top of page

In the Waiting Line

Updated: Apr 5, 2021

Have you ever found yourself in a crowded New York subway and you don’t know which way to go?

What do you do? Ask someone for directions? Look at the map? Call someone? Or just leave the station and walk?

Being in a crowded place with people moving quickly all around you reminds me of one of my favorite songs and movies: “In the Waiting Line” by a band called Zero 7 that was featured in the movie Garden State.

This line of the song grabs me: Everyone’s saying different things to me.

So how do you know what to listen to, and which path forward is the best one for you?

The answer, like so many things in life, is ridiculously simple: take a step back and see where we just came from so we can figure out where we are going.

The pandemic isn’t over yet

While the pandemic slowed all of us down, we each had to create a new way of life for ourselves and our families. Investors piled into stay-at-home stocks and Zoom, Google, Netflix and other usual suspects benefited enormously from a spike in demand for their services.

With the vaccine roll-out, some stock market pundits think we’re going to suddenly ditch our Lululemon and Netflix and hop on planes to travel and resume our pre-pandemic lives overnight. Some investors shifted to that reopening trade by chasing expected gains in stocks that benefit from face-to-face and in-person experiences.

To be sure, a critical driver for the economic recovery will be pent-up demand for goods and especially for services. And with many in-person activities choked off by the pandemic, a rebound in travel, hospitality and leisure industries will enhance the recovery in GDP once covid restrictions dissipate.

But we’re not quite there yet.

A shot in the arm that took the punch bowl away

For a few months, everything seemed golden. Our economy appeared to be recovering, and the stock market was booming. Tech growth stocks were still going up along with the overall market.

Then everything changed (again!) and the economic recovery party was put on hold.

One more stimulus punch shifted the crowd away from high-tech growth due to climbing bond yields.

Rising inflation concerns made investors (mostly the Japanese) dump their bonds because it erodes the real value of the coupon payment.

We thought that fiscal stimulus would be the water that lifts all boats, and both high-growth tech and value cyclical stocks would both benefit.

But instead, inflation fears are siphoning off the water under the tech trade boat because that’s less favorable for long plays on high-growth tech companies with hefty cash flows like Apple, Google and Amazon.

Then you factor in higher interest rates, and that’s a bit of a buzzkill on the economic recovery party.

Uhhh, what’s inflation?

A lot of people don’t really understand what inflation is and why it matters. Let’s look to history for a quick lesson.

Put simply, inflation is a result of supply and demand. It can mean too many dollars chasing too few goods (prices go down), or not enough goods to meet demand (prices go up).

Right now the United States has ample dollars, but there is not a lot of chasing (rising demand with no increase in supply), nor are there too few goods (full employment and no capacity to increase production). There are still 10 million people out of work.

Some economists are calling this economic pullback a she-session because so many women had to leave work or cut back their working hours to figure out homeschooling and keep their families running during the shutdown.

How are people spending stimulus money?

Women typically make 70% of the purchasing decisions for their families, and I think most of us are more concerned about supporting our families and than running out to go shopping at Target. Here we go again with a market that is dominated by men in their 50 to 60s who are completely disconnected with the day-to-day realities of the world.

So what are people spending their stimulus money on?

They aren’t speculating on things like GameStop given the market volatility.

Most have said they are using funds to pay off debt, which is the opposite of inflation. Lower debt is deflationary because you are not using the money to buy things.

Federal Reserve Chair Jerome Powell has been reiterating that inflation could temporarily exceed 2%, although upward price pressures are likely to be temporary.

Waiting in Line: 1979 Oil Crisis

Anyone over age 50 probably remembers the oil crisis of 1979 when real inflation had a major impact on families. As a kid who was born in 1972, I remember the long lines when my parents had to wait in line to fill up their cars with gasoline. That was a supply shock that caused terrible inflation.

The price of crude oil rose dramatically over the next 12 months, more than doubling. That spike in price caused fuel shortages and long lines at gas stations, which echoed a similar oil crisis earlier that decade.

With 5 lines of almost 15 cars in each, gas customers had to wait nearly an hour before filling up, as shown here at the Texaco station at Industrial Blvd. and Reunion in 1979. (The Dallas Morning News)

Today we have too much supply of oil, and the Middle East is having to cut production to prop up oil prices.

Mr. Market is worried that the most recent stimulus plan will result in rampant inflation and make the bond market continue to sell off, which would push up long-term Treasury yields and therefore the higher cost of money will hurt the recovery.

The recent jump in yields would also put a slight dent into the hot housing market by making the cost of money more expensive.

Where is inflation going? The market doesn’t know.

