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Rate hikes and the end of the Covid stimulus are killing housing, car sales, and speculation. But there is good news.

We’ve been through financial crises and we always come through.

Getting through this one will take a while — at least a year, and likely a recession along the way.

Here’s why. Two “reasons.”

  1. The Biden covid stimulus is over. The covid stimulus was huge, pumped in huge monies. The Fed kept interest rates low and flooded us with more money. Stimulus and the Fed, afraid that covid would tank the economy, pumped housing and car sales, whose prices skyrocketed. What didn’t get spend on cars and pricey houses went into investor hands which in turn pumped crypto, art and tech stocks.
  2. Now, there’s no more covid stimulus and the Fed’s aggressive rate hikes are killing housing, car sales, stocks and speculation.

Everyone thought covid would tank the economy. They over-reacted. Never let a crisis go to waste.

Blame the economists who panicked and dreamed the stimuluses. Blame ourselves for not selling when our tech stocks went parabolic (i.e. up big time). Blame ourselves for thinking good times go on forever.

How bad will this be? Dr. Google says over 1.7 million people are employed by the auto industry. The industry is a huge consumer of goods and services from many other sectors and contributes to a net employment impact in the U.S. economy of nearly 8 million jobs. Housing is big, also. 4.4 million people work in residential construction.

So, 8 plus 4.4 equals 12.4 million people. You’re looking at around 6.5% of the U.S. work force. Those are big numbers for the Fed to clobber.

What you can do:

+ Sell your remaining stocks. Today is good. The market is taking a bounce. I sold my last two stocks — GNRC and ENB.

+ Sell short some of your favorite overpriced stocks, e.g. AMZN, NVDA, and TSLA and maybe some banks. I wrote about shorting yesterday. My shorts are making pocket change today. Click here.

+ Buy my two favorite ETFs — VGT and VTI. Set up a monthly automatic investment plan. Also called dollar cost averaging. I now have one.

+ Buy some treasuries. If you buy today, you can earn 2.96% on a one year and 3.20% on a two-year. You will earn that if you hold them to maturity. If you want to sell them along the way — and you can easily — you may take a haircut, since interest  rates are rising. I just bought some one year bonds — which are of course yield more than the two-year bonds I bought a month or so ago. I shall hold them all to maturity. Imagine me recommending treasuries in a blog that can still be reached by

+ Keep looking for “bargains.” Soon there’ll be real estate that the owners default on — allowing you to buy “cheap” real estate. Especially if you have the cash to keep it alive. Your banks will love you if you take it off their hands.

+ Don’t buy a new house now. It will be cheaper in a few months.

+ Do nothing until this all blows over. It will. Right now, it’s a very hard market.

I’m sleeping on the couch

Yup. Susan has banished me because I have covid. And she doesn’t.

I’m taking my Paxlovid pills. Some doctors won’t prescribe them — even for compromised patients. My friends swear by them. You should read this from Yale Medicine. It’s positive. Click here.

If you have covid, you shouldn’t go nuts exercising. That may prolong your chances of “enjoying” long covid. Which you don’t want. Read here.

I’m drinking oodles of water, often laced with LiquidIV and sleeping alone.

My Birthday party last weekend was outside under an open tent. We were being extra careful. Still, 13% of attendees got covid.

Apart from never celebrating my birthday again, the moral of this story remains: Wear a mask. Keep six feet distance. Stay home.

Progress from our animal kingdom

Our five baby robins hatched, grew and flew away, leaving us an empty nest.

This was them two and a half weeks ago. The mother will be back a couple more times this season. She’s a fertile little lady.

Our gypsy moth caterpillars are still around. They have destroyed one tree and are now going after the others. This little critter is ambling across our front path. One of my blue Sketchers will end its ambling.

My office AC isn’t working. But the rest of the house is. There’s an irony there somewhere.

It’s perfect tennis weather in Columbia County, NY. But I am not allowed to play until I get better.

Another irony.

See you soon. — Harry Newton