47 Finance Monthly. Inve s tmen t it. At first, the Fed increased interest rates by token 25 bps in March, then by 50 bps in May, and then by 75 bps in June and July. As the Fed kept winding down access to cheap borrowing money, it wiped out trillions from the stock market. Year-to-date, this reduced the US total market cap, as a percentage of GDP, by -50%. Moreover, US wages are still lagging behind the consumer price index (CPI), at just +5.2% annual increase vs. +8.5% inflation. The end result? The US household net worth fell in Q2 2022 by $6.1 trillion, which is more than during the lockdown of Q1 2020, at $6.07 trillion. In other words, the Fed enacted a liquidity reset, making meme stock trading all the more untenable moving forward. With rising costs of living, other priorities have taken a foothold. Retail Lessons Learned Meme stock trading bears a remarkable resemblance to altcoin trading. While Dogecoin relies on Elon Musk’s Twitter escapades and other social media hype, so do stocks like GME or BBBY. Likewise, there are always early winners and longterm bag holders hoping for another hype wave. However, investors cannot escape from fundamentals which made short sellers place their bets, to begin with. The Fed’s unprecedented money printing spree served as a reprieve, but only for a while. Now that this excess liquidity is drained from the system via interest rate hikes, fundamentals are all that remains. Image credit: Trading View It appears that the BBBY bubble has finally popped. 36.00 32.00 28.00 24.00 20.00 16.00 12.00 8.00 4.00 0 BBBY 9.22 -68.95% 2018 2019 2020 2021 2022 Bed Bath & Beyond Inc. 1W NASDAQ TradingView 9.22 +0.29 (+3.25%) US total market capitalization as % of GDP. Image credit: Ycharts 1D 5D 1M 3M 6M YTD 1Y 3Y 5Y 10Y MAX JAN ’22 FEB ‘22 MAR ‘22 APR ‘22 MAY ‘22 JUN’22 200.0% 180.0% 160.0% 140.0% 151.0M
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