It’s hard to tell how the market is going to absorb and react to incremental moves on inflation. There are so many factors at play, and the reactions can be all over the map from day to day.

According to Mohammed A. El-Erian, a Bloomberg Opinion columnist and the Chief Economic Advisor at Pimco parent company Allianz, there are three types of inflation that influence the economy:

1. Base effects, which means distortion in a monthly inflation figure that results from abnormally high levels of inflation when compared to the previous year when it was abnormally low. This is temporary.

2. Cyclical impact, when demand is greater than supply. This is what drove the 1979 oil crisis, but no longer have oil supply constraints because of technological advances in oil fracking that improved domestic production.

3. Cost-push inflation, which is due to high input costs. That means things like wages and materials. Low-cost labor doesn’t have much bargaining power nowadays because unionization has declined in recent decades. However, the prices of certain consumer packaged goods are up so this is something to watch.

Remember that markets can be influenced by anxiety and fear. Sometimes movements are emotional and unrelated to the current economy. Markets tend to go up when we feel they should be going down, and go down when we feel they should be going up.

People tend to panic and sell stocks when evidence and logic say it’s time to buy, and we tend to panic and buy when evidence and logic say it’s time to sell. This fear might be good, because the economic recovery will likely be lumpy and we should be cautious about knee-jerk decisions.

If the markets can’t tell us where inflation is going, maybe collective wisdom can give us a hint. I constantly see women comparing prices when they shop at Target and other big-box retailers because they are really concerned about saving a few bucks. They won’t buy something if they can find it cheaper somewhere else. As a result, retailers have no ability to pass on higher commodity prices to the consumer.

Take any train and trust that it’s going to be an amazing ride

Some 70% of employees still want to work from home even when their employer reopens their office. I’m not giving up my Lululemon pants and Zoom calls to sit in traffic again. That was miserable, and we are not going back to the craziness of our old lives.

The stay-at-home trade has gotten beaten up, and the tech sector is now considered a value play. Apple, Microsoft and other companies aren’t worried about short-term volatility — they’re too busy working on the 4th industrial revolution and building new technology and products like 5G, artificial intelligence, and electric vehicles.

The economy is recovering nicely, that means the cyclical theme of rising demand for materials, industrials, metals and mining sectors, which I wrote about a few weeks ago, will continue to do well.

As most of you know, I started my business during the pandemic. The shutdown taught me to slow down and ask myself what is important to me and focus on the things I can control.

We can’t control the market, or hedge fund men behaving badly with leverage like what happened recently with Archegos Capital when a margin call wiped out the firm.

Ignore the volatility that Mr. Market creates and focus on what Jeff Bozos has always said — he thinks in the future.

Stay focused on the long term and get comfortable with some uncertainty and volatility in the markets. That’s how markets behave sometimes, and it’s normal and OK.

At the end of the movie Garden State, the character Andrew (played by Zach Braff) chooses to be with his love interest Sam (played by Natalie Portman) even though he’s going through an existential crisis after his mother’s death. Love wins over uncertainty. He acknowledges he’s going through some heavy stuff, but that doesn’t mean he has to give up a chance at happiness.

When I focus on uncertainty and things I can’t control, I get upset and anxious. But when I have confidence in what I’m doing, I get excited and feel steadier on my feet.

I’m excited about this economic recovery even if the recovery is lumpy and the market has some tantrums.

We will get through this because we are focused on our futures, and we can talk about these big market concepts together and decide on an investment strategy that’s right for you.

Let’s pick a train and trust that it’s going to be an amazing ride.

Because the only line we should be waiting in right now is for a covid vaccine.

Tiffany Kent

CERTIFIED FINANCIAL PLANNER Wealth Engagement LLC An Independent Registered Investment Advisor (RIA) 3715 Northside Parkway Bldg 100, Ste 500 Atlanta, GA 30327​ Office: 404-795-6124 Cell: 917-826-5955 The information contained in this e-mail message is sent on a confidential basis to the recipient(s) named above. This message is not an advertisement and does not constitute an offer of any securities or investment advisory services. Any offering may only be made pursuant to the securities laws, an offering document and related subscription materials all of which must be read and completed in their entirety. This message is intended exclusively for the use of the recipient(s) named above, and it is not to be reproduced or redistributed to any other person without the prior consent of Wealth Engagement. If the reader of this message is not the intended recipient or an agent responsible for delivering it to the intended recipient, you are hereby notified that you have received this document in error and that any review, dissemination, distribution, or copying of this message is strictly prohibited. If you have received this communication in error, please notify us immediately by e-mail, and delete the original message.

59 views0 comments

Recent Posts

See All


bottom of page