENT DEBT — The
Washington Post editorial board says Biden should restrain himself when it
comes to student loan forgiveness, arguing that “across-the-board student debt
cancellation, which left-wing activists and politicians demand, would amount to
a regressive subsidy for many high-income university graduates.”
“Mr. Biden should continue to resist these irresponsible
demands, even as his administration looks for ways to offer more targeted
relief. Congress, meanwhile, should make clear that high-income borrowers need
no more federal help and instead put the money into college finance programs
tailored to aid the needy.”
CHRONICLES OF HIGHER EDUCATION PART DEUX - Food
pantries have become common features of campus life. Now, colleges are
beginning to recognize another basic student need: affordable, safe, reliable
transportation.
While only a few institutions currently provide or facilitate
low-cost access to transportation — typically through subsidies for bus, subway,
or light-rail rides — such benefits are likely to grow as recognition of
“transportation insecurity” continues.
It’s about time. And with billions in federal infrastructure
dollars soon to start flowing, the timing could also be opportune.
The Science of Learning -
Scholarship on teaching and learning has grown exponentially over the decades,
encompassing thousands of experiments, stacks of books and journal articles,
and major initiatives to bring the science of learning into classrooms. But
many faculty members remain untouched by this work, unsure how to apply it to
their teaching, or skeptical of its value. Education researchers, learning
scientists, and teaching coaches say they often feel as if they’re preaching to
the choir — or to one another, the same subset of professors eager to try new
practices. And what does get through to many faculty members and students is
often garbled, or just one piece of the puzzle.
So, what’s going on? Some of the bottlenecks are a product of
the structures and systems of higher education, in which faculty members are
given few incentives for, if not actively discouraged from, improving their
teaching. They care about their students, but they don’t have the time,
understanding, or motivation to make their courses better. At the same time,
colleges enroll students from a wider range of backgrounds, they’re seeing
firsthand the unintended consequences of methods such as high-stakes testing,
rigid course structures, and lecture-based classes, all of which set up students
from disadvantaged backgrounds to flounder or fail.
Teachers are leaving the classroom for jobs in the private
sector, where talent-hungry companies are hiring them—and often boosting their
pay.
The rate of people quitting jobs in private
educational services rose more than in any other industry in 2021, according to
federal data. Many of those are teachers exhausted from toggling between online
and classroom instruction, shifting Covid-19 protocols and dealing with
challenging students, parents and administrators.
The potential for career and pay growth—some roles are paying
tens of thousands of dollars above typical teacher salaries—is alluring amid a
long stretch of Zoom learning and pandemic-stressed classrooms, former teachers
say.
The exodus is worsening a nationwide teacher
shortage and proving a boon to hiring managers in industries such as IT
services and consulting, hospitals and software development. Teachers’ ability
to absorb and transmit information quickly, manage stress and multitask are
high-demand skills, recruiters and careers coaches say. Classroom instructors
are landing sales roles and jobs as instructional coaches, software engineers
and behavioral health technicians, according to LinkedIn.
DRIVING THE WEEK - Boarding just got more
pleasant for Delta flight attendants. The company announced it’ll begin paying
flight attendants during boarding time. It’s a first for a major US airline
(typically, flight attendant pay begins when the plane’s door closes and
passengers are seated). The Association of Flight Attendants, a union that has
been attempting to organize Delta employees, said, “This new policy is the
direct result of our organizing.”
Robinhood announced
layoffs. The trading app is letting about 9% of its full-time employees go,
saying that its hiring spree last year led to “duplicate roles and job
functions.” Robinhood’s stock is down more than 71% since it went public last
summer.
A lot of you had Covid.
At least 58% of the US population had antibodies from a previous Covid-19
infection in February, up from 34% in December, according to new data from the
CDC. What happened in between? Omicron. Another startling finding: 75% of children
and teenagers have antibodies from a previous infection.
THIS IS BAD - Roughly 4 in 10 Republicans
and independents say that violent action against the government is sometimes
justified, according to a startling new WaPo-University of Maryland poll.
Overall, “the percentage of Americans who say violent action
against the government is justified at times stands at 34 percent, which is
considerably higher than in past polls by The Post or other major news
organizations dating back more than two decades,” write WaPo’s Dan Balz, Scott
Clement and Emily Guskin. “Again, the view is partisan: The new survey finds 40
percent of Republicans, 41 percent of independents and 23 percent of Democrats
saying violence is sometimes justified.”
22% of Republicans say they thought the 2020 election was
fair.
How many Peter Meijer’s (Republican, 3rd Michigan District)
are in the Republican Party?
