The Magnificent Seven stocks (FANG stocks, plus Tesla, Microsoft, and Nvidia) have contributed significantly to the overall market gains. Bianco attributes their success to the hype around artificial intelligence and the rollout of new technologies. However, he also notes that the performance of the other 493 stocks in the S&P 500 has been less impressive, with economically sensitive stocks not showing strong signs of recovery. He cautions against conflating the market performance with the state of the overall economy.
Bianco also highlights the other side of the equation – the 55 percent of people who have no savings and need assistance. He then delves into the complexities of the labor market, stating that the pandemic triggered fundamental changes, such as remote work becoming more acceptable. This has led to more job switching and labor hoarding, where companies bid up prices for workers to retain them. However, there is also a lot of churn in the workforce with people being more transactional in their approach to employment. Bianco acknowledges that the labor market is now very different from what it was before the pandemic, making it difficult to measure and understand its dynamics. He advises a shift in mindset from trying to return to pre-pandemic norms to adapting to the new world of work.
