Daily Brief - The Death of Equities

You don’t need to be an old-timer in the market to have heard of the famous BusinessWeek cover ‘The Death of Equities’.

The cover was published in 1979, when the war on inflation had left S&P 500 bloodied, battered, and range-bound for more than a decade.

The roaring 80’s would follow, and SPX would increase three-fold in a matter of 10 years - pretty much the exact performance of the 2010-2020 bull market.

In a somewhat cheeky homage to the classic cover, Businessweek was at it again in 2019 with its ‘Is Inflation Dead?’ cover.

The editors knew very well that readers would construe the cover as a contrarian indicator, but they probably did not imagine how well it would work. Three years and a pandemic later, we have 7% CPI.

A replacement for the unions is what might make the 2020’s look like the 1970’s

The world is a different place now, compared to the 70’s. One difference stands out to us in particular: unions.

In part due to the dismantling of the collective bargaining rights, in part due to cultural changes, unions have become far less belligerent than in the past: 2020 unions are the chamomile version of their forebears 50 years ago.

Yet in a curious parallel to the GME odyssey, internet forums seem to have provided an alternative.

Just like it happened with GME traders, Reddit has offered employees a place to convene, share ideas and organize from the bottom.

Enter r/antiwork, which defines itself as “A subreddit for those who want to end work [...] and want personal help with their own jobs/work-related struggles”.

A receptacle for schadenfreude stories about employees leaving work (for better ones) in The Great Resignation, r/antiwork tripled subscribers in Q4 2021.

At pixel time 1,500,000 subscribers share horror stories about terrible employment practices, and advice about the next moves for people in the wrong spot.

Internet forums have proven capable of enabling grassroot coordination.

If they provide an alternative to structured union participation, they might as well add the final tassel to ensure that inflation is truly going to stay with us.

And if inflation is not transitory - well, look again at that chart of S&P 500 in the 70’s.