THIS IS BAD, PART DEUX — A new
CBS/YouGov poll finds that 68 percent of respondents see the Jan. 6 attacks as
“a harbinger of increasing political violence, not an isolated incident,” write
CBS’ Anthony Salvanto, Kabir Khanna, Fred Backus and Jennifer Depinto. “That
leads to larger misgivings. When people see it as a sign of increasing
violence, they're more likely to think violence is a reason democracy is
threatened.”
“There is 12% of the country , and a fifth of Trump's 2020
voters, that want Trump to fight to retake the presidency right now, before the
next election. … [A] third of the people within that 12% say he should use force
if necessary. While that only amounts to 4% of the population, it still
translates into millions of Americans effectively willing to see a forceful
change in the executive branch.”
TOUCHED FOOTBALL - For some Americans, the
separation of church and state has been a long-established norm. But as we've
seen over the past several years, what some see as established norms others see
as detours from the America they want. For those folks, the modern
interpretation of the separation has just meant that prayer in schools has been
on the injured reserve list until they could get it back. And, with the current
makeup of the Supreme Court and a new coach on the sidelines, that team finds
itself in the red zone.
ESPN: How an unknown high school football coach landed in the
center of a Supreme Court religious liberty case. "All he wanted, he says,
was to connect with young people by coaching football, and to connect with God
by saying a brief midfield prayer after each game. 'I'd take a knee and thank
God for what the guys just did and the opportunity to be a coach,' Kennedy told
ESPN, adding: 'I wanted to hang out with my players and develop these young
men.' Yet the 52-year-old finds himself out of coaching and in the midst of a
raging legal battle ignited when he insisted on taking a knee at midfield to
pray after games, often with students. Bremerton public school officials fired
him in 2015 after he refused to stop his on-field prayers, which they said
violated the Constitution's prohibition against government endorsement of
religion." (I guess I'm an outlier. During hockey practices and games, I
always took a knee because I was tired.)
THE BEST TOURNAMENT IN THE WORLD - Before
The Swami reveals the winner of the 2022 Stanley Cup playoffs. I'd like
to just offer a small reminder to establish a baseline for your expectations:
I picked the Detroit Red Wings to make the playoffs.
But that was before the season. Now I have 82 games of data,
observation and results on each team to rely on for my prognostications, rather
than just vibes. Although, in fairness, sometimes vibes work too.
The brackets are set, and so are the rosters. The 2022 Stanley
Cup playoffs commence beginning Monday night, with June 30 as the last possible
day for the Cup to be raised. Who will win? Who will lose? Who will shock the
hockey world, either in victory or in defeat?
Western Conference:
First Round – Colorado, Minnesota, Calgary, Los Angeles
Second Round – Colorado, Los Angeles
Conference Champ – Colorado
Eastern Conference:
First Round – Florida, Tampa Bay, Boston, Pittsburgh
Second Round – Florida, Boston
Conference Champ – Florida
Stanley Cup Champion: Colorado Avalanche
THE SWAMI’S WEEK PICKS –
MLB Game of the Week –
Saturday 5/7, 1:15 PM (PDT), FS1: Our first MLB game of the year. The Swami is
picking a Toronto Blue Jays v. Los Angeles Dodgers World Series. St. Louis
Cardinals (12-9) vs. San Francisco Giants (14-8). The Giants are off to a surprising start,
they take this Saturday Showcase¸ Giants 5 - 3
SCIAC Conference Pick of the Week – Friday
5/6, 3:00 PM (PDT): Chapman University Argyros (28-9) vs. University of La
Verne Leopards (27-7-1). The first game of a three-game set to determine the SCIAC
regular season champion. The Leopards have many fine business students in their
lineup; thus, we like them in game 1: La Verne 6 – 3
Season to Date (5 - 2)
Next Blog: Commencement Season and Jack
Ass of the Month
Until May 9, 2022, Adios.
Claremont, California
May 2, 2022
#XII-9-446
2,978 words, six-minute read
CARTOON OF THE WEEK –
Dilbert
RINK RATS POLL – Did you get a pet during the pandemic?
___ Yes
___ No
QUOTE OF THE MONTH – “The
problem with the world is that everyone is a few drinks behind.” – Humphrey
Bogart
Rink Rats is a blog
of weekly observations, predictions and commentary. We welcome your comments
and questions. Also participate in our monthly poll. Rink Rats is now viewed in
Europe, Canada, South America and the United States.
Posted at Rink Rats The Blog: First Published – May 3, 2010
Our Eleventh Year.
www.rhasserinkrats.blogspot.com
