I guess fears of Mt Gox holders flooding the market with BTC was overexaggerated. In a move that went against the general tech market, bitcoin rocketed by 17% this week while the Nasdaq posted a loss of 3.6%. Why did the Nasdaq drop so precipitously? Fintwit suggests it was mainly driven by investors rotating out of tech stocks and into other industries and small cap in anticipating of a September rate cut.
Still, my belief is that we're not going to see a rate cut despite traders seeing a 100% chance (essentially a certainty). The political landscape has become increasingly volatile. Trump has said he doesn't want to see a rate cut before the elections. The overall job market is still relatively strong with unemployment ticking slightly to 4.1% and inflation is sticky at 3.4% -- why risk falling into a trap by cutting rates until there are clear signs that inflation has been tamed?
With that being said, the white collar job market is in very poor shape. Among my friends I know at least 10 people who have been out of jobs for at least 6+ months. This is across NYC and the Bay Area. The WSJ wrote a piece today about recent college grads struggling to land full-time positions.
According to the article, hiring for roles that require a bachelors degree has fallen below 2019 levels in recent months. With AI starting to enter mainstream and replacing some low-level coding tasks, the next few years for folks that are in repetitive roles (e.g., paper shufflers and form fillers) will quickly be displaced. Junior people will have a harder time finding jobs with no "real world" experience as AI replaces junior tasks, which were once necessary to gain experience.
The future looks bright for some and very dark for others. With the upcoming election, it remains to be seen which administration will have the fortitude to make tough decisions to boost job growth. Tax cuts are a drug: it works great once or twice but the long-term effects are questionable; trickle down economics doesn't really work for the general population. You can only eat a steak dinner or buy a fancy car one so many times. What's necessary is a way to re-educate the workforce and encourage entrepreneurship to discover new economies that address the needs of today and tomorrow. I'm hopeful that America will find it's way.