When there is a wealth destruction in the stock market due to dispersion, it eventually affects the economy as a whole, resulting in companies cutting budgets and reducing spending. This phenomenon is often related to major personalities selling off their equities.
The ongoing supply chain issues are clogging up the movement of atoms and molecules and causing adversity in the market despite spending interest and capital flows. The consequences of the supply chain problem might lead to a recessionary effect, as there is a trickle-down effect of capital flows and less spending on suppliers.
Consumer confidence has been unpredictable in the face of economic uncertainty caused by the pandemic, with a slow decrease in spending and uncertainty over inflation, gas prices, and future plans affecting personal budgets and the overall economy.
The speaker comments on the negative 1.5% economic growth in Q1 and the rampant inflation, questioning how the Fed will handle the slowing economy.
The current situation of gross stocks is one of the worst in the last two decades, and as a result of this, the economy is being affected, leading to companies cutting budgets, low spending, and people having less money. The dispersion dynamic is what causes this situation, which means that people would likely sell equities to reduce the risk of losing their money.