My final concern: I do think that at a certain point there will be a real issue with the Fed, but it won't be anywhere around these levels of inflation or of economic activity.
I think that once the stimulus runs out and the consumers decide they aren't paying up anymore, and we have a more normal supply chain that will not be hurt by COVID, things will calm down. Runaway inflation won't be a problem if we remove the tariff on wood with Canada if we get some port coordinators who know what they're doing, and more people will learn how to drive trucks, for heaven's sake, if everyone got vaccinated, most of these inflation problems would go away.
And I think that once we have seen the unemployment benefits revert to normal, there will be more job seekers. I sure hope so. Bar San Miguel. I can't find a bartender. I was hosting last night - kind of tiresome. And when we get more job-seekers, the wages will settle down at higher levels. But it's not so bad given how underpaid so many people are vs., say, the CEOs they work for.
All that said, we are in an unprecedented boom time. And I think we could all understand that if we do get to where unemployment is back to 2019 for minorities, then Jay Powell’s job will be done and rates will have to come up, maybe much higher. This market can handle two or three rate hikes without a problem, though. In fact, I think we can go higher during that period. And I've seen that before.
The bad news: We will most likely lose the industrials like we're losing this morning. And then ultimately, the techs, not yet. And then some of the higher-yielding stocks, one group at a time. So we have to whittle our exposure down every quarter-point up in fed funds.
Fortunately, I do not see that happening for at least 18 months, which means there's plenty of time to make money like we're doing right now with our tech stocks. OK, so we're losing on some of the banks. But remember, we only have one that matters. Actually, that's really the only one.
Transcribed by Robert Daniel